Self-Employed and Employed – The Advantages and disadvantages of both

Oliver March 2020 Fintech Content Editor 6 min

Table of contents

Many people are interested in being their own boss and running a business, but what are the pros and cons between self-employed and employed?

Working for yourself is often seen as a way of escaping the routine of the 9-5 job, having more free time, and earning more money. However, the reality for many is very different from the dream, and many self-employed people end up working longer hours for less money.

So what are the relative advantages and disadvantages of employed or self-employed?


The term self-employed covers a range of work activities, such as freelancing, a contractor, or as a business owner. 

Keeping your finances in order when you are self-employed can be a hassle, so open a Penta Business Account and let us take some of the strain.


You are the boss

For many, this is the number one reason for being self-employed.

Job satisfaction

Doing your job well as an employer does give us pleasure, but imagine how it feels when you’ve completed the job for yourself. From the very initial stage of finding the client to preparing the quotes, designing, planning, creating, and finally delivering the piece of work. It doesn’t matter what the job is, just the fact that it’s all by you and the client is happy.

You can earn more

As an employee, you have a salary, and unless you have a bonus scheme, that is the limit of your earning potential. As self-employed, how much you earn is only limited by your ability to find clients and complete the work.

Reduced costs

This depends on your line of work, but if you work from home, for example, then no more commuting except the walk from the bedroom to the home office! No more traffic jams or hot and smelly public transport.

Variety is the spice of life!

As an employee, you have a job that you can do well, but in most companies, it will be repetitive and often with little chance to show where you can excel. As self-employed, you can choose the jobs you want to do, in what order they are done and change things as required.

Organize your time

No one is going to say you can’t go for a coffee break, or take an hour off to take your child to the doctor. You don’t have to ask anyone to take a break and refresh your mind. Your time is your own.

Choose your clients

When you are self-employed, you can choose your clients. You don’t have that luxury when you are employed. 


No employee benefits

Probably the biggest downside of self-employment is the lack of a safety net if something goes wrong. If you are sick and can’t work, then you won’t earn anything. There’s no holiday pay, so you need to budget for that. If you want private medical insurance, you’ll have to pay for it. 

Possibly long hours

Working too many hours is probably one of the most complained about aspects of being self-employed. Firstly, you see working long hours as the way to earn more, but you are also the only one that can do the work. 

Starting from scratch

Building a business from nothing is time-consuming and hard work. And it is all down to you!


Getting things done means actually doing the work. Being self-employed requires excellent self-discipline, particularly with distractions such as social media. This goes hand in hand with the long hours. By putting off work to do something else, you are merely making more work for yourself.

You are responsible for everything

Taxes, social insurance, pension, annual tax declarations are all your responsibility. Employing a professional to complete these steps is a great idea, but costs money, which you may not have yet. Whether you fail or succeed is entirely down to you.


If you enjoy the workplace environment, then self-employment may not be for you. It can be lonely, which in turn affects your motivation. One way around this is to join a co-working group.

Unstable income

Particularly at the start, your income may be precarious, as you build a client base and your products and services. Despite no income, you will still have bills to pay.

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business woman employee on laptop doing banking finances


The term employee applies to a person who is hired for a salary or fee to perform work for an employer.


Employee benefits

Need a day off? You’ll still get paid. Not feeling very well? You’ll still get paid, depending on the local rules. There may be a company pensions scheme, company health benefits, expenses that you can claim.

Fixed hours

Your hours are pretty well defined, and outside work hours, you don’t even need to think about work. Time is your own.

Stable income

You get paid a salary, regularly at the same time every week or month. You can budget, put some of your income away for a rainy day or your next holiday.

Social life

Work colleagues often become good friends, as well. You can easily find people that have things in common with you. 

It’s not your whole life

When you leave the office and shut the door, that’s you finished for the day. 


Slave to the clock

As an employee, you are generally required to work set hours. In the majority of cases, these are 9-5 jobs, which means you will have to ask your boss if you need to leave for doctor’s appointments, collecting children from school, etc. Although knowing your work schedule is great, it’s also very restrictive. 

Annoying colleagues

Yes, we’ve probably all been here at one point or another! To be fair, everyone is different, and that’s a good thing, but at work, you are stuck with the people around you.

Constrained by company rules

Companies have essential rules, but again can be restrictive. There’s a delicate balance between ingenuity and maintaining the companies standards, but it can stifle individuality and be frustrating.

Limited potential to increase your income

Unless you are in sales or have another role that includes an excellent bonus scheme, your salary is probably all you will get paid each month. 


Another option is to work both self-employed and employed at the same time. Perhaps take a part-time job while you develop your own business. For many, this is the only route to becoming full-time self-employed, because of the need for an income.

If you become self-employed, don’t forget that you need to keep your finances separate. a Penta Business Account is an excellent way of separating your personal and business transactions.

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