Just like everything in life, there are advantages and disadvantages to self-employment and it’s worth considering these before going freelance.
In today’s article, we’ll take a look at the pros and cons of being your own boss.
You’re the decision-maker
The freedom to make decisions and be your own boss is one of the key reasons why many employees decide to become self-employed. As a freelancer, no one dictates when you work or how long your breaks should be. You can organise your working days flexibly and according to your personal preferences. However, this freedom of choice can also be your downfall. There may be days when you find yourself slacking and you just don’t feel like working. You may tell yourself that tomorrow you’ll be back on the job, but it can sometimes be a challenge to stay motivated.
As a freelancer, you have to persevere. Even if you don’t feel motivated to work on a project, it’s important to keep in mind that completed jobs and satisfied customers are what bring in the money. There is no longer a regular salary from your employer waiting for you at the end of the month. Your income will depend on you and your keenness to work. So there are pros and cons to this flexibility and independence.
Be prepared for stress and long working hours
Tedious days at work are a thing of the past. With your own company, you can work flexibly anywhere, any time. But it’s a mistake to assume that self-employment is an easy option. Your first few years as a freelancer will demand a great deal of time and energy. You have to make new contacts, attract customers and successfully complete projects. When you start out, you’ll probably have to work long hours and at weekends. Freelance work can be exhausting and stressful. Effective time management and good planning will help you to keep an overview and avoid getting bogged down with work.
Transform your hobby into a career
What could be better than turning your passion into a career? Starting your own business can be a great way to earn a living doing something you love. If you enjoy your work and feel positive about it, the long working hours will seem less daunting. There’s nothing worse than being stuck in a job where the minutes seem to drag on for hours. Why do a job that doesn’t fulfil you if you could make money doing something you really love?
Consider the costs
Self-employment involves additional costs. If you are an employee, your employer pays a percentage of your statutory pension and health insurance contributions. However, when you work as a freelancer, you will need to inform your health insurance provider and you will be charged the full insurance fee: you are now considered both employer and employee. In addition, you will need to plan your pension privately and also allow for lost income if you’re ill. It’s worth asking your health insurance provider about additional insurance options for freelancers.
Your annual tax return is another important issue. As taxes are not deducted directly from your fee, you will have to file a tax return each year. Based on your annual turnover, the tax office will calculate the amount of tax you have to to pay in arrears. So you can’t just invest all of your profits: you need to set aside enough money to pay your taxes.
You benefit from your profits
Do you put a huge amount of effort into your work and get nothing more than a little praise from your boss in return? A juicy financial reward would be much better. As a freelancer, this can be a reality. Your work and efforts pay off in the form of profits that flow directly into your account rather than going to the company you are employed by.
As you decide which jobs to take on, which customers to work for and what to charge as an hourly or daily rate, there is nothing to stop you from working as much as you like. Of course, you shouldn’t expect to make legendary profits at the start of your freelance career, but once you’ve established yourself and built up a reputation, your business could really take off. There is no limit to what you can earn as a freelancer.
There are many advantages and disadvantages to self-employment. On the one hand, you can make your own decisions and be your own boss, you can organise your time flexibly and you’ll be rewarded for your hard work. On the other hand, you face the prospect of additional costs, longer working hours and a stressful start-up phase. So you should carefully consider the pros and cons before setting up your own business.
Working as a freelancer: how to get new contracts
As a freelancer, you have to find your own customers and how much work you have will depend the number of commissions you receive. It can be difficult to secure jobs, especially when you first start out. Do you feel unsure about how to get new contracts? Then don’t miss our next article in the ‘Working as a freelancer’ series on Friday, 23 August. You’ll find helpful tips on how to attract new clients.