What are the advantages of self-employment? What are the disadvantages?

Self-employment can give you financial rewards and independence from employers.

When you first arrive in Ontario, it can be difficult to find good work. Many newcomers consider starting a business or becoming self-employed.

In Canada, most self-employed people are:

  • Professionals working as independent contractors (freelance)
  • Business owners
  • Salespeople who work on commission
  • Farmers and fishers

Advantages of Self-Employment

  • Independence, control and freedom from routine - Companies or individuals you work for are your clients, not your employers. As clients, they can state what results are expected from you, but they do not direct your work. Of course, you want to satisfy your clients if you want to receive more work, favourable referrals or better rates. But you are your own boss - you decide when, where and how to work to get the job done.
  • Financial rewards - A business may become very profitable. Companies are willing to pay more to independent contractors because they don't have the expensive, long-term commitments that they do with permanent employees, such as benefits, unemployment compensation and pensions. Independent contractors may also deduct business expenses from their taxes, which may increase their net pay. Many successful businesses in Canada are run by newcomers or immigrants.

Disadvantages of Self-Employment

  • Less security - It will be your responsibility to make sure you always have work to do. This means you may sometimes be without work and therefore without income.
  • Fewer free benefits - You will have to pay for your own vacation time, fund your own retirement plans, and buy your own dental, disability and life insurance.
  • Paying taxes - As a self-employed person, you are solely responsible for doing all the paperwork and paying your taxes on time. If you are an independent contractor, you will pay estimated taxes quarterly to pay your Canada Pension Plan contributions and income tax.

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Last updated: April 24, 2024 4001201