What are the risks & rewards of being a self-employed independent contractor / consultant vs. being a permanent employee?

Note: I am, in fact, a self-employed independent consultant, and I often get asked this question by friends who are in traditional employment. Before I answer my own question, what do you think?

2 Answers 2


When I worked for myself it was bad because

  • My work week was often WAY more than 40 hours
  • I had to do lots of things in my job I didn't like
    • Pay taxes quarterly
    • Send invoices
    • Calculate mileage
    • Register business names with municpalities and other boring paperwork.
  • I had to fire people
  • I had to get yelled at by customers when I was wrong or made a mistake
  • I couldn't get someone to cover for me
  • No employer health benefits
  • No employer matching 401K
  • No severance, cashed in vacation or sick leave


  • I set my own hours
  • I could work harder and make more, work less and earn less
  • I didn't have to answer to a micromanaging boss
  • No office politics
  • Miller Time was whenever I wanted
  • My potential for earning was limitless
  • There are lots of tax breaks and programs for saving money as a business
  • I got to hire people who were good workers and was respected
  • No micromanaging boss
  • No doing stuff I hated because it was in my job description

Ultimately I gave up my business and went to work for a school teaching, and through a series of other jobs ended up in a very stable reliable trustworthy job. When I was younger the variable paycheck didn't outweigh the freedom. Now that I am a dad I only think about having insurance and a secure job.

The other option to consider is having a regular job, and then doing a little side work for yourself. You get all the benefits of both (and all the detractions)


In the current economy there is no upside to working for yourself. Get in a salaried position as soon as you can, and sacrifice to whatever gods you worship that you don't get made redundant.

If you're already working for yourself, and wouldn't give it up for anything, hire someone, and get them off the street.

  • 4
    (I beg to differ ;-) Jan 7, 2010 at 14:46
  • 2
    I disagree too, though not enough to down-vote though since it is only an opinion. Working for yourself puts your fate in your own hands, working for others leaves you vulnerable to the whims/failures of others to make the company work. I guess the bottom line is whether you trust yourself or others more to keep you employed.
    – JohnFx
    Jan 7, 2010 at 22:28
  • Boy Carey, you're not a downer or anything ;-)
    – Nat_Rea
    Jan 12, 2010 at 1:33
  • @JohnFx Until the state closes you down for a non-pandemic pandemic, or the IRS picks your return for review. Good luck with that. Starting a small business is not the place to be for the next four years.
    – paulj
    Jan 22, 2021 at 17:39
  • @paulj - No idea what you mean about a non-pandemic pandemic. However, if you think a full time job insulates you from impacts of the pandemic you are mistaken. It is always riskier to run your own business, that's why the potential benefits are much higher.
    – JohnFx
    Jan 22, 2021 at 19:03

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