The costs of being self-employed

Occasionally I’ll get into a conversation with a friend or acquaintance about my job which inevitably leads to them making some comment about how nice it must be to be self-employed, working from home, and how I must be just rolling in money.

Although working from home does have its benefits, it’s not always what it’s made out to be. What they normally forget to think about are the expenses I incur that a normal employee would not.

For example, I pay for my own:

  • Office space and equipment like, desks, chairs, phones, and coffee.
  • Equipment like numerous computers, printers, backup power supplies, data backup drives, web cams, paper, pens, light bulbs, etc.
  • Utilities like electrical, heating, and cooling.
  • Services like internet access, offsite backup, cell phone service.
  • Office insurance which includes a lot of equipment coverage.
  • Most of the software I use daily, including my development environment and numerous plugins for it, Outlook, dOpus file manager, image editing tools, backup software, instant messenger, and numerous utilities.
  • And of course, payroll taxes.

What I don’t receiveĀ  that a normal employee would:

  • Benefits like medical, dental, disability, and life insurance
  • Retirement and 401k plans
  • Stock Options
  • Bonuses
  • Paid vacation time
  • Paid sick days
  • Job Security
  • School reimbursement
  • Perks like lunches and parties
  • Pretty much everything but the paycheck

Other things not typically considered

  • Time spent keeping up to date with technology
  • Time spent maintaining systems

Yet I’m pretty much on call 24 hours a day, 7 days a week, 365 days a year. I’ve worked weekends, holidays, and often 14 hour days. I haven’t had a vacation in over a year and I don’t foresee one any time soon.

I’m never really away from work. If you think too much about that, you’ll get depressed. Even when I’m not in front of the computer, often I’m thinking about work – way more than I should, but the nature of software creation is one that when your creativity starts going, it has a mind of its own.

Sometimes it even gets extreme. I’ve driven non-stop 900 miles back home from a vacation to make a 1 hour software fix, then drove 900 miles back. You know something is up when the park ranger at Yellowstone National Park comes and finds you in a campground.

So you might be asking, would I rather be a regular employee? The answer would probably vary depending on when you asked me, but most of the time I would probably say “yes”.

U.S. Bureau of Labor Statistics
data collected in September 2012 indicates the average total cost to employers for employee benefits is $10 per hour for each employee, or about 30 percent of total compensation.

Some additional reading if you’re interested:

Wake Uplater

Houston Chronicle

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