Self Employed vs Business Owner – What’s The Difference?

Updated: June 30, 2016
by Ray Alexander

What's the difference between Self Employed vs Business Owner? Am I self-employed, a business owner, or should I be? There's not much more than a little confusion to these questions. And the answer is, they are the same, using different terminologies. The moment you officially decide to earn income through your own business, you will become self-employed, and a business owner too.

Self Employed vs Business Owner

One of my clients has actually asked me this question. He got confused when filling in his tax assessment form. He then showed me a couple of website URL's where the misleading information had come from. One says "Think BIG, you're not just a self-employed, you are a business owner!". The other one says "If you start to employ people under your business, you are no longer self-employed" (which is wrong).

For legal and taxation purposes, the term "self employed" is expressed as opposed to "employed", but a "business owner" is not an official term. Anyone who owns a business is a business owner, so you can be self-employed as well as a business owner! My client hires someone to work for him. So he himself is an employer. But he's also self-employed.

If you decide to incorporate your business‚Äč, then the business will be a limited company (or called "corporation" in the US), so you will own the business. But YOU will not be employing yourself. You own the company (=business), and the company can employ you. So you won't be self-employed. Does that make sense?

"Think Big?"

A lot of people may tell you to have a "business owner mindset" rather than a "self-employment mindset" for motivational reasons. The latter sounds like you spend all your time and hard work to earn money, whereas the former sounds like you hire people and leverage other people's time therefore you have more freedom, hence more wealth...which is not always the case!

Good business owners care about their assets and resources, they value and invest their time to continuously improve their businesses. Whatever you call yourself (founder....proprietor!), whatever motivates you will be good. You are what you own!

About the author 

Ray Alexander

ASD. Recovering alcoholic. LGBTQ+ advocate. Semi-retired. 15+ years of web-designing experience. 10+ years affiliate marketing. Ex-accountant. I'm nice and real. Ask me if you need any help in starting up your home business.

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