There's nothing wrong with self employment in and of itself. I've been self employed for many years now, and this hasn't stopped me constantly receiving jobs offers. Of course, I've also been employed for many years before that, and that probably counts too.

I think self employment only looks bad when it's interspersed with very small periods of employment, from a couple of months to six months. Having long periods of unemployment, followed by short bursts of a couple of months here, three months there could maybe be interpreted as a sign that the candidate has a problem with keeping jobs, and that there are probably good reasons for that.

Having only ever been self employed could also be seen as a bad sign. Having never worked within a company, maybe the candidate has no teamwork skills, cannot work within a hierarchy, cannot keep a fixed schedule, etc.

I can't think of any other situations when self employment would look bad.