4 Benefits of Being a Contractor vs. an Employee
Consider these benefits of contract work.
The era of a singular career—with full-time work at a stable employer, benefits, a retirement plan, and a living wage—is over. An NPR/Marist Poll found that 20% of American jobs are held by a worker under contract, without the full-time benefits (or the constraints) of yesteryear. The U.S. labor force is projected to reach 163.8 million in 2024 and contract work is expected to grow with it. It’s not uncommon for Americans to have multiple, simultaneous careers, and to work for many different organizations in their lifetime.
If you have an entrepreneurial spirit, love a challenge, and a degree of uncertainty in your life won’t prevent you from sleeping at night, working as a contractor can be a rewarding means to make a living.
Consider these benefits of contract work:
Be Your Own Boss
If you’ve been in the workforce for more than a few years, chances are that at some point you’ve had a boss whose management philosophy was inflexible, unresponsive, or incompetent.
The stereotypical “bad boss” creates a toxic work environment by taking credit for others’ work, and insulating themselves within the bureaucracy of performance reviews, personal development goals, dress codes, and an attitude of superiority.
Contracting requires that you’re fully responsible for your own successes (and failures) and that you listen and respond to the needs of your demanding clients. However, these complexities are yours to manage, which amounts to a greater sense of being your own boss.
Flexible Hours and Place of Work
One of the biggest advantages of working as a contractor is greater flexibility in setting your own work schedule and place of work. Even full-time wage and salary workers say they benefit greatly from a flexible work schedule and often seek employers who offer this perk. According to a 2017–2018 survey, 36 million workers (25% of total workforce) worked from home at least occasionally, and 15% had days they only worked at home. Furthermore, 57% of workers had a flexible schedule in which they could vary the times they started or stopped working.
The ability to set your own hours allows for customization of your work schedule to suit personal performance. Flexible work schedules have been shown to increase job satisfaction, provide better mental and physical health, and save precious time commuting to and from work.
Provided you can work from anywhere and don’t need to be on the client’s premises, being a contractor allows you to set up your own office space and work around personal and family life.
More Life Freedom
As a salaried employee, you’re typically eligible for two to three weeks of vacation per year, with specific vacation time being subject to veto by the employer. Vacation time can often be lost if not used within an annual schedule, and requests for paid-time off are generally accepted as a necessary evil within the realm of maximum profit.
Depending on an employee’s specific industry, certain times of year are “off limits” for scheduling vacation. Taking extended unpaid leave (to travel or care for a sick relative) is unacceptable in most cases, which makes quitting your job the only available option.
As a contractor, you have much more freedom. Your contract is an agreement to perform services for your customer for a fixed period of time, or as defined by the contract. When the contract expires neither you nor your client has an obligation to renew the agreement. Whether you accept an offer, search for other opportunities, or take time off is up to you.
20—30% of America’s working-age population currently engages in some form of independent work, and these individuals have reported higher levels of satisfaction in their work-life balance than those holding non-contract work.
Business Expense Tax Deductions
As a self-employed contractor, you don’t pay taxes on every dollar you earn; you pay taxes on the amount you’ve earned minus the costs of running your business. You are eligible to deduct business expenses from income tax. This includes:
- Automobile expenses related to your business, including mileage
- Charity and non-profit donations made on behalf of your business
- Accounting and legal fees used for business purposes
- Business travel expenses like conference fees or membership dues
- Promotion and marketing expenses
- Workspace rental, office supplies, and equipment purchases
Make sure you’re fully aware of all the deductible business expenses you can claim on your taxes before branching off as a full-time or part-time contractor.
Original Article by the balance small business
