Are You Self-Employed Or A Business Owner?

Being self-employed and being a business owner does not mean the same thing.

It may be difficult to tell the difference because the terms have been used interchangeably for so long.

But it’s important to know the difference.

Because it helps you know where you stand and the advantages or disadvantages of your business.

And that is what this article aims to achieve.

The Difference Between Self-employed and Business owner

• The self-employed person is not different from the business compared to the business owner
• Self-employed means you create a job for yourself, while a business owner creates jobs for others
• A business owner has limited liability versus a self-employed person.
• A business owner can generate revenue without being involved in the operations of the business while a self-employed person cannot.

By definition, being self-employed means that you created a job for yourself.

You don’t have a boss and can choose when you work or how you work.

But unlike self-employment, business ownership means you own a separate business that does not rely on your involvement in its day-to-day operations to provide returns.

Compared to a self-employed person, the business owner creates jobs for others.

One of the biggest differences between a self-employed person and a business owner is that a self-employed person is indistinguishable from his job.

Because whether you serve as a sole proprietor or an independent contractor or a freelancer, you’re paid for your skills or talents, and you don’t get paid independent of them.

But a business owner is a different person from his or her business. And so, the business can exist without the business owner.

And the business owner is the person that runs the business.

For instance, say you’re a graphics designer, and you have people pay you for your designs without going through someone else (a boss) – we can say you’re self-employed but say you open a graphics design agency and bring on clients that pay your firm for designs which your employees can do even in your absence then we can say you are a business owner.

Another area of distinction between a business owner and a self-employed person is that while the business owner has the luxury of freedom and can have a holiday or can afford a sick leave or just focus on growing and improving the business, the self-employed person cannot.

In the case of a self-employed person, a holiday or absence of any kind means that there will be no income.

Mr A and Mr B may both own restaurants in town, but if they get sick and are unable to go to their restaurants, Mr A has a system in place that will ensure the restaurants function without him, but Mr B does not because he is both the chef and the waiter and has no such system in place.

This is the case with many so-called small businesses in Nigeria, where the business shuts down when the owner unfortunately dies.

Because they are not real businesses, but just self-employed entities.

Many small business owners a frustrated today because they spend their day doing things they are not passionate about.

Because they wear many hats within the business, they must perform most of the tasks necessary to run the enterprise day-to-day.

Business owners, on the other hand, perform only those tasks that excite them about their businesses, and they can afford to do this because they delegate tasks they aren’t passionate about or aren’t skilled at.

Thus, they have more time to run and grow their businesses.

Finally, I would like to emphasize that a business owner’s liability is limited compared to a self-employed person’s.

This is because the business owner is seen as a separate entity from the business and cannot be sued personally, or his finance cannot be used to settle his or her business debts.

Unlike a self-employed person, that is the same with his or her business.

Now that you know the difference, take a moment to evaluate yourself.

Where do you stand? Are you self-employed or are you a business owner?

Share with us in the comments section below.

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