23 Disadvantages of Self-Employment

Countless employees dream of leaving behind a demanding boss, working from home, and earning a limitless income. Self-employment, however, is not the same as a life of leisure. As was already pointed out a few months ago, much of the mythos surrounding self-employment is simply mythical. Businesses that promote work from home “opportunities” thrive on our desires to be our own boss or have more time to ourselves. These companies emphasize the benefits of self-employment, but downplay or simply fail to mention the downside of working for yourself. Before you quit your day job, take into consideration these twenty-three disadvantages of self-employment:

1. Small business owners


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19 Responses to 23 Disadvantages of Self-Employment

  1. fern says:

    Excellent article and i can say from personal experience, all very true. That is why, though so many people dream of working at home, or in their own business, that’s it’s really not for most people, especially if you don’t know what to do or have a product or service people will pay for.

    #1, 2 & 4 are of course the most important points. The taxes make it just not worth it unless you’re committed to doing it full time.

  2. A Marino says:

    Your article was on point. My husband has been self-employed for years now and most people think that we are so lucky. We have to pay full insurance coverage. For us now for 2 people $1,432.70 a month that doesn’t cover any doctors, prescriptions, tests, or anything. We would have to first pay $500. deductible for each illness. Also, like was said, 15.3% Social security, not 7.65). No workman’s comp because we can’t afford it. No unemployment insurance, no holidays paid, no holiday time, no 401K’s, no vacation pay, no sick time, and on and on it goes.

    I think one of the worst parts is that because you are self-employed your friends and family think that you can drop whatever you are doing to talk or do something for them. Their attitude is that you don’t punch a time clock.

    It’s not a bad life, but you really do have to be self-motivated, responsible about your jobs and keeping your taxes paid promptly.

    Alot of financial planners will advise some couples to build a home business because of its many deductions. It is important to have another paycheck coming in regularly and to have one of the couples that can handle much of the business at home at least parttime.

  3. Teri says:

    I was self-employed in college. Likewise, never saw the draw. Hated it!!!

    Likewise, I find all the advantages you listed by being an employee. Got the flexibility and love what I do. I am not sure why you would have to be self-employed to find those pluses.

  4. Amber says:

    boy do I know all of this from experience, both me AND my husband are self-employment. sure isn’t easy.

  5. Scanner says:

    This country is very hard on the self-employed for the reasons you outlined.

    Universal healthcare, while controversial, would go a long way in helping the venture capitalist/entrepreneur.

  6. A Marino says:

    When a self-employed person buys health insurance, he or she pays social security on it as if it was pay. The self-employed persons ends up paying 15.3 social security on his health insurance while the employee working for another employer does not pay these taxes. The self-employed person can deduct the health insurance on his return. Sometimes our health insurance costs have put us over the line with a next tax bracket.

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  8. Betty says:

    Hey, I am a work-at-home mom, I can not totally agree with you. I think it is unavoidable for a mom to choose if she should not to continue to work outside of the home. For me, to be honest, it was fear at the beginning. Fear that I wouldn’t succeed. Fear that I wouldn’t be able to earn money. Fear that my family would suffer because of my decision. I think I am right that I have made the decision. Now my family and my job work well. My point is, most obstacles can be overcome. I overcame my obstacle and so can you.

  9. Shannon Christman says:


    I think you read more into my article than what I intended. I am also a stay-at-home-mom who works (part-time) from home to help the family make ends meet.

    I agree that working from home is the best option (and in some cases the only option) for many parents. I simply wanted to point out that self-employment is not as easy as many people try to say it is. I hope you’ll agree with me on that!

  10. Andy says:

    You pay the full social security bill whether you are self employed or not. Companies lower salaries to make up for the money they have to send to the government on your behalf.

    As for healthcare, if you think it’s expensive now, wait till it’s free.

  11. Paul says:

    Some of the points are valid and self employment isn’t for everyone. However every tax law is written to help corporations and if you are self employed as a corporation you will be way ahead of the game. Health insurance is completely written off, your 401k plan as the employer is written off, the withholding taxes as en employer, car, operating expenses, portion of the home work area, phones, gas, business meals, computers, copiers, printers, clothing, as well as vacations if you incorporate them into your business. Unfortunately thinking small minded is very dangerous. If you own your own business you have control of your life, your income, your retirement and you can pass it off as an inheritance…what do you get working for someone? Forced retirement? Leasing your time but not owning it. Be careful when people only give you part of the truth. When you work for yourself you should be passionate about it and if that is the case you will make much more money then working for someone or corporation that cares about the bottom line instead of you. Peace of mind, enjoying your work and keeping it balanced will not only be physiologically and physically healthier but you will be able to lay your head on the pillow each night with new hopes and desires to make you and your family a better life. I feel like I just read an article on being on welfare saying that we should allow other people to direct and choreograph our time, lives (which is mostly the amount of hours we work) and income. That is very sad. Please think again and make sure you incorporate even if you are an individual and take the steps necessary to get you and your family safely out of poverty.

  12. C Hodges says:

    I am a new entrepreneur (two years in) and I am so glad that I didn’t read an article equivalent to this one when I was starting my business. Sure, the facts are right but the joy and satisfaction of owning and running your own business far outweigh the sacrifices if it is run with a financially smart approach. Not to mention that I am a little taken aback that encouraging others to work for established large companies who monopolize and destroy small mom and pop businesses would take priority to encouraging people to take a chance. Thanks for the information but it is too bad that you feel people should play it safe rather than take risks!

  13. Pingback: 10 Reasons Why a Corporate Job is Better Than Taking the Entreprenurial Plunge | Agile Personal Development

  14. Akwa says:

    The findings are perfect

  15. Benson Bennet says:

    It is sad that you are discouraging start ups.I quit my job of 5 years of working in a slave like conditions in a car repair shop and with NO SAVINGS.I started offering a similar service(Engine service,oil change)behind a gas station of course i had requested the owner of the gas station since i was buying oil and other accessories from him,The business picked after two months and within a year i now have an estabilished business premises in a prestigious business address serving who is who in town.I enjoy the fruits of hard work,it is about FAITH,FOCUS,DETERMINATION,SELF SACRIFICE AND HARD WORK-faith breaks mountains,if you are dreaming it,go for it,do not be faint hearted.Two choices in life BE A WELL FED SLAVE work till you retire and wait for your pension enjoy you retirement Sadly as you wait for your last day or BE A HUNGRY FREE MAN,Struggle for some time,set your business,get well fed slaves for your business let them work for you as you enjoy you success as a well FED FREE MAN.Choose one WELL FED SLAVE OR HUNGRY FREE MAN!

  16. sushmitha ann says:

    good info which helped me a lot in doin my project.. thank you

  17. Everything in life has advantages and disadvantages. These are very valid points. Self employment is not for everyone. According to SBA, 50% percent new businesses fail within 5 years.

    That being said, advantages of self employment are also plenty. We are living proof of it. My wife and I are both engineers. After working 10+ years for others including as a hands-on engineer and later as a supervisor, I resigned in April 2012 to join forces with my wife to run our IT/Web consulting company full-time where I was working part-time since 2003.

    We work from home and plan to travel overseas since our business does not require us being psychically in New York or anywhere in particular as long as there is an Internet connection. Working hard & smart have helped us well: We do not have any debt! We paid off our home within 5 years of purchase, our vacation apartment within 3 years of purchase, our two cars within 2 years of purchase.

  18. Tony says:

    This author is right about everything. Unless you have a some really great sure-fire idea, or you know that the government is/will be willing to subsidize your business/industry (really, anymore, government subsidized industries are typically your best bet for a business), your ready to work non-stop & probably struggle big-time for a few years (& with the VERY strong possibility of losing everything/having NOTHING to show for all of your efforts & investments), can be reasonably sure that the world/environment around you won’t just suddenly viciously turn on you/your business (making your original plan/idea/concept impotent & unprofitable… which happens VERY often living in this increasingly fast-changing –in a way that’s usually unfriendly to small-business environment– that we live in), and all the other biz friendly ingredients for starting a business are present… I say that you are CRAZY to start your own business. The numbers don’t lie: over 90% (not 50%!) of all businesses fail within the 1st 5 years… all educated people know this. Furthermore, after your business fails, good like finding employment! Employers/HR departments totally shun the “self-employed”, and you are basically treated like somebody whom was unemployed (not self-employed) that entire time. And guess what, with each passing year, most employers & HR departments are becoming less willing to hire the “self-employed” (esp. since they can’t really genuinely verify your employment, job duties, work history, etc during your time at “your” own company). That point should have really been made & emphasized in this article: if you go the self-employed route, be prepared to suffer an even greater struggle & obstacle once your business fails and you have to go work for somebody else (not to mention all of the time you lost truly building/adding to your professional resume during those “independent” years… which are merely looked upon as just another “gap in employment/work history” by hiring manager, employers, HR departments everywhere!!!)

  19. Frederick Johnson says:

    Very well written and honest article. The bashers against this article are just a bunch of classist liars who don’t want people to know the full truth about self-employment. I’ve been self-employed too (15 years after working 30 years as a regular employee from job to job) but even when the economy was grand and I was good at it, it wasn’t always easy. I’m retired but I know it ain’t getting easy out there then or now.

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