Are You an Entrepreneur at Heart?
Being a small business owner is the American dream. But it doesn’t look like what you’d expect. You don’t have to have a storefront and half-dozen employees to be considered a success. According to Upwork, technology has enabled more self-driven workers to turn to freelancing as a proprietary means of income. This allows you to work with minimal overhead on your own schedule and create as many income streams as you can handle.
Born to be your own boss
While anyone can open up their own business, it takes a true entrepreneur at heart to stay put when times get tough. Before you decide to quit your day job and dive head first into the uncertain world of self-employment, there are a few questions you should ask yourself:
- Am I willing to take risks?
- Can I change direction at the drop of a dime?
- Am I just a little bit stubborn?
- Can I give 100 percent to my business?
- Am I driven by competition?
According to Plexus, these and other characteristics are important for all entrepreneurs.
The good, the bad, and the ugly
If you think you have what it takes, you need to understand that there are pros and cons associated with being an entrepreneur/freelance worker. For starters, work probably won’t be steady in the first weeks and months. It takes time to build your reputation and grow your client base. But, while being a freelance worker isn’t always predictable, it does offer a level of flexibility that you can’t get when you’re assigned to a payroll roster. The gig economy, as this new employment freedom has been dubbed, has its pros and cons and has been both embraced and rejected by workers and employers alike.
Money talks and Uncle Sam is listening
There’s a good chance that your decision to work for yourself comes down to one thing: money. On one hand, as an entrepreneur, you are not limited by a dollar figure your employer assigns you. You are in full control of your income. You set your own rates and decide how much – or how little – you want to work. But running your own business takes money. Between startup costs, business insurance, and taxes, even businesses that don’t require maintaining an inventory need funds to stay in operation. NBC News explains that you can cut hidden expenses in both your personal and professional life to save cash. This might mean switching your cell phone plan or buying materials in bulk. Another unexpected expense most new entrepreneurs overlook is taxes.
While you already know that you have to file your taxes at the end of the year, freelance workers are also required to submit quarterly tax payments. There’s also the matter of self-employment taxes, which slash your income by about 15 percent. When you’re an employee, half of this is automatically paid by your employer; the other half is deducted from your paycheck. Fortunately, you can deduct much of your self-employment taxes along with office supplies and even the use of your home for business purposes on your taxes. Forbes offers more information for freelancers and advice on why you should use a tax professional when you switch from employee to entrepreneur.
For all its advantages, becoming a freelancer is a big decision and one that must be carefully weighed against your family’s needs. If you need a predictable income, you’re likely better off as an employee. But if you are willing to take risks and don’t mind shouldering the responsibility of either failure or success, it’s a decision that could change your life and give you more time to live it.
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