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As an employee, most you have worry about is paying your state and federal income tax and claiming whatever credits you're entitled to. When you're an employer you have to think about all of that as well as self-employment tax and a myriad of other business-related tax issues. An accountant becomes an absolute necessity. Also, as a self- employed person, no-one's withholding tax from your checks. Make sure you put enough aside to pay tax bill!
Security is relative. For some, security comes only from working for someone else. For others, this is merely an illusory form of "security" since none of us really knows what's around corner. We could be next to be laid off. For some, real security can only come from being in control of their own destiny and that means working for oneself.
As a self-employed person you need a broad skill set. Not only must you be able to perform main skills inherent in business you have chosen for yourself, you must also be able to handle myriad other jobs around office that your secretary would otherwise do for you if you were in paid workforce. This forces you to be something of a generalist which in turn dissipates your focus from central core of your business. When you work for someone else, you are generally more able to specialize in a particular area and, over time, develop something of an expert status, increasing your marketability in workforce.
In corporate work-world, you have a certain professional image to uphold. When you work for yourself, at least on days when you don't have to meet with clients, you can wear what you want, even your rattiest sweats, if that's what you feel most comfortable in.
Some people think that leaving paid workforce to work for themselves from home means they will work less hard and fewer hours. The reality is usually opposite. In early days of a home business you will probably find you need to work harder and longer, only to make less money than you did in your paid job. This will get easier over time but in early days, expect to have your nose to grindstone.
Who's going to provide for your retirement when you work for yourself? You've got it, you! No more employer-funded pension plans for you.
When you work for someone else you get paid like clockwork, even if your employer hasn't yet been paid what he or she is owed from clients. When you work for yourself, whether your client pays often determines whether YOU get paid. So you need to be diligent in following up slow payers and take appropriate action in response to non-payers.
When you work for yourself you can kiss goodbye endless office politics that used to drive you crazy. On other hand, you're also out of loop.
ISOLATION AND LONELINESS
Along with being out of loop comes isolation monster. Although early days of your home business may be an absolute luxury compared to rigors of your corporate work- life, over time you may find you start missing office politics and lunches with colleagues.
OUT OF THE LOOP
Once you leave corporate life for home-business entrepreneurship you may find it hard to get back in, if that's what you decide to do. Many employers will label you as "not corporate enough" if you've been out of workforce for any length of time. They may also, however unfairly, figure that you couldn't make it in corporate world which is why you left to start your own home business and now that's failed too.
These are just a few of issues you need to think about when deciding whether working for yourself or working for someone else is right for you. It's crucial to be brutally honest with yourself about your particular strengths and weaknesses, as well as your emotional and mental make-up. A good way to dip your toe in is to consider moonlighting - starting a home business on side while you continue to work your full-time job.
Sure, this will mean some both-ends candle burning but better that than making break and then finding out you made a mistake. Another alternative that may work well for some is to telecommute. Work for someone else out of comfort of your own home. These types of positions are pretty rare and usually can only be negotiated by long-term employees in positions that lend themselves to individual, as opposed to team, projects. But don't let that discourage you. If you have particular expertise in a field that lends itself well to telecommuting and your boss won't go for it, start looking around for companies that will hire you on this basis.
This article touches on some of major areas that you need to think about when deciding whether self- employed or employed option is best for you. For a more detailed treatment of these and other issues, check out following articles at http://www.ahbbo.com/articles.html : => And Never Twain Should Meet => Checklist for New Home-Based Business => Entrepreneurship: Do You Have What It Takes? => Flipping Switch: How to Turn Off Your Business and and Turn On Your Life => Focus Your Light => Getting Paid ... Minimizing Bad Debts in Your Home Business => How 9 to 5 Grind Could Be Costing You More Than You Earn => Look Before You Leap ... Is a Home-Based Business REALLY For You? => Moonlighting's Greatest Challenge ... How to Beat Time Crunch => One Foot in Each Camp => Overcoming Isolation in Your Home Business => Overcoming Procrastination in Your Home Business => Putting Theory Into Practice ... A Personal Perspective => So You Want to Be a Freelancer => The 9 to 5 Home-Business Tug O'War => The Telecommuting Alternative.
Elena Fawkner is editor of A Home-Based Business Online ... practical home business ideas, resources and strategies for the work-from-home entrepreneur. http://www.ahbbo.com