Self-employment may not be the right fit for everyone. Knowing which questions to ask yourself can help guide you to the decision that makes sense for you. There are a wide range of possibilities; the first thing to do is explore your options.
Forms of Self-Employment
How you go about becoming self-employed is an individual journey based on a number of factors, including: your current financial situation, your current employment status, where you are in the life cycle, what you expect to happen personally and financially in the next few years, and your immediate and long-term family and other obligations.
There are four major categories of self-employment that can be especially appealing to those over 50. Here, we’ll explore freelance/contracted services and provide additional resources for you to learn more about social enterprises/nonprofit organizations.
1. Running a part-time business on the side – you don’t quit your day job but you can add to your income with a second venture.
2. Freelancing or contracted services – you work for yourself but do specific projects on behalf of companies or organizations.
3. Owning your own microbusiness – you run a business of fewer than five people that offers products or services to the public.
4. Social enterprises or nonprofit organization – you own a business that has the goal of generating profits AND doing good in the community. See below for resources to help you learn more about Social Enterprises.
What’s the difference between a contractor and a regular employee?
Often, independent contractors and employees work side by side at the same company, even doing the same or similar work. But there are very important legal differences between being a contractor and being an employee.
Your employment status affects many issues such as employment benefits, taxes and liability. If you are accepting a job offer to be an independent contractor, you should know some of the key differences.
• Usually works for only one employer.
• Works the hours set by the employer.
• Usually works at the employer's place of business.
• Often receives employment benefits, such as health and disability insurance.
• Generally provides consulting services to more than one company.
• Sets his or her own hours.
• Works out of his or her own office or home.
• Does not receive employment benefits from the employer.
Social Enterprise Resources
You can own a business that has the goal of generating profits AND doing good in the community. See below for resources to help you learn more about Social Enterprises.
Additional Resources for Exploring Your Options
- Salary.com - Pay Yourself Right When Being Your Own Boss
- AARP Budget Calculator - Online calculators have made it easier than ever to craft a budget that works for your situation. AARP offers a home budget calculator that allows you to enter your income and expenses and then does the math for you.
- AARP Foundation Finances 50+ - Worksheets and Action Plans on Budgeting.