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Advantages & Disadvantages of Being Employed Rather Than Self-Employed

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Statistics from the U.S. Bureau of Labor Statistics show that the vast majority of Americans are traditionally employed, rather than self-employed. Job stability and clearly defined roles are good reasons to work for a company, but traditional employment has its downsides, too. Examine the advantages and disadvantages if you're contemplating a change in your work situation.

Security and Stability

A primary reason some people avoid or get out of self-employment is the need for job stability and financial security. When you work for yourself, your income is only guaranteed as long as you continue to find clients or customers to pay you for products and services. Being employed by a firm that has been in business for a long time offers support and stability. You also are eligible for group benefits, such as health insurance, dental insurance, life insurance and retirement plans, with an employer. A self-employed person may purchase insurance, but the coverage and costs are usually not as favorable.

Focused Role in an Organization

An organization typically has departments and employees working together toward shared goals. As an employee, you have a primary role with a set list of responsibilities. Your work is supported by others, including colleagues, coworkers and managers. In self-employment, you get the credit for success, but also the blame for failures. You often must have a "do-it-all" mentality to make money that includes changing light bulbs and shoveling the sidewalks. You sometimes cannot hire people to facilitate administrative tasks and still make a solid income.

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Restricted Autonomy

A downside of working for an employer is the limited ability to dictate your role. The employer, perhaps through a supervisor, assigns activities and tasks. Your role may include some creativity, such as in a copywriting or design position, but your work must meet the expectations of the employer. Some workers feel stifled because they cannot connect their personal work to end results. When you run your own business, on the other hand, you operate as you see fit and have the ability to develop a company to match your personal vision.

Limited Earning Potential

In an employment setting, your pay is dictated by the pay structure. You may receive a straight salary based on the role you play. Even commission-based salespeople get paid at a rate declared by the organization. When you run your own business, your earning potential is limited only by the practical income opportunities for your business. You know, though, that if you succeed in building a customer base, you can make a lot of money.

About the Author

Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.

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