The biggest obstacle to  self-employed  success is often not figuring in all the costs involved. While being your own boss has many advantages, including controlling how much money you can earn, unforeseen costs can negatively affect your cash flow. While it is technically easy to start working for yourself, it can also be expensive. Many people fail to figure in these expenses. In order to become successful self-employed, you must consider some of the hidden costs of working for yourself.

Lost Benefits

When you work for another company, you typically will have a benefits package in addition to your wage. These perks include things like health insurance, sick and vacation days, and other benefits. Regardless, all have value and create a cost for you when self-employed. Health insurance can become particularly expensive when you aren't receiving it through an employer. Moreover, lost work days because of a vacation or illness is lost income. 

Taxes

As a person who is self-employed, you are responsible for making all income and payroll tax payments. Not only that, you will pay more than what would have been deducted from an employee paycheck. Why? It is because an employer is responsible for a portion of the payroll tax. Since you employ yourself, you do now have the privilege of paying this yourself.

Retirement

Technically, this could be listed under lost benefits. However, it is important to single out. Most employers that offer retirement plans and provide a defined-contribution into a 401(k) or other structure. They may automatically add funds to your retirement account or they could match your own contribution. Regardless, this is lost income.

Work Slowdown

It is important to budget yourself. Many companies have cycles when their sales or receivables are slow. However, they are still responsible for paying their employees and keeping up with benefits. When you are self-employed, it is your responsibility to plan for when things are slow. If you don't, you can discover yourself in major debt.

What haven't we covered yet that is important to you? If you would like to talk about the costs of being self-employed, or need more information, please  contact us .