Business Owner Vs. Employee?

You Decide.

Factor  

Independent Business Owner

Employees

Flexibility

Be your own boss. You decide for whom to work, when to work and how to work. Many Virtual Services Corporation principals say the increased freedom they enjoy is the greatest benefit of being an independent business owner.

Work for a boss. Your boss determines when, where, and how you work. You have to ask for days off far in advance. Flexibility is limited.

Earning Potential

Your service fees are closely tied to the results you produce.

As an independent business owner, you get to select the clients and applications that match your earnings expectations. You control your earning potential based on the frequency you work and the results you produce. You and you alone have the opportunity to decide what your financial future holds.

Employees are limited in the variable compensation they can earn based on performance. Employees are worried about winning the boss's favor to earn raises or bonuses. Employees face the possibility of corporate downsizing.

Employees are often eligible for certain benefits, such as health insurance. But earning potential is still capped by salaries and per-hour paychecks.

Deductible Expenses

As an independent business owner, you can deduct expenses on your taxes for a home office, Internet, telephone, certification fees, etc.

Employees cannot deduct expenses. The company may or may not provide and own the tools the employee needs to accomplish the job.

Taxation

Federal or state taxes are not withheld from an independent business owner’s earnings as they must be for employees. Your accountant can help you determine the amount of taxes you need to pay — no more, no less.**

Your employer automatically deducts the taxes based on your earnings. You often pay more taxes than you owe and have to wait a year for a refund.

Location

Independent business owners get to work from home and do not have to deal with transportation-related expenses.

Employees typically have to work on company premises.

Value Creation

Independent business owners who perform according to their contracts directly contribute to the success of clients. They are remunerated for these results with monthly compensation bonuses.

Employee performance often is tied directly to the success of the company. The remuneration for that performance is often an annual bonus, not a monthly payout.

Client Flexibility

Independent business owners choose the clients for whom they want to service and how many clients to whom they want to provide service. This offers diversity to their work.

Employees work for a single employer. Workload diversity depends on the employer offering new opportunities.