The distinction between the time you take for work and the time you take for your personal life becomes blurred and difficult to separate. You take problems home with you because you are the ultimate person responsible for any problems that occur; problems don’t disappear in the hands of someone else in the organization. The decisions you make during business hours have a very real impact on your life at home. You are on call 24 hours a day, 7 days a week, and you are the person that everyone looks to for answers, decisions, and problem solving. This is the reality of the self-employed small business owner. And this is the very real distinction between being self-employed and being an employee. The impact is even greater if you have an office in your home; you may find yourself in a tug of war between your family members demanding some of your space and time, and the differentiation between family and home life and work and business life becomes even more indistinct. Opening a new business from home always impacts the family; it’s important that everyone is on the same page about what’s happening, when, and where. Let’s examine how the day-to-day aspects of life are affects by the decision to be a small business owner.
1. Where is my money coming from?
When you’re an employee, you get a paycheck every two weeks. Your income, as long as you do your job and everything remains constant, is regular and expected. You look expectantly to a source outside of yourself to generate that check each pay period for the allotted hours that you have worked. It’s relaxing to receiving a paycheck at regular intervals for a known amount of money, although those workers who depend on tips or commission may have a more variable income. Small business owners, on the other hand, are paid only when they move past the breakeven point. Even the most successful businesses rarely generate sizable income during the rocky start up period.
2. Who is paying for my health care?
The rising costs of health care impact everyone. Employees are feeling the burden through the amount of money taken out of their paychecks to pay increasingly larger shares of health care costs. The truth is, it’s even worse for small business owners. There is no employer to pic up even a tiny portion of some of the premium. No pool of employees exists to allow you to negotiate your rate, which would hopefully be lower than the rate of an individual policy. However, there are small business associations that get cheaper group rates that small business owners can seek out.
There is an option under the COBRA law where an employee who leaves their employment for whatever reason (in this case, to start a business) can take the option of continuing coverage through their employee’s former plan. The employee that takes this option becomes responsible for the full cost of the premiums, and the continuation of coverage is limited to 18-36 months, depending on the circumstances under which the employee leaves the company.
3. What about my retirement?
Retirement savings differ from the health insurance issue in that if you don’t have health insurance and experience a catastrophic event, you could be financially dead in the water. Failing to save for your retirement could be even more damaging, but most tend to minimize the risk because retirement seems so far away when you are in your 30s and 40s. Employees tend to save more for retirement than the self-employed do. Employers usually provide an easy way to set aside a part of each paycheck without too much thought or sacrifice involved. The small business owner must consciously and sometimes painfully take money away from what they may consider to be more necessary functions in their small business. Sometimes, retirement is simply not a high priority for small business owners. It’s important to note than many small business owners rely on the sale of the business when it is highly profitable to ensure a comfortable retirement.
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