The grass is always, always greener on the other side of the fence. Want to know why? Because all you see from your side of the fence is the exterior. You see their green grass and their landscaped yard, their simple perfection and their desirable and envious differences in comparison the hard work and effort you see when you look at your own yard. What you don’t see is the main differences, the hard work and sacrifice that go into creating that yard. You don’t see all that they do to make their yard look good, and it seem easier, more enjoyable and much nicer than yours. It’s not always the case however (you know, what your own yard for green grass and blah blah) and this is exceptionally true of the self-employed versus the “normal’ job. Having been on both sides of the fence, a ‘normal’ employee at a business for many years before deciding to become self-employed, I can tell you that I know firsthand how much more difficult it is to be self-employed than you might assume if you’ve never been here. With that said, here are some of the biggest differences between the two; and they’re all financial.
The grass is not always greener. Some of the financial aspects of being self-employed are very shocking to those who aren’t self-employed, but it does give you a sense of respect for those who are going to become self-employed or those who already are.
You Pay Quarterly Taxes
Okay, so most people pay their taxes annually, but being self-employed means you pay every quarter. You will be fined a relatively inexpensive (in the grand scheme of things) fee if you do not do this. Quarterly taxes can be a good thing, however, as they make it a lot more affordable for you to file your own income tax return at the beginning of the year. Imagine paying $5000 a quarter to the government four times a year or paying $20,000 at a time. And this is a relatively small amount of money, just so you know.
You Handle Your Own Expenses
If you want to travel for work, you suddenly realize how expensive it is. That per diem your boss gave you at your old job per day for a work trip suddenly seems like a lot of money even though it did not back then. Now it’s your money. The good news here is that once you become self-employed, all of these expenses become tax deductible. This means you can lower your own business tax liability by keeping track of these expenses so that you can write them off and make sure they are going to help you save money rather than spend more than necessary.
If you don’t Work, You Don’t Earn
That’s the big deal about being your own boss. If you don’t work, you don’t get paid. No one is paying you to sit at a desk and work when you feel like it and play online when you don’t. If you decide to waste all of Friday on the internet shopping or booking a vacation, you’re not getting paid for that. In fact, you’re now going to have to work all weekend to play catch up so that you can get ahead or at least back on track. Being your own boss means you have to be on top of your game at all times or you do not get paid. There are no days when you can just “not go” to the office or skip out on work. Working from home or being your own boss does not mean late mornings, early afternoons, long vacations and doing whatever you want; it means running a business so that you get paid.
Being your own boss does not always mean you will be wealthy. It’s one of the biggest misconceptions that people have. Just because you are your own boss does not mean you are wealthy. Some, sure. The rest of the world; no. Many of the world’s self-employed people are just trying to get by the same way in which the rest of the employed people are. They have to earn their money and their paycheck, pay their expenses and often save money when other people don’t have to because there is no guarantee when their next paycheck might make an appearance in their bank account. Keep that in mind if you ever decide that being self-employed is simpler than being employed by someone else.
You Have to Pay Your Own Taxes
That’s right my friends. And there is nothing more depressing than having to take your money and give half of it (yes, half of it) away. That means if you make $5000 per month, you get $2500 per month to actually use to live on. It’s relatively depressing, but you have to pay for your taxes at the end of the year and this money goes toward those. It’s much easier to get a check from an employer with that money already removed than it is to discipline yourself to set it aside every time you’re paid. It’s hard to realize just how much of your hard-earned money goes to the government, but it’s a tough reality we have to live in if we want to be self-employed.
No One Matches Your Retirement
Now, we know that not all employers offer retirement plans and not all of them have any inclination to match your contributions if they do. However, many employers do offer this kind of employer-matching retirement contribution. And that means that you are likely going to see yourself in a situation in which you have to save for your own retirement without any help. It makes you kind of want to take the people who don’t contribute as much as they can so that they can max out their funds with all that free money their employers are offering and shake them until they understand just how good they really have it (hey, I said almost). Oh, did we mention you have to start your own retirement account and contribute to it regularly?
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