A time could come when the question arises: “Do I keep working here or become an entrepreneur?” In other words, do you remain a W-2 or become a 1099?
It might not an option. For some, it’s simply too scary to become a W-2 with the next payday an uncertainty. But for others who possess what Chris Coleridge, a researcher at the London School of Economics, calls the “e-gene,” it’s a no-brainer. For those with the creativity, innovation, leadership and tolerance for risk, an entrepreneurial lifestyle is preferable.
Let’s look at the pros and cons of each.
As a W-2, you can expect to be paid for your efforts. Moreover, you can expand and hone your skills while your boss worries about administration, insurance, payroll, taxes and other concerns. There’s a lot to be said for having all that taken off your plate. Life is hectic enough for you and your family without worrying about associates and their welfare. You could be promoted to a high-level executive position that comes with higher pay and a great retirement package. You roll in and take care of your part of the business every day.
The down side of being an employee? Your daily routine could require an emotional commitment to a cause you just don’t feel. Consider the high school graduate who always had aspirations to be an architect, yet neither the means nor social culture that nurture higher education. This worker committed to employment in the produce department of a local grocery store for more than 30 years to earn a retirement, but was miserable for half that time.
At any given moment, your position could be altered — perhaps for the better, but maybe not. Your pay might increase, but not necessarily as high a rate as you’d like or need. A promotion or demotion could occur any time. You might be fired. In a right-to-work state like Colorado, you could lose your job for any reason or no reason at all. Even if you excel in your work, your boss might not like you. It’s almost as if you’re at the whims of those for whom you work. It could be difficult landing another job, especially if you’re above a certain age level.
As a 1099, you could experience freedom and flexibility, become a master of your own destiny and innovate and implement. You might even hire some of your own employees and turn your enterprise into something bigger than you’d ever imagined. You could make money doing something you love and have to ask yourself, “They pay me for this?” Think of media mogul Oprah Winfrey, for example. Of course, you’ll need some talent to soar to those heights.
The hard reality of becoming an independent contractor is that you might be paid more up front, but you’ll owe taxes. If you work strictly on commission, your income could be erratic. Moreover, you could be financially vulnerable while you’re building your business. As an 1099, you could face concerns about your future.
Seems there’s treachery all around. But that’s life in general, no?
The pros and cons of each path should be carefully weighed. For those who enjoy detailed analyses, there are labor laws in place that define some of the differences between employees and independent contractors.
Because there are plenty of choices in either direction to confuse and possibly immobilize us, the difficult, fundamental and philosophical questions should be asked and answered first. That leaves us at the beginning of this choice, which feels like we’re going nowhere.
One way to get to a decision is to “chunk it.” In other words, look at the big chunks first. Details can be managed as you go along once a choice has been made. Minutiae will bog you down if you look at it first. Ask such as questions as: If money were no object and anything’s possible, what would I choose? How can I help this cause? What brings me joy?
First, know yourself. If you don’t, the journey to discover your best career choices could be rife with obstacles. Check in with yourself and ask the big questions. After the questions have been answered, respond to a call to action and go get it. Put systems in place that help you, and you’ll eventually get there if you don’t let go. Perseverance is key.
Make a choice and hang on for the ride.