Deciding whether or not to become an independent contractor is a difficult decision; here's what you need to know.
For many people, taking a job as an independent contractor can be a great choice. Typically these jobs allow workers to take on parts of a job and charge an agreed upon rate for the work. Since they are basically self-employeed, they are able to have flexibility in choosing the work they want to do. Consultants and freelance employees can work for a short period of time or turn working for themselves into a full time career.
However, there are many employers who take advantage of workers by forcing them into an independent contractor contract. The worker is basically an employee without the rights and benefits that come along with working for a company. The company doesn't have to withhold taxes, contribute to Social Security and has no liablity in regards to the employee. This type of behavor is illegal most of the time, but it doesn't stop it from happening.
If you are considering accepting work as an independent contractor, there are a few things you need to know to decide if it is worth your time and touble or if you should continue looking for work as a traditional employee. Here are some of the basics:
- Taxes - When you are an independent contractor, you will be responsible for paying Income Tax and Social Security Tax yourself. Rather than having a certain amount withheld by your employer, you will need to save the same percentage each time you get paid in order to be sure that you will be able to pay when the time comes. Depending on your tax situation, the amount of taxes you'll have to pay could be substantial. You'll want to take that into consideration when you decide if the opportunity is financially worthwhile.
- Your intellectual property - For designers, writers and artist, working for themselves can be a huge plus. Often employers automatically have ownership of anything you created while you worked for them, whether or not you were using company time or resources. As an independent contractor, your clients only own the things they pay for. Anything else you create belongs to you.
- Flexibility - When you are an independent contractor, you can set your own hours and complete projects in the manner you see fit. Of course, your clients will expect you to do the work well and adhere to deadline, but if they are telling you when you have to work and setting hours for you to be in the office, they may be wanting a no-strings employee. That type of situation isn't going to benefit you. Why give up all of the perks of self-employment while suffering all of the hassles?
- Your own equipment - In general, independent contractors are responsible for providing their own equipment and supplies for the job. If you can't afford to purchase the supplies you need to do the work or the supplies are very expensive, you might not earn enough money to make it worth your time.
- You can work for anyone - If a company wants you to work for them as an independent contractor but doesn't want you to take work with anyone else, this is a big red flag. If you work for yourself, you are free to work for whomever you like. Consultants, for example, can work with just one company or with several. It is up to them to decide what works best.
- Lack of benefits - When you enter the world of self employment, you won't be able to take advantage of benefits like paid vacations, group health insurance and sick time. You should factor these costs into the rate you charge, because you'll need to get these things on your own
Have you ever worked as an independent contractor? Have you seen companies that take advantage of workers by forcing them into these arrangements? Please feel free to add your thoughts to the comments.
By Melissa Kennedy- Melissa is a 9 year blog veteran and a freelance writer for ManhattanJobsBlog. Along with helping others find the job of their dreams, she enjoys computer geekery, raising a teenager, supporting her local library, writing about herself in the third person and working on her next novel.
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