Freelance and contract work has exploded in recent years, and while being your own boss is
a huge draw for many, it’s not without its fair share of challenges. Before you decide to open
up your own shop and start working for yourself, here are four things you need to consider.
1. You really, really, really need to be disciplined. Not everyone is motivated enough
to get work done on time without a boss breathing down their neck. Self-employment
doesn’t remove accountability. In fact, as a self-employed person, all mistakes and
missed deadlines are things you must take ownership of—or you’re going to lose
2. You have to look for work—constantly. After a number of years in business for
yourself, you may build up a reputation and referral network that delivers new
clients and projects to you, but in the beginning you’ll need to invest a lot of time
marketing and networking to keep your business afloat. This is time consuming and
can be pretty tough to take—especially when you get turned down.
3. You’ll be paying self-employment taxes. When you work for an employer, they split
your Social Security taxes with you. But when you’re self-employed, you have to pay
the employer portion as self-employment taxes.
4. You’ll need to fund your own benefits. We often overlook all the benefits afforded
by a traditional employer. Basic benefits can range from health insurance to
retirement matching, Social Security to sick pay, holiday pay and vacation hours.
Some employers have other benefits, such as daycare, free food and even tuition
reimbursement. But when you’re self-employed, you pay for any benefits you receive.
It means you need to work even more hours (or charge even more per hour) to make
up for those benefits that an employer would otherwise provide.
Self-employment can be a fantastic option for some, but it’s not a choice to be made lightly.
Make sure you understand everything that it entails and all the added responsibilities you’ll
take on before you turn in your notice and start working in your pajamas.