Self Employed vs Employed
Although it may not make much of a difference to people whether you are self-employed or else employed, between these two types there exists a considerable difference. Knowing the difference between the two is vital because most of the employment rights apply only to those who work for others rather than for themselves. Just because, you are not shown as an employee by the person who pays you for your services does not mean you are self-employed. It does not take away your employment rights, and the law cannot be deceived by such means. Through this article let us examine the difference further.
What does Self Employed mean?
Being self-employed is when an individual works for himself and not for any organization. He has his enterprise to work for. Unlike in the case of being employed, self-employment gives much more freedom. For example, setting up your office inside your home and meeting clients there gives you much more free time. You can even spare time to play with your kids, as you are free from physical presence at a premise the whole day.
In self-employment, your success or failure is dependent upon your entrepreneurial qualities, and the amount you earn is reflected in the kind of risk and responsibility you are willing to take. You are your boss when self-employed and, you do not need to seek permission to take a day off or to ask for leave to see a doctor for your kids. You are creating an asset for your kids when you are self-employed as you can pass your asset to your kids.
What does Employed mean?
However, generating income for one’s family on one’s own is not every man’s cup of tea, and this is why we see more employees than self-employed people. If you are selling a product or service for a company and earning the commission on your sales, you are in effect employed and not self-employed.
When you are an employee, you have to be there at the office on time every day, and you cannot think of spending more than a few hours every day for your family. When you are an employee, all the risk and responsibility lie on the shoulders of the owner of the business. But while you can be satisfied with your salary, there is a ceiling to your income beyond which you cannot expect to grow.
A key advantage in being employed is that you have a steady income. This is not so when self-employed. This is one reason most people prefer to work for others rather than working for themselves. However, while there is a limit to earning when doing a job, only the sky is the limit when you are self-employed. This highlights that both being employed and being self-employed have pros and cons.
What is the difference between Self Employed and Employed?
• Definitions of Self Employed and Employed:
• Being self-employed is when an individual works for himself and not for any organization.
• Being employed is when an individual works for another.
• Enterprise:
• When self-employed the individual has his enterprise to work for.
• When employed he works for another enterprise.
• Freedom:
• Self-employment gives much more freedom.
• Employment does not give much freedom.
• Success and Failure:
• In self-employment, your success or failure is dependent upon your entrepreneurial qualities, and the amount you earn is reflected in the kind of risk and responsibility you are willing to take.
• When employed these risks and responsibilities do not burden you.
• Leave:
• When self-employed you do not need to seek permission to take a day off or to ask for leave.
• When employed there are strict rules and regulations for applying for leave.
Images Courtesy:
- Japanese Ukiyo-e museum by Steven Walling (CC BY-SA 2.0)
- Garments Factory in Bangladesh by Fahad Faisal (CC BY-SA 3.0)
