People want to be in business for themselves the same way most people want to be in shape — they want the end result, but the process of getting there is far more painful than they’re willing to endure.
Take a look at this video:
In case you don’t know (I certainly didn’t), this is former UFC fighter and current businessman Dana White riffing on the misconceptions people have about what it’s like to run your own business instead of working for someone else.
I spend the first decade after college working for other people, from large corporations like Lockheed Martin down to small startups with fewer than ten people. And then I spent the ten years after that operating my own business.
So from my vantage point of having done both for a good chunk of time, which is better?
It’s Better Working for Someone Else When…
It’s Tax Time
If you work for someone else, you gather all your documents together for your once-a-year dance with the purposefully-complicated tax code for a few unpleasant hours, and then you go about the rest of your year.
But if you run your own business, it’s always tax time. You can be filing and paying taxes — employee withholding, sales and use, estimated income taxes, etc. — as often as weekly depending on what business and what state you’re in. And then, of course, there’s the self-employment tax. Most folks don’t realize that their employers pay half of the 15.3% of taxable income that you’re on the hook for RE: social security and medicare (unless you’re a 1099 rather than a W2 employee, which is why corporations these days bend over backwards to classify people as 1099 “contractors”.) If you’re self employed or run your own business, you have to pay the whole bill yourself.