There are a lot of benefits to self-employment. Some are obvious and some are perhaps less obvious. However, while self-employment isn’t for everyone, more and more professionals are hanging out their shingles and going at it alone.
Here is an overview of three key benefits to starting your own business.
1. Your Money Works Harder and Smarter
As an employee you get a paycheck, often with taxes and other items deducted, but the company that employs you gets to do more with their paycheck than you do. A business has the right to deduct business expenses including: rent, utilities, advertising, technology, etc. Generally, employees don’t.
Businesses pay their taxes, if any, on the net of their earnings after these expenses are deducted. This means that you could work for yourself seeing the exact same gross paycheck, but pay less in taxes and apply many of the things you use every day, such as your cell phone, as business expenses. Your net earnings, when using the combination of legitimate business deductions and lower taxes, will be higher even when you earn the same gross paycheck.
There are also other financial benefits to self-employment. You don’t have to wait for the “boss” to give you a raise. By continuing to add new customers to your existing base, you can increase your paycheck as the increased revenue allows.
2. Your Time Becomes Your Own
As a small business owner, you get to decide when you want to work [for the most part]. If you are most productive at night or early in the morning, you can adjust your workflow so that it accommodates your personal work patterns.
For example, if you provide Internet marketing services, and you are a night owl, you can give your customers higher quality service by aligning the work that needs to get done with the time when you are most ready to work.
In most cases, being self-employed will also mean that your commute changes. It might be as simple as creating a home office, here your business operates (also a business tax deduction). You’ll no longer be required to conform to a cubicle environment and traditional workplace schedule that puts you in bumper-to-bumper traffic.
3. You are Empowered to Live Life More Freely
If your child gets sick and you are employed by someone, you need to ask permission and/or use paid or unpaid time off to care for them. Entrepreneurs don’t have this problem because they can build their business around their life and lifestyle.
Many small business owners are able to spend more time with their family or doing projects or hobbies that they enjoy while still running a successful business. Not surprisingly, their company will also benefit from the work-life balance they are able to create between their careers and personal lives.
Equally important, self-employed people have the ability to “flex” their business when their life needs a lull or boost. For example, if an entrepreneur is planning for an extended vacation, they can boost their revenues in anticipation of the added expense and adjust their workflow so that customer deliverables aren’t negatively affected. Likewise, if you own a small business and don’t want to work during a particular holiday period, you just don’t work. You accomplish this by increasing your output just prior to the time you don’t want to work.
Although working for yourself is certainly not for everyone, there are many benefits to starting a small business. As a bonus, smart entrepreneurs will often start a business while they are still collecting a paycheck from their employer. They add customers and complete customer work at night and on the weekends until their business is large enough to replace their paycheck.
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Photo: Club Monaco
Michael Templeman is the founder and CEO of Entrepremingle, a social network for entrepreneurs. He has started several eCommerce companies and brought them to profitability. In his latest venture, he’s trying to get everyone to join the entrepreneurial revolution.
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