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Want to Become an Independent Contractor? Benefits and Pitfalls

 

Being an independent contractor is not as hard as many would believe. Independent contractor benefits are limitless if you are diligent with your work as you would for someone else. An individual working as an independent contractor will be able to set her own hours and work in the convenience of her own home rather than rushing into the office.

Independent contractors are made up of freelancers and consultants. An independent contractor is an individual who performs services to the public without having the status of an employee. Many independent contractors have their own business, trade or profession. In other words, they are in business for themselves. Independent contractors are people with their own practices such as graphic artists, accountants, doctors, carpenters and plumbers. There are also many freelancers in highly specialized jobs, while others offer technical skills such as engineering, computer programming, writing and accounting. Working as a freelancer, however, has its share of advantages and drawbacks. 

Benefits of Being an Independent Contractor

When you are working as an independent contractor, you are your own boss. You also get to choose your own work hours. You can work at home or even while you are on a Caribbean vacation for as little or as much time as you want. Independent consultants are considered to be masters of their very own economic fate. Their income depends on the quantity and quality of their work.

As an independent contractor, you get to earn more than those working for other people. According to studies conducted by the Wall Street Journal, independent contractors are usually paid 20 to 40 percent more compared to regular company employees. There are many firms who would opt to hire them since they don't have to spend on social security taxes, sick leaves, health insurance, etc.

Independent contractors get to have many tax benefits not available for regular employees. There are no state and federal taxes withheld from your payroll. There are also many business related tax deductions that an independent contractor can deduct from her income taxes such as office expenses, travel expenses, equipment and insurance costs, utility expenses, and entertainment and meal expenses.

Pitfalls of an Independent Contractor

Being an independent contractor doesn't offer any job security. When you don't have an existing business, you don't get paid. The income you have will depend upon the number of projects that has been offered to you.

There are no company benefits. Independent contractors don't have unemployment insurance benefits, health insurance, sick leave, vacation leave, etc.

They also take the risk of not getting paid. There are some independent contractors who get scammed or get paid by their clients at a very late time; this means the usual bimonthly payment is usually not feasible.  There are several federal and state laws that protect employees from exploitation and discrimination, but only a few are applicable to independent contractors. Most of these contractors are also made liable for their business debts.

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