One of the biggest choices a person can make is deciding to stay at the nine-to-five job or take the plunge into working for themselves as an independent contractor. There are pros and cons for both choices — either can be rewarding.
Advantages of being an independent contractor
The top reason to be an independent contractor is the fact that the person becomes his or her own boss. The only person that person reports to is the company offering the work and the government to pay taxes.
It’s a different way of working, according to the Xero small business guide on the subject.
“It might sound like an insecure life for the contractor, but knowing that your skills are in demand by more than one company can actually make you feel more secure,” according to the guide. Independent contractors own their own business, can work for multplie companies, can focus on a specialized skill and create the amount of hours and amount of work on a week-by-week basis, which can create the ultimate work-life balance.
Some independent contractors opt to work that way in order to find a business or company that they’re passionate about. The beauty of working as a contractor is that a person can do work for several companies until they find the one that’s the perfect fit. Better yet, contractors can actually make more liquid cash than the normal employees at that company if they’re good at what they do. There is minimal overhead cost for contractors and no obligation to keep them on board if the work isn’t satisfactory.
Cons of being an independent contractor
With the good comes the bad.
While an independent contractor can work for several companies at once, it can also have the reverse effect. If no companies are in need of a contractor’s expertise, there might be no jobs for that contractor. Job security doesn’t exist for contractors. While contractors may be making more money, they’re not being paid employee benefits and medical coverage and other benefits are expensive. Full-time contractors must pony up for those expenses, which can cut into their paychecks.
There’s also a risk of not getting paid at all. After doing significant work, an independent contractor runs the risk of being duped by a company. Of course, a sharp contractor will know how to deal with that type of situation through the legal system. And probably the most difficult part of being a contractor is that the contract needs to make sure to put away for taxes. A traditional employee has taxes taken out of each paycheck, and frequently, receives a refund at the end of the year. It’s important for contractors to either hire an accountant or use solid accounting software to keep track of their income, expenses and taxes.