Showdown 2: Money

This is part two of a series exploring factors in self-employment and traditional employment. For more about this series, read the opening article.

Money

How much financial compensation you receive

Self		Boss
Pros	Cons	Pros	Cons
You control how much and how often you are paid There’s no artificial ceiling to your earnings You can control your rates and pricing, which directly affects the business Distribution bonuses can avoid Social Security tax (for S-Corp)	If sales are bad your payroll suffers – so pay may not be what you think it is Overhead usually takes precedence You’ll notice the other 7.65% in Social Security tax	Steady paycheck means reliable cashflow Established businesses can offer commensurate pay	You’re at odds with your employer about how much to be paid Negotiating for raises You also support everyone else, which means your individual performance may not come back to you

Conclusions

Working for yourself can pay a lot more than working in a traditional setting. If you can meet your bare minimum – what you absolutely need to maintain your lifestyle – you’ll find a lot more satisfaction in your pay. Meanwhile, arguing with your employer about how much you should be making or constantly looking for a new job that pays better is stressful and distracting. Put another way, is there any way your job can make you rich?

Winner: Self-Employment