The Advantages And Disadvantages Of Being Self-Employed

Finding employment in South Africa is not easy. With the current unemployment rate at 29% and still rising, finding a conventional job is harder than ever. The same goes for other places around the world. One way around the problem is to become self-employed. It’s something that more and more South Africans are turning to.

The Benefits Of Self-Employment

Self-employment has several benefits, the biggest of which for many is being their own boss. You will be able to set your own working hours, take time off when you need to, and set your own holiday allowances. But all of these advantages have a flip side. They can be seen as disadvantages too.

Self-Employment Financial Advantages

Moreover, self-employed individuals reap many financial benefits. When you work for yourself, you control how much you drive. Self-employed individuals who work from home particularly save because they avoid overspending in gas. At the same time, you earn capital without leaving your home office. Thus, you increase your cash flow without subtracting capital from it. You can also improve your financial state with the best credit card for self employed business owners. Keep this in mind as you consider entering the world of self-employment.

The Downside Of Self-Employment

Being your own boss is all very well as long as you can remain focused. It’s all too easy to drift and not apply yourself 100%. If this happens, it will affect your earning potential. When you have a conventional job, you have a guaranteed wage coming in every week or month. When you are self-employed, you only get paid for the work you perform, and sometimes, not even then.

If you do take time off, whether for sickness or other personal reasons, you probably won’t be earning. The same goes for holidays. There is no such thing as holiday pay for the self-employed. The other problem that self-employment throws up is guaranteed income. It’s not always easy to find new customers, and those you have, may not pay you either on time, or now and again, not at all. Consider the major disadvantage of self employment before committing to the lifestyle.

Applying For A Loan

If self-employed people need to borrow money, their employment status can cause a problem. Lenders are all too well-aware that the earnings of those working for themselves can be unstable. Income often swings wildly from one month to the next, and this can leave borrowers with insufficient funds to keep up with their repayments.

Borrowing money, whether you are employed or self-employed, is a two-way transaction. Both parties have to agree to honor the terms of the loan. Most legitimate loan companies today support what they term, responsible borrowing and lending. They do their best to ensure that potential borrowers are not getting themselves into trouble by taking out a loan they can ill afford.

So, if as a self-employed South African, you apply for a loan, you will be expected to be able to fulfill certain criteria. Criterion one is that you will have an active bank account. Criterion two is that your bank account will show that you have a regular source of income.

The Truth About Unemployment Benefit

In the current climate of unemployment in South Africa, self-employment is a serious consideration. It may well prove to be the only way you can afford to live. If you have lost your job, you can apply for unemployment benefit. However, it only lasts for 34 weeks, and there is worse to come. In terms of value, unemployment benefit in South Africa ranges from 38% of your last wage if you are considered to be a high earner, to 58 % if you fall into the low earner category. Whichever band applies, the drop in income will come as a rude awakening.

The Value Of Bookkeeping

If you do decide to become self-employed, you will need to consider how you go about the task of bookkeeping. You can learn to do it yourself or find someone to do it for you if you can afford to. It is not only good practice; it will help you to manage your finances and could come in handy if you do need to apply for a small loan. Learn about self employment taxes and develop a solid bookkeeping plan before jumping into self employment.

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