Work for Me or Work for Thee?
Should I Work for Someone Else or for Myself?
Like most people, my first real job was working for someone else, as were the jobs that followed, until just very recently. Along the way, I would hear of people who owned their own businesses, or said that they were 'self-employed'. In my younger days, I assumed that these people were wealthy, and had carefree lives. But I was wrong on this as I grew older, and read more, and listened more. I heard about things like business and quarterly taxes, regulations, payroll rules and taxes, and the cost of facilities and overhead. As an employee, withholding took care of my taxes, and I knew what to do on the job more often and usually had guidlines to follow when I didn't.
So while I dreamed of working for myself and not having to report to an employer, keep certain hours, have little control over my pay and work, and what I could and couldn't wear to work, I was scared off by all the risk and problems that the self employed faced.
But as I continued to work for someone else, I saw that I needed to supplement my income, and two ways that came to me was, to take an independent contractor type of position, or start my own business.
So, I went to work doing more detailed research. I saw how many businesses are of a type that require much less overhead, and sometimes no brick and mortar place of business. Some can be run with just a cell phone and a pair of feet. And a little record keeping. And, after going to a tax professional, I learned that, while not easy, the taxes involved can be handled in terms of record keeping. I decided it was time to jump in.
The first thing I thought of to supplement my income, was to deliver free publications. After contacting a few, I found one that accepted me. I was given a route, and worked it one day a week as an independent contractor.
Generally, an independent contractor is self employed, doing a job for a company or other contractor. The contractor does not necessarily have to look for clients unless he or she is in sales. The independent contractor is paid by the job, not the hour and has control over how the work is done to a much greater extent than an employee in most cases and generally they are able to keep the job as long as they are willing to and that they do it to the company's or contractor's satisfaction. I get paid the same for my route, whether I complete it in 3 hours or 10, so long as the magazines are delivered within 24 hours of my picking them up. I can do my stops in any order I choose, take breaks when I want to. I also do my own taxes for this job, as no withholding is taken from my paycheck.
Recently, I also started a flyer distribution business. I recently got my first client, which I tell about in my hub, "First Client, Finally!". This is true self -employment, as I am responsible for the whole thing from beginning to end. I search for clients, deliver flyers per their request, and get paid for it. I will also be doing my own taxes for this venture. As I am working alone, I don't have to worry about employees and regulations and taxes concerning them, at least for now.
So, the question: Is it better to be an employee, or to be self employed either as an independent contractor or be in business for oneself? Let's take a look!
Employee Advantages:The employee has the advantage that the company or employer takes care of things like tax withholding, regulations, training, and must provide the work and workplace, at least in general. The employer also provides supplies, and pays for them. They often provide benefits, though more and more, employees are paying an increasing share for them. Employees below management level also get paid overtime and are guaranteed payment for work done, even if the goal is not met or the project is not successful, so long as the employee showed up and did their job as required. The employee is also protected from most liability issues, as they are assumed by the company, unless the employee is breaking regulations or is directly involved in wrongdoing in most cases.
Employee Disadvantages: The employee also has disadvantages, most of which can be wrapped up in the fact of their having little control. The employer tells the employee when they are to be at work, what work they will be doing, how it is supposed to be done, what the employee can wear to work, when and if the employee can take time off, when they can take breaks and lunch, and for how long.
How onerous and oppressive this can be largely depends on one's boss and company policy. Some employers have lots of onerous rules and few benefits, so that employees working for them feel like children at best. Others, like the company I work for as an employee, are very generous, either with pay, time off, or relaxed rules, or a combination of the three, and are very pleasant to work for. One can feel like they have the advantages of an independent contractor, with few of the disadvantages. Immediate bosses, too , can have an effect on this. I've worked for some bosses in the distant past that expected me to nearly read their minds! I was trying to make a filing system for one, but it turned out to be not what the boss wanted, but didn't explain well enough to me. And I was far from the only one who had problems with this boss, nor was I the one who had the most conflict with this boss.
Then, many of us who are, or were employees know that, when we're done with our job for the day and it's early, we cannot go home, the way a self employed person can. We have to "look busy", or ask for more work.
Then there's scheduling. If Billy has a little league game on Friday, his mom, Betty, the employee, has to ask if she can leave early that day if she wants to see her son play. If the boss says no, she's stuck.
Then there's vacations. Many an employee has been pressured to take less or none at all, and employees often have to fight each other , so to speak, to get the time off that they want. And sometimes, employees are actually called back to work from their not yet complete vacations when something comes up. This also applies to overtime, when employees are told on Friday just before quitting time, that they are expected to come in that weekend, regardless of whatever plans they've made.
Then, employees can be fired, and not only for cause, but for any reasons except discriminatory ones. So yes, if they show up and do their work, they'll get paid, but they can be let go at any time, no matter how the company is doing!
Again, this all depends on the employer and bosses. Many employees have these problems with their employers, and many don't.
So, lack of control is probably the main disadvantage of being an employee.
Independent Contractor Advantages:An independent contractor's main advantage is that they can do their job as they want to do it. Of course, independent contractors do all kinds of things, and some who use their services may try to exert more control over them at times, but generally, an independent contractor does the job his or her way, and when they're done, they can go home or wherever else they need to go. If they do a job regularly, such as delivering free publications, they likely can hang onto the job so long as they do it to the client's satisfaction. And, the client provides the work, once the contractor has been accepted. In my independent contracor job, which is to deliver free magazines, the magazines are provided, I do not pay for them. I pick them up and deliver them. And that's it. Though I can increase the number of stops, I don't necessarily have to, unless I start losing some for various reasons. In other words, I don't have to go 'searching' for work, it's provided. And, I never have to "look busy" once I'm done. Being paid by the job, I get paid the same whether I complete the route in 2 hours or 5 hours.
Independent Contractor Disadvantages: There are several disadvantages for independent contractors. One is taking time off. This is really a double edged sword, as, for me, I can take off without having to worry about 'company policy'. But, If I take off too often, I can be dropped. And, I do have to find someone who can do my route during that time. Also, I do not get paid when I don't work, as there is no 'paid vacation'.
An independent contractor is just that. Independent, which means they are not an employee, and they do not get benefits.
Luckily for me, there is another person who does my route when I take time off, and the person who deals with the route drivers knows this and contacts this person when I take time off. Again, as with employers, it depends on who the independent contractor is working with in this regard.
Then, the independent contractor must pay quarterly, or 'estimated' taxes. Now, they can avoid this if they also have a job, as an employee, where taxes are withheld, like I do. Then, they can either rely on their withholding if it's high enough, or they can still make the quarterly payments to boost their tax refund.
And, if the job is temporary, or has to end due to economic reasons or changes that the 'client' has to make, the position can be lost and the Independent contractor will have to find other work.
Self-Employed Advantages:Here, by 'self-employed', I'm talking about one who does everything from one end to the other in terms of employement, such as having their own business, no matter how small. I've just started my own flyer distribution business. It's just myself and I've recently had my first paying customer. The biggest advantage is having much more control of everything. This includes when I work, how I work, what I charge, who I will serve, and so on. Of course, much of this depends on how successful I am. If I have lots of customers, I can name my price and afford to pick and choose in many areas. But even starting out, I can choose when to work, and how the job will be done. Also, if I need to take time off, I don't have to ask anyone, nor do I have to account for my time. Remember Betty the employee above? If she were self employed, she could rearrange her schedule so that she could attend her son's game. And no one could say diddly about it.
Also, even if I'm not successful at first, or the economy turns bad, I cannot be fired, so to speak, unless I decide to fire myself. If I want, I can instead make changes, and ride out the bad times however way, and go right back to business. In other words, I can give myself a perpetual 'second chance' for having learned from my mistakes, that an employer or someone who hires me as an independent contractor might not give me,
Self-Employed Disadvantages:The main disadvantage of being self-employed is that the self employed person must do everything. And if they hire employees, they've got to be up on the regulations. In my flyer business, I had to go out and find clients. I made up my own flyer to advertise, and I passed them out myself. And I put ads out on Craigslist. I also had to pay to have my flyers printed. Here, as to how much money and work goes into one's self-employment, depends on what kind of work one wants to do. My startup expenses were quite small. If I had started a motorcycle repair business, they'd be quite a bit larger, as I'd need a shop building, an office, supplies, tools, and of course, know how.
And like the independent contractor above, the self-employed person does not get benefits, except those they can procure themselves, and, if no customers, then there's no work and no income. And they also have to do their own taxes.
The answer?:Actually, the answer as to whether or not it's better to be an employee, independent contractor, or totally self-employed, is up to you and your situation. I've heard self-employed people say that 'once they were self employed, they would never work for someone else again as an employee'. I can certainly understand this, as I do feel I have the most freedom with my flyer distribution business and, if it really takes off for the longer term, I can easily see myself leaving my other two jobs, but again, it depends on the situation. Some employees are very happy as employees, because their employer is a very agreeable place for which to work. And some independent contractors and self-employed people never get out of having to struggle.
So, the choice is really up to you. If you're not sure, do your research, try out each one on a small scale, and you'll more likely reach the best answer for you.
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