What’s the difference between being employed and being self employed? In a lot of situations, you’re doing the same work and there are often lots of similarities, even getting down to terminology to split the two. However, there are some pretty fundamental differences – as anyone who’s been employed and self employed will confirm.
1. Go home and forget about it
In the vast majority of cases, if you are employed, you go home at night and forget about work, possibly not giving it another thought until you get in the next morning. If you are self employed, you never forget about work. You think about opportunities to get more customers, to improve your business, maybe your next marketing campaign. You may worry about cash flow, getting orders, finding suppliers. But either way, you will think about it more because it’s yours.
2. Get another job
If you are employed and you wish to change jobs, because you want a new challenge, or you don’t like the people you work with (or for), you can easily change employers, get a new job. If you own the business, this may be a lot harder, especially if you have premises or employees. Rather than a job, it can be viewed as an investment, one which you have sunk a lot of time, effort and money into, and one which you can’t easily walk away from.
3. What happens if it all goes belly up?
If you are employed and your employer goes bust, you are unfortunately unemployed. You are free to get a job. If you are self employed, the consequences may be much deeper. You may lose personal money which you’ve invested in your business
4. What’s a holiday?
Employees are entitled to holidays under employment law. They may have to take them at pre determined times, but it is still an entitlement. If you have your own business, there can be a rather distorted view that you can have as many holidays as you want. If you don’t want to work next week, fine, have a duvet week. However, the truth is that most small business owners don’t get paid if they don’t work. Many small businesses that rely on the time or the skills of the owner can actually be more tying. Consider how tying a shop can be. Therefore, business owners tend to work longer hours and have fewer holidays.
5. Employment protection
In addition to holiday pay, employees have protection and support from legislation, including National Minimum Wage, Working Time Directive and Discrimination to name a few. Business owners don’t have the same kind of protection. Take the National Minimum Wage. It is not uncommon for the profit which a business owner makes to be at a rate lower than the National Minimum Wage.
6. The buck stops here
As an employee, you may encounter problems where the customer wants to take the issue higher to get it resolved. However, ultimately the highest it can go is to the business owner. It really is a case of the buck stopping here.
7. Who’s the boss?
An interesting aspect of being self employed is recognising who your boss is. As an employee, it is almost always clear who you report to, who your is boss. When you are self employed, you work for yourself, so your boss is you, right? No, your boss is your customer. They are the ones who give you work, who pay you. If you have a service business, and have, say, 20 clients, this effectively means you have 20 jobs and 20 bosses.
8. The sky’s the limit
If you are an employee, you generally build your income up over the course of your career. However, if you are self employed, and depending upon your business model, you may benefit from the risk and reward principle which follows self employment. You have a very tangible reason to try your hardest to make the business as profitable as possible. Your income may go through the roof, and you may become very wealthy. Well, that’s obviously the idea, isn’t it!