Every day millions of people at their workplaces stop and think about how much better their lives would be if they worked for themselves instead of for someone else. Thoughts of “if only I could set my hours” and “I could run this place a lot better than him/her” run through their heads. Working for themselves instead of working for “the man” starts sounding better and better.
While it’s easy to fantasize about waking up and going to your home office and doing work that you scheduled (and answering to no one but yourself), often the benefits of working for someone else are not fully realized until working for yourself becomes a reality.
Here are some of the benefits of being an employee:
- Health and Retirement Benefits
The best part of being an employee of a company is that they usually have benefits available. Health care is a huge benefit of being an employee, as it is much cheaper through an employer than on the individual market (this will change slightly in the United States in 2014 when insurance exchanges are put in effect).Companies also often match 401(k) and 403(b) contributions up to a certain amount or percentage. They somtimes also offer some nice programs where you can lend yourself money against your retirement account and the interest you pay on the loan is paid to you.
One final benefit that larger companies offer is employee stock purchase plans. The plans vary depending on the employer, but some offer up to 15% discount on their stock and allow you to sell the same day they make the purchase. Others force you to hold for a longer period of time (I know one friend who has to hold his company stock for at least three years before selling). These programs are for the most part built in bonuses that you have to opt-in to receive.
- Less Dependency on the Bottom Line
When you are self-employed, the revenue that is left over after all expenses have been taken into account is literally what you take home. The benefits of working for someone else is that generally (unless it is a commissions-based job) you have a consistent paycheck regardless of the bottom line. Yes, if a company is losing market share year-over-year that consistent paycheck (or job) could change. For the most part, though, working for someone else gives you the security of a consistent paycheck and less dependance on the bottom line.
- No need to be a jack-of-all trades
At the beginning, a lot of entrepreneurs are forced to deal with accounting, legal compliance, marketing, administrative tasks, and more. When you are an employee you have the benefit of not having to be a jack-of-all trades.
In my current role I can focus solely on the accounting piece. Yes, I have “customers” but they are other internal employees who I provide reporting to and who I am held accountable to. I am very removed from the end client and I see it as a good thing as I can focus solely on my role in accounting and reporting.
Some people enjoy the idea of doing a variety of functions, and that’s okay as long as they take into account the fact that there is a difference between the idea of doing it and the idea becoming a reality. Can you imagine how unhappy some people become when they realize they hate dealing with all the various functions of running a business and being self-employed?
There is no denying the fact that working for yourself and owning your own business has advantages over being an employee. As I have described, there are also advantages that being an employee has over working for yourself. Ultimately, it comes down to listing the pros and cons of each work setup and deciding which aligns better with both your short-term and long-term goals.
Do you think there are more benefits to being self-employed or an employee?
____________
Photo by Victor1558
Check out some of our favorite personal finance resources:
Are you getting the best credit card rewards? Check out the top cash back credit card offers (updated daily)
Make extra money: 15 ways to make money from your computer
Get the First Chapter Free!
Join our online community and get the first chapter of the book Student Loan Solution absolutely FREE!
Oh my gosh, where do I begin? Having owned a business, my wife and I can add a million reasons why being an employee is better! :)
– You’re not the object of frivolous lawsuits, OSHA inspections and other related petty hassles coworkers spring on you because someone else does a better job and gets the promotion they feel entitled to
– You can go home on Friday afternoon and enjoy the weekend
– You’re not the hamburger in the sandwich between health care insurers jacking up their rates and employees (legitimately)) complaining about higher deductions.
In Hollywood, for every Brad Pitt there are thousands of small time people who never make it big. Same with business owners. Most are simple people, trying to scratch out a living, to quote Fiddler on the Roof.
Employee is fine, trust me! That’s why there are billions of them. They may be a dying breed, but that’s a different topic altogether. :)
@William_Drop_Dead_Money Thanks for your perspective! The more I think about employee vs. small biz owner/self-employed, it seems like employee is better (for the most part). Besides the fact you can be fired at any time and that you have less control over how much you make and when you work, being an employee comes with a TON of benefits.
I think being an employee would be better for me. I crave stability, and being self employed would not provide that.
@SenseofCents Very true. Self-employment is always a risk.
I really think it depends on the field. My husband works for a small business that is unable to provide health insurance or a retirement plan for its employees so I truly believe the added stress of owning your own business would be worth it since we wouldn’t be missing out on those perks. But with 2 young kids we’re not prepared to take the risk of losing a paycheck. One day we will be though
@Em23 Good point. It will all change in 2014 tho when the exchanges are rolled out (health insurance-wise, not any other way). Gosh I can’t even think about kids yet, we are going to start with a dog in a few months ;)
It depends on what you mean by “benefits.” You’re right: people rarely think about the benefits you listed above. If you read “The E-Myth (Why Most Small Businesses Fail)”, you’ll see that most people with dreams of having a business go into it for the wrong reasons anyway, and the business collapses.
@AverageJoeMoney Just added that book to my list, looking forward to reading it!
@AverageJoeMoney Was just about to mention that book! I haven’t read it yet, but most of the people in my office have it sitting on their desk lol
There is nothing wrong with being an employee. We need people to work for companies. I can see why people will lose sight of the benefits of being an employee. A lot has happened. There are benefit to both. It also depends on the field you are working on and the type of career you have. There are people who leave high paying jobs to start their own business and become success. Personally, I’ve seen first hand the benefits of creating a business and the benefit of being an employee.
@OrnellaGrosz I agree it really does depend on the field. Some people seem like they are much better off freelancing/self-employed vs. being an employee simply because of their line of work. I do see many people who freelance who are absolutely terrible at it. You need to use your time ultra-efficiently and some people who try to make it in the freelance world are the complete opposite.
I think it all depends on the individual whether being self employed is better than working for someone else. I’m not sure if I could ever do the self employed thing. There is just so much risk there that I’m not sure if I could mentally handle it. I think in the future I will own a business, but it will be one where I can work a normal day job at the same time. Always need something to fall back on. The health insurance thing is huge, especially after I read J$’s thoughts and experiences on it. After my injury in July I know I could never go without insurance again.
@DebtnTaxes Yeah health insurance is big, though I do believe no matter what health insurance you get it usually is about the same in the end (deductibles and premiums even out). If I didn’t have health insurance right now my surgery in a couple weeks would be $20k….out of pocket :0
I like the ability to leave work at work as an employee. As an entrepreneur, you are always on the clock, like it or not!
-M