what is self employment 
self employment is earning income without being employed and paid by someone else self employed persons may be involved in a variety of occupations but generally are highly skilled at a particular kind of work writers tradespeople freelancers traders investors lawyers salespeople and insurance agents all may be self employed self employment isn t like being a traditional worker because self employed individuals aren t tied to an employer being self employed gives people flexibility but comes with certain tax implications understanding self employmentthe precise definition of self employment depends on who you ask as it varies among different agencies including the u s bureau of labor statistics bls the internal revenue service irs and private research firms however the overarching definition of the term is the state of earning a living from any independent pursuit of economic activity instead of earning a living working for a company or entity a self employed person is anyone who performs work for pay independent contractors sole proprietors of businesses and individuals engaged in partnerships 1 a freelancer or an independent contractor who performs all of their work for a single client may still be a self employed person 2being self employed is often confused with owning a business but the two concepts aren t necessarily the same a self employed person is usually the business itself whereas a business owner may own the company but not be involved in operating or managing it special considerationsa self employed person must file annual taxes and pay an estimated quarterly tax they are also required to pay what is called the self employment tax in addition to income tax this tax equals 15 3 of their earnings of this tax 12 4 goes to social security on the first 168 600 in 2024 and 2 9 goes to medicare tax 34those who make less than an annual net profit of 400 are exempt from paying taxes on that income 2advantages and disadvantages of self employmentthere are benefits and drawbacks of working as a self employed individual we ve highlighted some of the key pros and cons below while self employment generally requires much more work and attention many benefits are attractive one of the most significant disadvantages of self employment is that there is no entity withholding and paying your estimated taxes or withholding you re required to pay estimated federal taxes quarterly some other disadvantages are you are the bossability to choose projectsflexibility in your schedule