Self Employment

Let’s start with how I became self-employed

I became one of the few in the year 2003 to become self-employed. At this time I had been working for someone else since I was 17 years old, or by partially giving away my age for 25 years I worked while someone else made money from what I did.

It has not been easy. But, I was always self-motivated and never needed a boss to tell me what had to be done. I have always tacked the job at hand and if any time were left it was for my leisure. This became such a habit that in my last job Capsugel a div of Phizer I basically sold my life away to them. A year into my employment I took a position that required me to travel to their installations around the world. For 12 years I was away from home 80% of the year. I had no life of my own. My marriage ended.

Moving On With Life – New Start

But after that, I met another woman in Indonesia and fell in love. I continued traveling with Capsugel for a few years until 2001 we had problems with US immigration. They barred my Indonesian wife and by default our infant daughter from returning to the USA for 10 years due to a previous overstay. Even though it was the fault of INS for not filing the papers I sent correctly, they said she broke the law, a law she did not even know existed. I tried for 2 years to get the decision repealed to know avail.

That is when I decided to join the self-employed. That is when I resigned from Capsugel and moved to Indonesia on a family visa. I had already begun my online website design business part-time while at Capsugel. Also, I built an intranet website for them. I started selling furniture wholesale online shipped from Indonesia in 2001. So the move from working for someone else to being self-employed was not too bad for me.

Self-employment is a phenomenon that is developing at an alarming rate. Even though for many people the word has a rather threatening overtone. More and more people choose this form of employment, but some are forced to do so mainly by their professional situation. These people usually do not hide their dissatisfaction, yet they do not realize how much they can gain from self-employment.

The advantages of this form of employment are immeasurable, but not everyone knows about it. Such ignorance can lead to an aversion to self-employment, work fatigue, and, as a result, a decrease in motivation. And without motivation, do not move, after all, everyone deserves to enjoy their own work. Therefore, instead of being immediately dissatisfied with self-employment, it is worth getting to know its advantages and find out what aspects of it may have a positive impact on your personal and professional life.

What is self-employment

Most often, the definitions related to self-employment are terribly complicated and hardly understandable (what is more, not all government regulations take into account the established definition of self-employment). 

There are 3 types of self-employed individuals:

• Independent contractors
• Sole proprietors
• Partnerships

Self-employment is a situation in which a natural person undertakes economic activity on his own account and on his own responsibility.

Who is a natural person

Natural person or physical person – simply speaking, it is a term for a person who has certain rights, but also obligations. He obtains full ability to independently shape his legal situation (i.e. acquiring certain rights – for example, buying alcohol legally – and incurring liabilities – i.e. applying for a loan) at the moment of reaching the age of majority, while he may have a limited capacity as early as at the age of 13 (maybe, because total incapacitation deprives him of this ability).

A natural person is not a legal person! These terms are often confused or used as substitutes, while a legal person is an entity such as capital companies (joint-stock companies and with limited legal liability), foundations, universities, churches, state-owned enterprises, etc.

Economic activity – is simply a company that is established by an entrepreneur, i.e. – following this path – economic activity is a certain type of activity of an entrepreneur operating on the market. There are three important requirements of economic activity in US law:

1. Income Tax: –  as they say “In this world, nothing is certain except death and taxes.” Annual tax returns. Your federal tax return provides proof of how much you’ve made over the course of a year.
2. Bank statements. Use bank statements to show all your incoming payments from clients or sales. This also can be used to verify expenses.
3. Keep up with all records that show your profit and loss statements.

A natural person engaged in economic activity  – is also known as an individual entrepreneur. It is one of the simplest forms of doing business. Legal persons cannot use this form of economic activity. A natural person may start running a business at the time of submitting an application for entry in the business register. The general principles of operation of enterprises of natural persons are laid down by each state and city ordinances.

To sum up, in America, the term ” self-employment ” generally refers to people running a sole proprietorship. However, the definition of self-employment differs from country to country. Self-employment, and thus economic activity, does not include persons who:

• they do not bear the economic risk associated with the performance of the contract;
• perform tasks at the request of the entity responsible for the effect and performance of these tasks (this does not apply, however, to liability for tort);
• work under the management at the place and time specified by the client.

In connection with the above, it is sometimes worth fighting for your rights. More and more employers take advantage of the benefits of self-employment and force employees to set up their own businesses, but without changing the nature of the work completely – former employees, and the current self-employed, continue to work on the basis of the employment relationships as a contract agreement. 

Meanwhile, employers reduce their costs in this way and avoid restrictions and obligations imposed on them by the labor code. Self-employed workers, unaware of anything, agree to this state of affairs, not realizing that now they can do more, e.g. they may refuse to further cooperate with a given employer on the basis of an employment relationship since the nature of the contract has changed.

Why self-employment

In fact, the benefits of self-employment are mutual – both for the employer and the self-employed person. However, let’s focus primarily on the advantages of self-employment for people who choose it. Below are ten golden rules for choosing self-employment.

• Better wages – the employer lowers the costs and therefore may offer a self-employed person a higher salary than in the case of an employment contract.
• Greater freedom of action – the self-employed person decides how much and how he will work. He also sets his own working hours.
• Several employers – a self-employed person does not have to limit himself to working with only one client. The more orders he performs, the more he will earn. Therefore, establishing cooperation with more clients is the most advisable.
• Professional fulfillment – a person deciding to become self-employed after all, he has a chance to fulfill his own visions. How many times has the employer limited the employee’s room for maneuver, not allowing him to implement his own ideas? Meanwhile, self-employment is precise to implement these ideas.

• Tax deductions – Self-employment offers many deductibles. A self-employed person may include as tax deductible expenses related to: commuting, fuel, training, items used in his activity, such as telephone, computer, software, etc. Moreover, if his company is based in a private apartment, he may also deduct part of the rent.
• Use a deduction of Tax on the purchase of goods and services.
• Lower tax rates – the self-employed are entitled to a flat-rate or flat-rate tax, 15.3 percent. That rate is the total of a 12.4% Social Security tax and a 2.9% Medicare tax on your net earnings.
• Possibility to take advantage of loans and subsidies intended for small enterprises.
• Free creation of the conditions of liability of a self-employed person in a contract, including the issue of non-competition and confidentiality.
• Reimbursement of business travel expenses (after appropriate note in the contract with the client).

The above “golden rules” proves that the devil is not as terrible as he is painted. Persistent and independent people will surely be fulfilled in this form of employment. Who knows, maybe with time the popularity of self-employment will surpass the standard employment contract and this one will become a thing of the past.