Anonymous
Anonymous asked in Business & FinanceSmall Business · 1 month ago

Can being self employed be expensive?

12 Answers

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  • Anonymous
    1 month ago
    Favorite Answer

    Yes and there ain't no health insurance or retirement bennies either.  If you want healthcare and retirement you're on your own.

  • 1 month ago

    Depends on how many employees you have. I'm very sure during covid-19 many were put into the situation where they had to make a choice: to pay themselves or to pay their best employees and save the team they like. 

    Things like that are actually quite common. And when choosing to save the team it's also important to remember not let your mind get used to it. Decline in critical thinking can get really expensive....

  • 1 month ago

    Of course it can. You have to pay for everything--your materials, your transportation, your taxes, your insurance--but it also depends on what the business is--a dog-walking business, for instance, might not have much overhead. But any sort of manufacturing would. 

  • 1 month ago

    Yes, being self-employed can be expensive.

    For business operations, insurance, pensions, unemployment compensation insurance, and workers compensation insurance, being self-employed means you have to pay those expenses yourself. There are lots of things an employer pays on your behalf that you never hear about.

    There's also self-employment tax, which is the self-employed version of Social Security and Medicare tax, also known as "FICA" (federal insurance contributions act). When you're an employee, you contribute 7.65 percent of your wages in FICA taxes which are withheld from your pay, and your employer matches that, for a combined total of 15.3 percent. When you're self-employed, you have to pay both sides. In other words, your self-employment tax is 15.3 percent of your net profit in addition to regular income tax. It's not only costing you an additional 7.65 percent, but nothing is withheld so many self-employed people who don't hire a tax professional are stunned by an extra tax bill of 15.3 percent when they file their return.

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  • Sean K
    Lv 5
    1 month ago

    Most new businesses don’t turn a profit in the first 12 months. Those with true skills like an electrical trade will end up making more working for themselves. 

  • Anonymous
    1 month ago

    It was for me during the 3-4 months of the year when I had no almost no sales or profits. Learned to prepare and to make hay when the sun shined.

  • Anonymous
    1 month ago

    Yes, it definitely can. But that is the risk that can pay off. You don't have to be losing money as an earlier answer stated. If you're a self employed in for example blue collar work, it's not unreasonable to think you need new equipment or machines to expand. That can be expensive. 

  • A.J.
    Lv 7
    1 month ago

    Definitely. You start about ability to opt-in or opt-out of social security, medicare, and unemployment insurance systems. Then have to consider any licensing and insurance and regulations about sales tax if that applies. You need to understand the nature of your business and ability to do accounting of finances or hiring help for it. The business can have multiple facets. Marketing, sales, services, administrative, possibly fulfillment and/or returns and complaints handling, and any legal compliance.

    Where will you do this business and what costs associated with location?

    I find most young people have unrealistic expectations.

    In most self-employment, it is similar to rent vs own. Owning takes more of your time and extra responsibility, and more control. Rent is like employed - Someone else handles some things for you, and easy to quit and move elsewhere.

    Half of business fail in the first year. They don't generate enough profit and cash flow to both maintain and grow the business AND provide living expenses not associated with the business.

    There are independent contractors that are legally self-employed as elements of both employment and self-employed.

  • 1 month ago

    A lot of variables decide whether being self-employed can be expensive. This can include, but are not limited to: what kind of business you're trying to run, the materials needed and the quality of the materials, extra employees if needed, buying/renting a building or suite, bills and taxes to start the business, etc. It really just depends on what you're trying to do.

  • Anonymous
    1 month ago

    Only if you dont make any money

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