The dream of self-employment is something that has gained a lot of popularity in recent years. Thanks to the Internet, almost anyone can start a side hustle from home.

Not only is it technically easy to become self-employed, it’s also relatively inexpensive — depending on the strategy you use.

A number of side hustles require only a computer and a fast Internet connection. Even if you choose a more expensive venture, you can still save money by starting out at home.

Because of the ease involved, and the low startup costs that are possible, many would-be solopreneurs fail to account for other costs that they might run into. While being self-employed works for many people, it isn’t the only satisfying career path. And there are costs involved that you might not have thought about.

Some of the costs of being self-employed include:

Lost Benefits

Honestly, this is probably the largest cost you experience when going from employed by “the man” to being self-employed.

Think about the benefits and perks that come with your job. One of the biggest benefits you receive is health insurance offered through your employer. When you transition to self-employment, you suddenly no longer have access to discounted health insurance. You can look for group plans, and individual plans, but the entire cost is on you (although you can offset with the help of tax deductions, as well as a Health Savings Account).

Carefully consider other benefits offered by your work, from the cafeteria plan, to reduced child care, to discounted gym memberships.

All of these are costs that you will have to bear on your own once you join the ranks of the self-employed.

Difficulty with Certain Transactions

Another consideration is the costs related to performing certain transactions.

You can still get a mortgage if you are self-employed, but it’s more difficult. There are some things you can do, like pay yourself a reasonable salary and issue a yourself a W-2, but many self-employed people don’t do these things. Instead, they have sole proprietorships, or a LLC. As a result, you might have to pay a higher interest rate on your mortgage or other loans.

I didn’t have to pay a higher interest rate when I bought my first home, but I did end up needing to go through an income audit. I had to pay for the audit, which verified my self-employed income for the mortgage lender. What you pay varies according to the accountant, and where you live, but you can expect to pay anywhere between $300 and $1,000, depending on how in-depth the audit is.

Other transactions might be more difficult to complete as well, without the regular pay stubs that a more traditional job offers. Make sure you understand some of these costs before you quite your day job for self-employment.

Variable Income

Don’t forget about variable income.

If you don’t adequately budget for your variable income, it can cost you in terms of fees and other costs. There have been times in the past when a client’s late payment, or some other issue, has led to overdraft fees as money came out of the bank for automatic payments.

Your cash flow should be arranged in a way that makes sense for your situation, and it’s important to know how to budget when your income is variable. Otherwise, you could find yourself in debt, racking up the interest charges, and paying all manner of fees.

Emotional Costs

Don’t forget the emotional costs involved with being self-employed.

We often picture those that work for themselves as having unlimited leisure time. However, this isn’t always the case. In fact, if you are just starting out, you might have less free time. It’s hard work to start out as a solopreneur — and can be even harder work if you hire employees on top of that.

Working for yourself often means that you don’t get to take days off, and when you do, you usually have to make up for it somewhere by working even harder to catch up. Self-employment can weigh on your personal relationships as well, cutting into family time and impacting how you interact with others.

Make sure you understand this, and that you account for it, before you decide on self-employment.

Bottom Line

I love being self-employed.

However, there are some times when I look at some of my employed friends and think it might be nice to “clock out” and leave the job at the end of the day, plus enjoy perks like employer-sponsored health insurance.

In the end, I think the costs are worth paying. But you should make sure that they are worth it for you before you take the plunge.

What other costs of being self-employed do you know of?