There are countless benefits to owning your own business, but there’s also no denying that being a sole trader or contractor also comes with a lot of responsibilities and, of course, some downsides. If you’re on the fence about leaving full-time employment and setting up your own business, this article if for you.
We’re going through some of the benefits and disadvantages of being a business owner, which will help you to make an informed decision. We’ve already looked into the pros and cons of being a sole trader, so, make sure to give that a read if you’re interested in dipping your toes in self-employment before choosing to set up a company.
Pros of Being a Business Owner
As small business accountants, we’ve been working with freelancers, contractors, locums and small SMEs for a long time. We’re well aware of the countless benefits of opting for self-employment, which we’re discussing a little bit more in detail here:
You Can Follow Your Passion
A big reason why people choose to become a business owner is to finally accomplish all their goals and dreams. Full-time employment is not for everyone so, if you’ve always wanted to run a venture, be your own boss, make your own hours and be as independent as possible, then self-employment is the right option for you.
You choose your own career path too, which is harder to do when employed, seeing as your goals need to line up with that of your employer. This way, you can finally do what you love and have control over every single element of the business.
Even if there are less than exciting days, you’re still working towards your goals, not everyone else’s, which can help you stay motivated.
You’re the Boss
Another big reason behind people wanting to set up a business is that they have no one but themselves to answer to. Being the boss means being able to control how services and products are created and delivered, who to work with, how much to charge, the values to follow, and so on.
While you still have to take customer input into consideration as well as work closely with partners and suppliers, you get to choose how you go about it.
You Can Have More Flexibility
As a business owner, you can also have a more flexible schedule, which includes a better work-life balance. Of course, this will also depend on the work you do, the sector you work in, how quickly you can complete your tasks, etc.
You might not be able to have this flexibility from the get-go but, eventually, it’s likely you can set your own hours and work at your own pace. If you have a boss, you have to follow their ‘rules’ and work the way they want you to.
Being self-employed, you can get up early to work if you prefer or simply work in the afternoon and evening – it’s entirely up to you and the nature of your business. So, while you still have to work hard, you’re doing it on your terms.
You Can Build Equity
There are many reasons why you should become a business owner, and one of them includes the ability to build something that will give you value in the long run, and which you can keep or sell. You can also pass it on to your family, for example. Some people choose to sell their venture and use that capital to start a new business as well, so you have a lot of choice when it comes to deciding the future of the business.
But you can’t make these decisions if you’re not the owner of the business!
You’ll Be Building Your Skills Nonstop
As a small business owner, you’ll have to learn a lot about many different things. While you should be an expert at what you do, you also need to become a marketer to promote your business and a recruiter if you’re hiring staff, for example.
This is especially true at the start, since you’re doing everything yourself while building your business. This means you are constantly learning new skills and developing yourself. In addition to this, you should also keep learning new things because sectors are always changing, with new updates, technologies, laws and techniques to stay on top of.
One role you don’t have to play if you don’t want to is that of an accountant. Gorilla Accounting can help you to set up your business and manage your accounts, ensuring your tax returns are submitted correctly and on time – and ensuring that you’re not paying more taxes than you should. This will save you time and money and give you peace of mind, since you can be confident that all paperwork is properly taken care of and that you’re following the latest legislation.
We can work with you to create a more tax-efficient business model, so speak to us if you’re interested in learning more about our services and products.
You Can Have Economic Security
While being self-employed can offer some degree of uncertainty, it can also be very profitable and efficient. Job security is hard to come by nowadays, so many people are at risk of losing their jobs at any time. But, when you control the business, you don’t have to worry about getting fired.
Your venture can be financially safe and protect you from future eventualities, since you’ll be in control of everything instead of at the mercy of the job market or an employer.
Cons of Being a Business Owner
Just like there are many benefits to being a business owner, there are also some downsides, so it’s up to you to decide whether they’re a dealbreaker for you or not. Take a look at some of the cons of being self-employed:
You Need to Be Self-Motivated
Being a business owner means you need discipline. It’s normal to be motivated at the start but that can disappear with time. So, in order to continue to drive your business forward, even when it doesn’t feel as fresh and exciting as it used to, you must have the necessary motivation to keep going.
Business owners must be passionate about their venture, especially because it’s likely they have to work long hours, often by themselves. To be a sole trader or contractor, you must be able to push through that during challenging times or when you’re “not feeling it”.
Financial Risk
When you’re in full-time employment, you may worry about keeping your job, but you don’t have to stress about the business itself, how to pay the bills and whether you’ll have a regular income. When you become a business owner, these are valid concerns that you should keep in mind before taking the leap.
When things are going great, you get the financial rewards that come with a successful business – but, if things go wrong, you’re also responsible for everything, including debts if you’re a sole trader. You also need to consider the initial investment. Many businesses require some capital to get off the ground and, at first, you may not even be able to make enough money to recoup it or to even pay your expenses.
Your Wages May Not be Consistent
One of the biggest issues for people wanting to set up a business is that their pay is unlikely to be consistent right away. Not everyone gets a salary immediately – it can take months or years to get to the number you’re looking for or even the number that will pay your living expenses.
This means you can’t rely on a set salary every month like you do when you’re employed. If your venture doesn’t pan out, you may go into debt, so this is definitely something to consider before you make a decision. It’s also worth mentioning that, if your business is successful, there’s no ceiling to how much you can earn.
As limited company accountants, we can help you to set up a company, which will give you limited liability; this way, you don’t have to worry about having your personal assets or money in the line of fire.
You Have to Make Hard Decisions
As a business owner, you’re responsible for every single aspect of the venture – unless you hire staff but, even then, you carry the bulk of the responsibility – which also entails making tough decisions. These can be anything from terminating a contract with a client to firing people who have been with you for years.
When you own a business, you have to be able to make the right decisions even when they’re hard so, if you struggle with things like that, this may be a challenge for you.
You Can Get Distracted More Easily
There’s no denying that, when you’re working alone, you may get distracted more easily. Whether at home or in an office, there’s always people talking to you, background noise and other distractions that slow down your work.
Many freelancers start out their business by working from home and, if this is your case, make it clear that you can’t be interrupted at certain hours and that the TV can’t be blaring in the background.
The internet is another time waster. It’s easy to jump on social media or go down a Google or YouTube rabbit hole instead of completing your tasks and projects, so turn the internet off if you don’t need it to avoid getting distracted.
There Are Many Things to Keep on Top Of
It can be easy to become overwhelmed when running your business if there are too many things going on at the same time. For instance, you need to complete the work your client hired you to do, but you also need to put out fires as soon as they appear – this can be dealing with a power outage or having to send out CVs to potential clients.
You may be passionate about what you do, but there are many details to consider when you’re a business owner – while you may find them boring, you still need to deal with them.
How Gorilla Accounting Can Help
As contractor accountants, we can provide a vast range of services, from helping you with limited company expenses to submitting your self-assessment tax return.
If you’re still not sure whether you’re ready to become your own boss or if self-employment is for you in the first place, you can try it by setting up a sole trader business, since it requires less admin and responsibilities. You can think about limited company formation later down the line, and we can help you to make that transition whenever you want.
Talk to us on 0330 107 9671 for more information or leave a message today and we’ll call you back.
