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Employed or Self-Employed?

So you’re in a job and thinking of becoming self-employed? Or maybe it’s some time since you’ve been in the workplace, and you’re weighing up the choices.

It’s a big step, bigger than you might think, so if you’ve never worked for yourself before, think carefully before making the leap. The thing most people underestimate is the extent to which being employed by someone else creates a framework and a structure within which you operate. While this might feel restrictive and stifling at times, it also creates boundaries, and hence, safety. When you’re self-employed, you have to do this for yourself, and some people are better at it than others. To some extent, your family history will influence which choice is better for you. Someone who has no family history of self-employment will find it more of a challenge to step into that role.

The main differences between being employed and self-employed are summarised below:

Eagle-2Freedom to choose and make the rules: When you work for someone else, your employer will generally decide what hours you work, who your clients are, how many clients you see, and the circumstances under which you see them. When you work for yourself, you decide who to work with while you have a lot of freedom when you’re self-employed, to dictate the circumstances. You also have to be okay with making lots of decisions.

Priorities and Values: Self-employed people get to decide what’s important to them, an employee on the other hand, works according to what is important for the employer. This means that when you’re self-employed you have much more control over the identity you bring to your work, because you decide the priorities.

Responsibilities: When you work for yourself, you’re responsible for everything: The work you do, ensuring there is enough work, plus all the other little tasks of cleaning, bookkeeping, paying the bills, having insurance, making tax returns and paying tax etc. When you’re an employee, these tasks are generally the responsibility of your employer. The employer is responsible for having a safe working environment and ensuring housekeeping tasks are done. In Ireland, it is also the responsibility of the employer to deduct and return income tax from salaries.

Risks: Self-employed, if work is slow, your income suffers. If there is insufficient money in the bank, you don’t get paid. When you are sick or on holidays, you don’t earn anything. If a client sues, it’s on you and your insurance. Employed by someone else? These risks are carried by your employer. You are paid if you are sick or on holidays. It is your employer’s job to ensure there is sufficient money to pay your salary. If a client sues, it is the employer who faces the challenge.

Supports: When you work for yourself, you decide what supports you need, such as training and supervision. You choose them, and you also pay for them. Without the support of an organisation, you will have to provide support for yourself, to prevent isolation. In a job, your employer decides what supports you will receive, for example, how much supervision or training. These may be paid for, or provided within your working day. In addition, you have the benefit of the support of the structure of the organisation, colleagues, managers etc.

Rewards: When you’re self-employed, if work is plentiful, you reap the financial rewards. You decide how much to charge, and how much your time is worth.   As an employee, golden-retriever-treatsyour rewards are usually decided by your employer, and while you may have some input, they will generally have the final say. If work is plentiful, your employer reaps the benefits.

Job security: Self-employed people have no job security or employment rights. An employee on the other hand is entitled to the security provided by their contract of employment, together with the rights afforded by employment law. Financially, they will also be entitled to benefits such as Job Seekers allowance.

Structure: When you work for yourself, you decide and provide such structure as you desire or require. You provide the organisation for yourself. In a job situation, your employer decides what structure and organisation is needed and provides that.

In summary, there are many significant ways in which being self-employed differs from having a job. In essence, self-employment brings greater freedom and flexibility, but it is tempered by the additional responsibilities and greater challenge in creating support and structure. You have to be both employer and employee. Neither choice is better than the other, although each of us will have a preference that is best for us.

If you are struggling with making the jump to being self-employed, I’d love to help you. Contact me here to make an appointment or to avail of your free 20 minute consultation.

 

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