24 April 2026
Being a small business owner and being self-employed share many similarities, which can sometimes cause confusion. Clarifying your business category can help you feel more secure about your legal and tax responsibilities, especially under labour laws and South African Revenue Service (SARS) regulations.
Examining how you manage the business is the easiest method to distinguish between being a small business owner and being self-employed. If you operate a small business, you manage it and frequently have employees. When you work for yourself, you are the business.
Small business owner:
You hire employees or have other self-employed workers working for you as independent contractors. Your business can be classified as a separate entity, meaning you have less personal liability.
Self-employed:
Sole owner: As a sole owner, you are your business. You call the shots, work for yourself, and take your business profits as personal income.
Independent contractor: Also known as a freelancer, an independent contractor produces work for clients while maintaining freedom and independence. You work on a contractual basis with clients but you are not their employee.
Partnership: In a partnership, you share business ownership with two or more individuals who are your “partners,” but you still have all the aspects of an independent contractor.
Being self-employed is an exciting opportunity to truly represent yourself! You have the freedom to choose your clothing style and work environment, which allows for a unique expression of your personality. While it’s essential to maintain a level of professionalism, you can do so in a way that feels genuine to you—no need for heels or formal attire if that’s not your style.
If you are considering venturing into freelancing, the best first step is to immerse yourself in an industry that truly excites you. Focus on building meaningful connections and attracting clients, which will help establish financial stability as you hone your skills. As you shape out your niche and start gaining regular clients, you will find the confidence to transition into full-time freelancing. This journey not only enhances your experience and reputation but also expands your valuable network. Embrace this adventure—you have the power to shape your own path!
To make sure you are on the right path with your taxes and business structure, it is important to understand the difference between being a small business owner and self-employed. Both paths provide you the flexibility to be your own boss, but they have different duties and tax obligations. It is a good idea to reassess your categorisation as your company grows to ensure you are maximising tax efficiency and liability protection. Your particular situation and long-term objectives will ultimately determine whether you choose to continue working for yourself or become a small business owner.
Ref: www.freelancersunion.org www.uasa.org.za