The real question you\u2019re looking for when you\u2019re asking whether you want to be an independent contractor or a traditional employee is: \u201cDo I want to work for myself, or for someone else?\u201d<\/p>\n
There are no general answers to be given. As with most big picture questions, the decision depends on what you want and what you\u2019re looking for, and any decision ought to be tailor made to fit any number of lifestyle variables and other desires.<\/p>\n
But given the boom in various economies dependent on contracting work, like the gig or sharing economies, and their continued upwards trajectory as they become more ubiquitous in our society, the choices and chances for contracted work are more available and varied than ever.<\/p>\n
While there isn\u2019t a straightforward answer for whether or not contract work is right for you, there are two distinguishing categories that can be made between the independent contractor and employee. The pros\/cons can be broken down into distinct subcategories- and depending on what\u2019s most important, this list could provide insight into what path to take.<\/p>\n
– Tax:<\/p>\n
Employees don\u2019t benefit from the same tax advantages independent contractors do. Employees face limited deductibility, but independent contractors can write off any expenses they deem necessary for their business. Business expenses can include travel and any reasonable costs that come with having a \u2018home office\u2019 business. Other interesting deductions include continuing education, depreciation of property and equipment, health insurance, car expenses and mileage, and health care.
\nTaxes aren\u2019t withheld. Federal, state and FICA taxes aren\u2019t withheld from the paychecks for independent contractors. The flip side is that these taxes will be paid out on your personal income tax return.
\n– Business:<\/p>\n
Independent contractors aren\u2019t beholden to required work hours set by their companies or boss(es). Employees must adhere to whatever hours their boss necessitates- whether or not they\u2019re compatible with their busy life schedule.
\nEmployees have a cap on earning potential- especially if they\u2019re salaried and exempt. This means no overtime pay. Independent contractors have no ceilings regarding pay- if a job is expected to exceed time and resources, they can renegotiate or expand their own pay and salaries on a per contract basis. Greater earnings potential abounds.
\nEmployees appoint any intellectual property rights to their employer. Independent contractors are the own the rights to their intellectual property, which include copyrights, patents, trademarks, and trade secrets, along with any inventions, art, symbols, images, designs, and literary works.
\nIndependent contractors can grow exponentially in their own career and chosen field. Employees can get hired for roles that evolve in entirely different directions than what the employee desires. Their skills might not be utilized in ways they prefer or their specific field, and they might be shuffled between departments and even job titles. Employees may be passed over for promotions, and their careers can be allowed to stall or become stagnant based on the whims of bosses. Career opportunities are always at risk of being limited. Independent contractors are in charge of their own trajectory- and they get to work permanently, as long as they so choose to do so, in their desired field. Further, IC\u2019s don\u2019t have to worry about interdepartmental politics that can plague companies, or sudden changes in leadership that could derail their careers.
\n– Personal:<\/p>\n
An independent contractor\u2019s time is their own. Their career is their own. Employees are dependent on promotions from third party sources, and their growth and upward mobility isn\u2019t always guaranteed.
\nEmployees are subject to office politics, and increased \u2018emotional labor\u2019- managing the feelings and catering to the whims of not just your clients, but of your coworkers, managers, bosses, and other office cohabitants. Employees are expected to match their personalities to the office \u2018culture\u2019- and it can be tiring work just managing who you are based on arbitrary expectations set by other people. Independent contractors, while of course professional and courteous, don\u2019t need to play the office politics and games that can often be a time suck and emotional drain.
\nIndependent contractors can reap the benefits of their work nearly immediately. Employees might not ever be acknowledged or recognized for the work they do and the time they put in.
\nThe above are only a small sampling of the pros\/cons that go into contractor work versus traditional employment.<\/p>\n