Employment at a large corporation and self-employment both offer different advantages, disadvantages and benefits. Some people are simply too entrepreneurial to be happy working for a large corporation. Others are way too dependent to be responsible for generating their own income. Is self-employment a realistic option for you?
4 Main Factors to Consider Before Going Self-Employed
Salary. One of the best things about being self-employed is getting to keep all the profits. Of course, the government will still take their share in taxes, but they do that even if you are working for an hourly wage. When working in a corporate environment your take-home pay is based on what the corporation feels you are worth. With self-employment, you get to take home everything you have earned after expenses. The amount that you earn is directly proportional to the amount of effort you put in to your work. If you sit in a cubicle in corporate America and put in 8 hours of hard work, you are still going to take home the same hourly pay that you would if you sat in your cubicle and surfed the Internet all day. However, you might not have that job for much longer with such habits.
On the other hand, working in a corporate environment almost guarantees you a paycheck. With self-employment, you may not have the business required to cover your overhead costs and still make a salary. Many small businesses do not turn a profit for several years. During this time, the self-employed are required to work long and hard hours just to keep their dream alive. With a corporate job, you know you will be paid if you work.
The question lies with where your motivation leads you. If you’re the type of person who has a passion and is willing to work hard, you could be served very well by self-employment. However, if you want security and a stable workload, a corporate job might be more of what you’re looking for.
Health benefits. If you work for a large corporation, chances are you are going to be eligible for a group Health Insurance plan for you and your family (if applicable). The amount that you pay for this insurance through your employer is going to be significantly less than the insurance rates you will pay being self-employed.
In some areas, there are non-profit groups that offer group policy insurance to self-employed business owners at a lower rate, which is a bonus if you are able to take advantage of such a program. However, those plans are usually limited in coverage and scope. In addition, the cost of the plan versus an employee group plan is still much higher. So, in the case of health benefits, working for a corporation will save you money and offer you more coverage. This could be very important depending on age, size of family and type of business — as well as other factors.
Vacation. Vacations for the self-employed are highly variable. If you run a service-based company and you are the only employee, chances are you will begin to forget what “vacation” means. If you alone operate a brick-and-mortar business, then you can definitely take a vacation — but you will be losing business (and money) while you are gone if the shop is closed. If you are able to operate a business with employees and trust them to handle the business while you are away, then you can take a vacation while they run the show.
However, a self-employed person on vacation is seldom completely relaxed. You will continually be thinking about your business. Thinking about the employees you left in charge and worrying about their performance. If you are the sole employer of your business, you will spend your vacation worrying about the money you are losing while the doors are closed.
Working for a corporation as an employee allows for a definite number of stress free vacation days per year. You can go on vacation knowing that you are being paid a salary for the days you are gone, there are plenty of other co-workers to handle the load while you are on vacation, and the success or failure of the company is not solely in your hands. With the exception of being the sole operator of a service-based business, both self-employment and corporate employment offer the option of vacation. The differences are the mental and financial impacts of each option.
Freedom from schedule. Generally the corporate workforce works eight hours a day, Monday through Friday. There are (of course) requirements for overtime, evening hours and weekend hours whenever necessary. The company you work for and the supervisor that oversees you largely determine the hours you work. A typical example would be the expectation that you are in your office chair at 9 am, you are allowed one hour for lunch between 12 and 2 pm, and you are expected to remain in your office chair until 5 pm. You have to apologize when you are running late in the morning, you have to ask permission to extend your lunch by half an hour for a personal errand and you have to request permission to leave at 4 pm instead of 5 pm — and then make up that hour the next day.
Setting up your own schedule is one of the benefits of self-employment. If you would rather start later in the morning, you can. If you need to schedule a personal appointment in the middle of the day or in the late afternoon, you can. You are free to arrange your work schedule to fit your personal schedule. If you’re the type of person who likes to work hard and fast in a shorter amount of time then that’s your prerogative. If you prefer to do a little work here and there with large breaks in between — and that fits with your business model — then that’s what you get to do. Being your own boss gives you extreme flexibility with your own work and your own schedule.
There are both benefits and disadvantages for choosing self-employment over corporate work, and vice versa. In the end you need to ask yourself what form of work best fits your attitude and needs. By reviewing each of these aspects, you should have a good understanding of where you fit between the two. One thing rings true whether you choose self-employment or a corporate job. Your success depends upon your own hard work.
(Image courtesy of shimelle under a Creative Commons Attribution 2.0 generic license.)
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