Showdown 2: Money

March 18, 2007

Posted in Small Business.

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


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


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