I recently guest posted over at Broke Professionals as to why I work for the government. In all of that description, I left out one key factor–I’m terrified of being self-employed.
Please don’t get me wrong. I long for the day where I can work from home or a park or a beach without reporting at a certain time, doing what someone else wants me to do and wearing something that’s not my pajamas or yoga pants. Lack of self-confidence not withstanding, here are a few reasons why I am too scared to take the plunge into self-employment:
Taxes. Except for knowing that I have to pay them and what the little abbreviations on my paystub stand for, I don’t understand taxes. They are far, far beyond my scope of understanding. If I work for myself, I will have to figure out taxes and make sure that I pay them on time and accurately. I fear that this won’t happen and I’ll have to deal with an audit. That scares me.
Insurance. Right now, since my husband and I both work for the State, our medical insurance is free (some sort of double state share formula that is way too complicated for me to understand) and we pay very reasonable amounts for vision and dental insurance. The thought of having to find my own policy and pay the borderline obscene amounts make me want to throw up a little.
Retirement. Although I have a Roth IRA, I also have a guaranteed pension where the money comes right out of my paycheck. I also have extra money deducted and put in some sort of Fidelity account. While self-employment means that I’ll have to significantly ratchet up the Roth and Fidelity savings, and I’m OK with that, losing the pension makes me really, really nervous. Confession time: because of the pension, I’ve been very lazy with the rest of my retirement savings and I’m afraid of how much catching up I have to do.
Finding work/clients. This is where the self-confidence bit comes into play. I am the world’s worst at convincing someone that he should pick my work over someone else’s (the fact that I have the job that I have is, in my opinion, a huge fluke and/or divine intervention) because, if I’m being honest, I don’t think I’m really all that better than anyone else. I have a terrible time selling myself (this also eliminates my potential career as a prostitute. This is probably a good thing) and, as a self-employed person, I would have to put myself out there. It’s not the rejection I’m scared of; I can handle rejection. I’m just not comfortable with saying “Hey, I’m awesome. I’m better than a sparkly unicorn who breathes diamonds and you should hire me instead of that loser”.
Inconsistent income. As the parent of a small child, I love the fact that I can rely on my paycheck to be consistent every single time I get paid. I have a nice, comfortable budget that provides for all of our needs and the occasional want. I know that if my daughter needs something, I don’t have to worry about the money that may or may not be in my paycheck; I’ll know exactly how much will be there. Being self-employed, there will be ebbs and flows in my income and that puts me on edge. I know there are tools to help budget and plan on an irregular income but there’s something about the consistency of my current paycheck that’s soothing. I thrive on stability.
To me, jumping into self-employment is like jumping off the high dive into a really amazing pool complete with swim-up bar and big screen TVs playing Jason Segel movies all day long. Right now, I’m on the ladder of security and stability, thinking about stepping onto the diving board to jump into the pool. Each rung I climb is a step closer to my dream. If only I could get over my fear of free falling.
Are you self-employed? How did you get over your fears and decide to take the plunge?
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[…] It also means that I need to have confidence in myself that I can be successful pursuing my passion. It means that I have to have faith in my talent (once I figure out what it is). It means that I need to surround myself with people who support me and are willing to pick me up if I fall. And it also means that I need to be willing to take risks. I’m not sure that I’m ready for that. Self-employment terrifies me. […]
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[…] And I want to leave. Posted on December 9, 2011 I’ve talked before about how self-employment scares the crap out of me. That still doesn’t change the fact that I have a burning desire to leave my job and pursue […]
I deal with self-employed people on a daily basis, and I wonder to myself "Why are they doing this?" Sure being being your own boss sounds great in theory, but in practice some people are just better of doing the work for someone else and getting paid. It takes a lot of dedication and discipline not to mention a few other important qualities that many of these people simply don't possess.
You say that you thrive on stability, and there's absolutely nothing wrong with that. It affords you the luxury of worrying about your duties working for someone and letting them handle everything else. (although states are notorious for not being able to handle their own affairs very well).
The taxes aren't really that scary if you have someone who will take the time to explain them to you, plus you can always hire someone to deal with the hassle so all you have to do is sign some papers and make the payments. The same goes for the retirement and other other aspects like marketing and IT…things that someone else can do more efficiently and effectively leaving you to do what you do best: your job.
I think I never considered being self-employed earlier in my life for the same reasons you mentioned.
Now, it's so close to retirement I'm going to wait until then.
Admitting your fears is the first step to overcoming them!
For years it was my goal to be financially independent and self employment is one way to achieve that. For me, to overcome a fear there has to be a larger compelling reason. I saw an opportunity and assessed the risks and went for it. My first foray was income property, then a business and consulting. Successful people take calculated risks. That means you make it safe enough that you are willing to take the risk.
I'm not self-employed, but my and BF constantly think about it. He plans on doing this relatively soon though, once everyone is planned and organized.
I am self employed. Yes it can be scary. You are at the mercy of no steady income. You do have to garner clients. Taxes are no problem, but you do have to keep rec'ts and save money, pay quarterlies. Figure 1/3 of every dollar you bring in at first. It is very hard to save for retirement, that is why I am scrambling now. But I love what I do and my health is such that trying to get a job with a regular employer would not work.
Yeah, self employment is a pretty scary idea for me too. Health insurance, erg. My husband has an S-corp for his side income, and the taxes aren't really that scary, especially if you get help from an accountant to get started.
I think the biggest scare factor for me would be the hustling. I've been in a few sales positions where my income was based on my ability to close deals. I never really felt comfortable there. But there's always something to overcome, I suppose.
Self-employment will be my only personal option when I decide to start bringing in an actual income. Taxes will need to be done by someone, I've already had to research and purchase health insurance for our family because it is ridiculously expensive through my husbands employer, I figure retirement will be added to because we live off of one income now any extra would be a bonus, and I already manage my husbands inconsistent income. The rest I will tackle the same way I tackle life: trial and error (and not just from my own experience)!
"The brave man is not he who does not feel afraid, but he who conquers that fear."
NELSON MANDELA, Autobiography
I'm not *just* self-employed right now, but I am self-employed in addition to having a job. And I"ve been strictly self-employed in the past, and likely will be again too someday.
I never really had any of those fears (although especially in the case of finding customers, I sure should have!) I could write a whole post in response to this though. Hm, maybe I will! At any rate, why are you thinking of becoming self-employed? (Since it sounds like you're happy the way things are?)
Been there/done that – I understand all your fears (and am a fed again). Have you read Quitter by Jon Acuff – not a "how to" per se – but things to consider and when/why you should – and shouldn't quit your job to follow your dream
The rest I can't speak to but I can give some advice regarding taxes.
(1) Every time you get a paid invoice, set aside 30% into a money market account or savings account for taxes.
(2) If you use an accountant, ask them to prepare Form 1040ES for you. These forms are used to pay an estimated tax payment every quarter.
(3) There's a website called "http://outright.com/" which will estimate your quarterly taxes for you and what your payment should be.
I was forced into being self-employed last year. And I can truly say it was one of the best things that happened to me. As long as you continue to invest in yourself, continue networking, take advantage of opportunities that present themselves then you'll be fine.
Certainly a lot of good advice in the comments. Hope your decision works for you.
Hi I been self employed for 30 years doing many different things…Still to this day when a slow spell hits my mind starts playing games with me. When this happens you just got to not care and plug ahead one step at a time…PS when I’m depressed i watch a movie from 1980 Used Cars always helps me LOl
MrFrugalrank recently posted…Frugal Living Has Many Benifits
Great Post. Being self-employed is a personal choice. It has it’s own pros and cons and each one of them should be weigh properly. BTW, I just want to share a good source for fillable forms and tutorials – PDFfiller. It has a ton of Tax Forms. It helps me fill out a needed form neatly and gives me the option to esign.