What are the disadvantages of being self-employed?

Life as an independent brings many benefits with it such as far greater freedom, flexibility and self-determination. 

But as with everything else in this life, there is also a flip side of the coin, where some self-employed people experience disadvantages or challenges. 

In this article, we will therefore take a closer look at the potential pitfalls of being independent, and give you some tips to navigate and overcome the challenges that may come with it.

A self-employed person is defined as a person who runs his own business and is therefore self-sufficient. In contrast to e.g. salaried employees, a self-employed person does not work for an employer and therefore usually has greater flexibility and self-determination as well as several other advantages, which we will get into in more detail in this article.

An independent freelancer is most often described as an independent trader who solves both large and small tasks for other companies. This is most often B2B, and you are therefore not employed as an independent freelancer, but are instead hired for various tasks at companies, where companies buy the freelancer's services.

disadvantages as an independent

What are the disadvantages of being self-employed?

To be self employed can be enriching, and there are a lot of advantages and benefits if you build a stable and strong business. 

But there are also clear challenges to life as a self-employed person. Once you fall in love with the idea of the free life, you can easily tend to underestimate the less glamorous aspects of that existence. 

Below you can read our take on some of the most widespread disadvantages of being self-employed.

(Also read here, what the benefits of being independent can be.)

Complex accounting

There is undeniably a larger accounting that comes with being self-employed. 

Unless you're just crazy about bookkeeping and numbers, this will most likely be something that drags down the standalone experience tremendously. As a self-employed person, it is your own task to keep track of both income and expenses, tax, VAT, deduction, driving deduction and invoicing. 

There are many rules to familiarize yourself with, and bookkeeping and accounting can quickly turn into many unpaid working hours. Yes, in fact, a full-time freelancer spends an average of 13.6 hours per month on administration. 

However, you can choose to outsource the task to an accountant, where a bookkeeping program will also be a good help. Unless you have really good contacts, they will of course also charge you. 

👋 Pro tip: More and more self-employed people are leaning towards smarter ways of running their business. Including is Factofly also a popular choice, in order to be able to spend time on the business, and not have to deal with various accounting technical maneuvers.



Responsibility for tax payment

When you work as an employee, the tax will be automatically reported by the employer. 

As a self-employed person, you are responsible for reporting the tax correctly - which also requires that you have everything accounted for and calculated to the letter. 

Tax reporting can be another time-consuming task, where errors can lead to fines and ultimately a ban on operating a CVR number for a period of time.

Of course, Factofly also helps you keep track of this part. See more about the benefits of Factofly here.

Time spent on administration

As the above suggests, there will inevitably be a lot of administration time. In addition to accounting and tax reporting, administration can be quite basic things, such as answering customer inquiries, updating the website or other marketing tasks in the company. "Things" that unfortunately cannot be invoiced to some customers. 

Time spent on administration is time that could potentially be spent on generating income instead. 

Administration is therefore something that can be particularly frustrating, as most self-employed people have chosen the industry because of passion for the work and not to sit with administration.


Late payments

As a self-employed person, you may experience delayed or missing payments from customers. Although the vast majority of customers are good at paying on time, it happens that some customers do not get paid. This can affect your turnover and salary, so that your entire financial foundation becomes more uncertain.

A fluctuating and uncertain economy and potentially not being able to pay your bills is something that stresses most people. Delayed or missing payments are therefore a major disadvantage in everyday life as a self-employed person.

In addition to staring at an unpaid invoice, the recovery itself can also be a bit of a time-saver.

Therefore, make sure you have paper at work (you can find a contract template here), where the payment terms for your cooperation are also stated. 


As also mentioned in the point above, if a customer does not pay the invoice, you will have to be responsible for recovering the non-payment yourself. It is both a time-consuming and unnecessarily stressful process.

If, on the other hand, you use Factofly, you are not responsible for the recovery of the payment yourself. At Factofly, you get your money paid regardless, and we then take care of getting the money home from your customers. We do this by first sending a reminder, and if the customer still does not pay, we are ready to take the case all the way to the bailiff's court. However, it rarely goes that wrong.

With Factofly, you are therefore guaranteed your payment, while of course we also have a full understanding of the care and maintenance of the customer relationship.



Fluctuating income

A fluctuating and fluctuating income as self-employed is and will be a stress ball. However, this does not have to be the case for all self-employed persons, which is why it is important to focus on building a safe and stable business with good risk management.

However, it is inevitably something that many self-employed people experience. A fluctuating income therefore also makes it more difficult to budget and plan ahead, which can go beyond you pay and the amount of fixed expenses you choose to have.

A very good father's advice from our side is to have a financial buffer of between 3 and 6 months. It helps you both through a freelance dry spell, and also gives you a ballast to have the arrogance to say no to customers who don't fit into your business.

Lack of health insurance and pension

As an employee, boats are automatically controlled health insurance and pension

As a self-employed person, the matter is different, and it is something you have to take care of yourself. It may take a little getting used to different ones insurances and to get a handle on your own pension scheme, which you must also remember to pay into every month.



No paid vacation

As an employee, you are used to paid holidays and holiday pay, but as a self-employed person you must ensure that you can afford to take a holiday. 

It is important to have time to completely disconnect and relax if you are to keep the business going. It takes self-discipline to save up for a vacation and to actually take time off when you have time off. 

For some self-employed people, this can lead to pressure, where they end up never taking real time off or lack money for the bills when they have taken a holiday.

Your price must therefore also reflect that there must be room for holidays. And by the way, your customer knows that too. The rule of thumb is an hourly rate that is 2.5 times higher than what your hourly rate in a permanent position would be. 

Especially as a creative, it takes a little practice to build up some healthy financial habits, so that you don't feel like you're living from hand to mouth.  

Tips for being a successful freelancer

Becoming a successful freelancer requires that you can (and will) wrestle with the challenges that come your way. 

You can't plan your way out of everything, but if you have the biggest disadvantages of being self-employed in the back of your mind, you can at least have thought through some scenarios so that you don't get caught in bed.

The independent world is tough, and to thrive – rather than simply survive – requires discipline, hustle and often also  a strong network

Here we've put together some tips to help you overcome the most common pitfalls in the freelance world:

Make clear contracts:

This part is important to avoid misunderstandings between you and your customers. By having detailed and clear contracts, both you and your customer will have the same expectations for the project, the time frame, payment terms and other important details.

Build a stable (and diverse) customer base:

If you would like to have a stable economy and turnover, it is a good idea to build a stable customer base. You can do this by varying your type of customers and focusing on a base of fixed/longer-term projects. 

In addition, you should also avoid committing to larger projects, e.g. to give 30 hours per week for the same project. If a major project suddenly ends, you will be left with a big loss in your turnover all at once.

Invest in your own development:

The freelance market is constantly developing and with the growing competition, it pays to invest in professional development. With the latest knowledge in the field and course certificates, you ensure that you can deliver good quality. In addition, you will also have the opportunity to raise your prices more easily.

Expand your network:

By participating in professional events, conferences and online forums, you can meet like-minded freelancers, which can lead to new opportunities and collaborations. A strong network can be your most valuable resource as a freelancer.

Manage your time effectively:

As a self-employed person, you manage your own schedule, so it is important to have a good overview of your time consumption. Use possibly time tracking tools or management tools to keep track of your projects and make sure you meet deadlines.

Have an overview of your finances:

Set a budget, manage invoicing and accounting. As an independent freelancer, it is important to have an overview of your paid salary, take care of the finances and ensure that the business runs as it should. It can also be savings for tax rates, VAT and a buffer for months with less income. At Factofly, we also have templates for this, and we can help you with this through our platform.

Be aware of your worth:

It is important to know your value as a freelancer. This is also closely related to belief in yourself, in what you can deliver and your mindset – so don't be afraid to negotiate your price and stick to what you know you're worth. 

Setting clear boundaries and sticking to your value will help maintain a profitable freelance business.

Take care of your well-being:

Life as a freelancer can be unpredictable and changeable, so remember to set aside time for yourself. It is important to take breaks, eat healthy, exercise and stick to a stable everyday routine – your business and income depend on you functioning.

Thriving as an independent freelancer therefore does not only mean that you deliver a good piece of work to your clients. It also means that you thrive in your business, and can make both everyday life and the economy fit together.

Become part of Factofly and make it easier to be independent!

When you become part of Factofly, you get access to tools and resources that make it much easier to deal with the disadvantages and challenges that can be associated with life as a freelancer. With us, you can become part of a community that supports you in your career as an independent freelancer. Experience the benefits of having a strong support structure behind you!