The disadvantages of being self employed

I am sure that at some point or another you have dreamed of being your own boss who can work where you like, when you like and how you like. There’s no doubt about it, being self employed is attractive and something many people would like. There are several advantages to being self employed however it is not always that great. There are some disadvantages to being self employed and many people seem to forget about these or simply gloss over them.

As an employee who pays national insurance contributions you will be entitled to statutory sick pay during those times when you are absent from work for extended periods of time through illness. The statutory sick pay isn’t much, but it is more than sufficient to cover your rent or mortgage, as well as your household bills whilst you are unable to work. If you are self employed you do not get statutory sick pay, therefore if you can’t work and make money you don’t get any financial assistance.

An employer has a legal obligation to provide members of staff with a minimum amount of paid annual leave per year. The amount of leave depends on a number of different factors, mainly whereabouts in the world you live. A self employed person does not get paid annual leave, therefore any vacations or time off means no income for that period.

A contract of employment is a legal agreement that specifies an employee has to work for a minimum number of hours and for this they will receive a minimum salary or wage. Even if there is no work available the employer must still pay the employee under the terms of the contract of employment. This is not the case for self employed, and in these circumstances if there is no work you won’t get paid.

A self employed person has to be tax under the self assessment scheme. This means that a self employed person must submit a tax return to the taxman on an annual basis and failure to do so will result in fines and penalties. If you are unable to complete your tax return yourself you are going to need to seek the assistance from an accountant, which is going to cost you. Employees are taxed under the Pay As You Go Scheme and the employer will not only calculate the tax liability but also pay it over to the taxman on the employees behalf.

The above are just a few of the disadvantages of being self employed and I am sure that if you sat down and really thought about it you would come up with several more. Being self employed does work for some people, and in some cases it works very well, however it is not for everyone. So, before you decide to register as self employed take a step back for a few minutes and have a serious think to make sure you are comfortable with the disadvantages of self employment as well as the advantages of self employment.