Things People Don’t Always Tell You About Being Self Employed

challenges of being your own boss

I’ve been my own boss for all but three of the 16 years of my professional career. I don’t regret it for one minute, but there are lots of thing people don’t tell you being self employed. Yes, you get to call the shots, set your own hours, and the sky is the limit as to how much income you’re able to earn. There are also some more challenging aspects to consider before pulling the plug on your day job.

Health Care is Probably Worse Than You Thought

I really hoped the Affordable Care Act, otherwise known as Obamacare, would fix the last hurdle that keeps many people working in jobs they despise. Who doesn’t know someone who stays in a job solely for the benefits?

I know that for many lower income workers, Obamacare has been a blessing, but for just as many it’s been a curse. I had a long conversation with my insurance agent last week to try and feel out the overall climate now that the ACA is in full swing.

He confirmed what I suspected, at least in Colorado. Yes, Obamacare has helped tons of people enroll in insurance, most of them being people who were denied or could not afford coverage in the past. However, there is now a growing percentage of the upper middle class who are replacing low income people in the uninsured category. I don’t have a solid statistic to back this up, but I’ve seen it with my own eyes. It’s cheaper to take the penalty and go without than pay $600-$800 or more per month for high deductible insurance.

Worse, he said that this year will be the end of most Anthem plans in Colorado that were in effect before the exchange was up and running.This worries me tremendously because I am one of the people who has this type plan. It might be OK because our plan was in place before 2010. I won’t know for sure until we get a letter in the mail allowing me to keep my very high deductible but relatively cheap plan, or I’ll have to seek out coverage at 3-4x my current rate. I can certainly understand why people keep jobs that have good health insurance!

You Could be Working More Hours

One huge benefit of being self employed is the ability to set your own hours. Being able to choose what projects to pursue and work them around your schedule is the life many people dream about. The problem, especially for type A personalities, is that we end up taking on more than we should.

One reason is the feast or famine mentality. Just because there is lots of work now doesn’t mean there will always be enough to keep the bills paid and the Roth IRA fully funded. Self employed people often try to do every available job, even if that means working more than 40 hours a week or agreeing to uninspiring projects that don’t interest us in the least because of the promise of a good paycheck.

It’s easy for me to say delegate, set a schedule just like with a company job, and don’t bite off more than you can chew, but after more than a decade, I still struggle with working more hours than I intended.

The Buck Stops Here

Once self employed, there are no supervisors that require reports or formal steps that have to be followed. That’s wonderful from the standpoint of cutting through red tape and getting to work, but not always fun when something goes wrong or you run into a situation you don’t fully understand.

If I worked for a company and my computer got a virus, I’d call IT to come fix it. At worst, I’d move to a new work station until a replacement could be found. When self employed, it’s up to you to figure out what went wrong with the computer or even buy a new one if it’s beyond repair. Being without a computer might mean missing deadlines or opportunities that ultimately result in not getting paid.

The same can be said for new technologies or regulations that affect your occupation. In health care, we are about to undergo a huge change in coding and billing as of October 1st. I’m sure if I worked for someone, I would have already had formal training. As it stands, I’ll study and watch some webinars and hope I get it right because no one else is going to do it for me.

This post isn’t meant to be negative or to discourage anyone from becoming self employed. I’ve done it for years and overall, being a business owner has been extremely rewarding. Sometimes it’s fun to play devil’s advocate and admit I do sometimes envy those who find enjoyable jobs that include good benefits, have adequate training, and allow the work to be left at the office at quitting time.

Do you dream of self employment or would you rather count on a steady paycheck with benefits? For those already self employed, what is your biggest challenge?



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  1. Healthcare is a mess. I negotiate for my employer and we are seeing over 20% increases every year. Most of our employees would get better coverage if we gave them an allowance and sent them out to the exchange to buy, but that is not allowed.

  2. Self-employment can surely be romanticized, and it’s filled with hustle and a certain degree of uncertainty, but if your goal is truly to accumulate a huge amount of pre-tax savings, nothing beats your options as a self-employed person. I’m sheltering almost $50,000 from taxes this year in my Solo 401(k), something that would be nearly impossible without unheard-of employer matching/profit share. I haven’t been lucky enough to find that level of employer contribution in my past career as a W2 employee! It’s 1099/self-employed from here on out for me!

  3. I’m definitely working many more hours than I used to when I worked for someone else. Unfortunately, as it’s early days, I work more but earn much less! I’ve been tempted to go back to a paid position (for the money) but I just can’t see myself working that way ever again. It seems like too big a sacrifice. Still… it would be nice to have some decent money flowing through the budget again.

    Luckily, I live in a country with universal healthcare. It seems to me that employer funded healthcare is the big stick used to keep the average guy slogging away at their desk… I feel for you guys in the US.

    1. I think lots more people would go the alternative job path if we had universal health care in the US. It would never pass because we tend to scream bloody murder at anything that requires a tax increase, but I think that would be one solution to the problems we’re facing now.

  4. As Michelle stated above, health care is a big reason I am perfectly happy side hustling (at least while I have kids and/or don’t have a business that can potentially sell for millions). I love the benefits I get with work and health care is much, much cheaper through an employer (especially a fortune 25 company). I wrote a couple posts about why people shouldn’t quit their full-time job without thinking twice, and it reflects my own thinking and rationale for not pursuing that route at this time.

    1. I think lots of people in the PF world tent to lean on the side of self employment with the notion that you can make your own benefits if you make enough money, but having a job that provides health insurance and other perks is not to be taken lightly.

  5. I would say healthcare is the worst part. We pay $335 a month for health insurance that has a $13,000 deductible and it’s only good in the state of Colorado (out of state our deductible turns into $39,000!).

    1. My agent was telling me about a lady who has a gold plan in Colorado but had an injury in Idaho that required an ER visit, life flight and surgery. Her insurance denied it all but the initial ER visit! I guess don’t get hurt away from home.

  6. I’ve worked both sides of the fence and they both have perks and downsides. I do think self-employment can be romanticized. There are many, many benefits to being your own boss but when I talk to people who dream of self-employment – they want less stress and fewer hours. And I chuckle. Because unless you are in a position to basically outsource all of the work, there is just as much stress (sometimes more because it is all on you) and it’s been my experience you work more initially. The upside is you generally don’t mind working extra hours because you’re building something for yourself.

  7. Yeah both situations come with sacrifices. I do miss my 401k and health care coverage, as well as some other perks of working full time all the time. But I recently worked in an office for four days straight 9-6 with a one hour lunch on the dot, and I was not crazy about that kind of life anymore. I do love working from home and the flexibility that comes with it, even if I work more, because at least most of the time it’s on stuff I love working on.

    1. It’s funny how you wonder about such things then get the experience like you had which confirms you’re on the right path.

  8. I wish someone would do a study on the number of high income people without traditional healthcare now. At FinCon, I probably talked to 15-20? people who were on health care sharing ministries. I also talked to a few high income people who bought noncompliant plans and just paid the penalty. One person told me it was still $2,500 cheaper to buy a noncompliant plan and pay the penalty!

    As you know, we have a health care sharing ministry. It was either that or pay around $800 per month for a plan with a $12,000 or $13,000 deductible. To me, that is extortion – not insurance. I refuse to participate, whether I can afford it or not.

    1. I think that number would be really high. I will consider the health share if they cancel my policy. $500 a month for a $10K deductible for two people who are healthy is insane!

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