3 Things I Hate About Owning a Small Business

There are different benefits to owning a small business. I enjoy the freedom of running my own show and getting to make decisions about the work I take on. And there can be some tax breaks to enjoy in the course of owning a business.

Meanwhile, data from Incfile shows that 72% of small business owners say what they do is challenging but worthwhile. But 22% say that owning a business isn't worth the hardship and sacrifice.

I have to admit that I sometimes find myself falling into the latter camp. While I generally like owning a business, there are also challenges that trip me up. Here are the things I dislike the most about owning a business.

1. I have to file extra reports and deal with extra paperwork

The more time I have to spend dealing with administrative tasks, the less time I can spend actually earning money. But when you own a small business, there are certain reporting requirements you have to adhere to that can be very time-consuming.

Thankfully, I'm able to outsource some of that reporting to my accountant. But then I have to pay for those services. So either way, I'm looking at either an expense or lost work time and income.

2. I have to pay for workers compensation insurance, even though I don't have employees

In my state, it's a requirement to have a workers compensation policy when you own a business. This holds true even if you're the sole employee.

The purpose of workers compensation insurance is to protect companies against lawsuits filed by workers who get hurt on the job. I have no reason to sue my own company in the event of an injury. If I do, any "compensation" I get is coming out of my own business checking account. In spite of that, I still have to pay to maintain a policy to be in compliance.

3. I never really know what my annual income is going to look like

Not having a predictable income is something anyone who's a business owner or self-employed individual has to deal with. And it's actually not such a problem for me from a bill-paying perspective. My husband and I have arranged our finances very carefully so we're paying our essential bills from his earnings alone. (I realize I'm very fortunate to be in this position. But we also took on low expenses relative to our total income to make this possible.)

Rather, the issue with not knowing what my annual income is going to be tends to arise with tax planning. I have to make estimated quarterly tax payments at the federal and state level. But I often end up overpaying or underpaying because it's very hard to estimate my income.

And yes, I do have an accountant to help me run those numbers. But it's still a hassle.

Go into business ownership carefully

All told, I still think it makes sense for me to own a business. But I can't pretend it's all rosy, either.

If you're thinking of starting a business, be aware of the pitfalls you might encounter. You may be prepared to grapple with an income that fluctuates based on your company's success. But you may not realize how much administrative work there is to tackle, and you might get tripped up by unexpected costs.

Before you start a business, talk to people you know who own one and see what their experience has been like. If you can talk to business owners whose ventures are similar to the one you're thinking of, even better.

It's also a good idea to sit down with an accountant before starting a business so they can review the costs and benefits involved. In some cases, starting a business won't make sense because while there may be some tax savings involved, there can also be added fees you need to absorb. The more information you arm yourself with, the better equipped you'll be to make a good decision.