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The Pros and Cons of Contract Jobs


Contract jobs are an excellent way to earn the money you need as a home based entrepreneur. When you have an agreement, the work is guaranteed, and you could work with a client for a long time and generate a steady income. The client benefits because they don't have the hassle of dealing with the legal and tax requirements of having a telecommuter, making it a win-win situation for everyone. Although there are cons to contract jobs, they rarely outweigh the pros:

Pros of Contract Jobs

When you work as an independent contractor, the person who hires you is your client, not your boss. As as a result, you can expect these benefits:

  • Set your own work hours, according to your family needs and work habits
  • Control how you work without direct input from the person who hires you
  • Work anywhere you please, as long as you have access to everything you need to complete projects
  • Own the intellectual property rights to your work, unless you waive or transfer them in an independent contractor agreement
  • Client's don't withhold taxes from your pay, giving you more money and more freedom for tax planning and filing
  • There's no supervisor to oversee you while you work
  • Work with multiple clients, doing different projects or types of contract jobs
  • Deduct business expenses like any self-employed person
  • Terminate the relationship when the agreement is over, or during if the contract allows for it
  • Determine whether you want to work with a client for a long time, by starting with short-term contract job 
  • Clients can only fire you according to the agreement you signed, which could mean a long-term gig for you if you comply with the agreement

The extent of these benefits depends on the agreement of each contract job. Some agreements are restrictive, and benefit clients and not you, the independent contractor. It's important to protect yourself, by asking an attorney to review the agreement, if you don't understand the legal complications of the clauses in the contract.

Cons of Contract Jobs

There are a few cons to working as an independent contractor that you should think about, and it's important to weigh them against the pros. Tax laws don't favor independent contractors, which makes it important to be diligent about record keeping and to sign independent contractor agreements .

You are responsible to pay employer's share of tax withholding, which you don't have to do when telecommuting. Most clients don't offer health insurance as a benefit. Also, you may have to charge less for services in an economic downturn, whereas minimum telecommuter wages are "protected" by state and federal laws.

Be careful not to act like an employee, and make sure that a client doesn't treat you as one. You and the client will be audited by the Internal Revenue Service (IRS), and you can find yourself with a lot of tax problems, which is a major con. Protect your status as an independent contract when you work on contract jobs. Signing an agreement goes a long way.

Daphne Mallory, Esq. is the co-owner of Mallory Writing Services and has written more than 100 articles helping home based business owners and entrepreneurs start and market their business. You can learn more about her here.

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