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Self Employed - Pros and Cons

Freelance Work, Made Redundant, Lost Job & Seeking Work

Feb 8, 2009 Asa Ghaffar

The recession has resulted in many people being made redundant and even more are now seeking work. Does being self employed and doing freelance work provide the answer?

With increasing numbers of people being made redundant and seeking work, becoming self employed suddenly becomes a viable option. Before proceeding with working freelance, it is important to assess the relative advantages and disadvantages of doing so.

Advantages of Being Self Employed

Own boss. Nobody likes answering to other people. Being self employed means that there is nobody to report or answer to;
Reduced transportation costs. The rising cost of petrol and rail travel means that being self employed is an attractive way of reducing day-to-day expenses. Any travel costs incurred by self employed people can be written-off against taxes;
Convenience. Arranging childcare or travelling for hours each day can be very inconvenient. Being self employed helps to improve someone's quality of life, as well as allowing them to spend more time with their family;
Tax advantages. Self employed people can write off many expenses, such as interest on mortgage payments, against their taxes.

Disadvantages of Being Self Employed

Income isn't guaranteed. Income streams can be erratic for the self employed resulting in late payments, bad credit or even financial difficulties;
Stress and anxiety. Working from home has a number of advantages, but many self employed people suffer with stress. This is because freelance work means that there is no official end to a working day;
Help and assistance. Whilst there are forums and specialist banking advisors one can turn to, self employed people don't have anyone to turn to when day-to-day problems crop-up;
Individual focus. It can be very hard for self employed people to focus on their jobs when working from home. There are various family distractions that can affect productivity;
Borrowing money. Self employed people tend to experience greater difficulty when borrowing money or getting a remortgage. Most lenders insist on three years of accounts;
Tax forms and administration. There is no PAYE which means that self employed people are responsible for filing their own tax returns and ensuring that there are sufficient funds set aside to cover them. This can be difficult when someone working from home is struggling with financial difficulties.

Those that have been made redundant and are seeking work may find that becoming self employed is an excellent option, especially if they have a skill that is in demand. However, it must be appreciated that revenue streams aren't as stable and this could create financial difficulties.

Those that found this article useful may also be interested in a series of money-saving tips and identifying ways to make extra income. Self employed people seeking a mortgage will regularly benefit from receiving assistance from a mortgage broker in order to secure the best deal.

The copyright of the article Self Employed - Pros and Cons in Self-Employment is owned by Asa Ghaffar. Permission to republish Self Employed - Pros and Cons in print or online must be granted by the author in writing.