indipendent_contractor

10 Things They Never Tell You About Being An Independent Contractor

 

Working on contract offers you a lot of freedom. You can change up your job, your priorities, and even your location with relative ease, and if you know what you’re doing you can actually build a pretty strong business in the process. Being a contractor is like being any other employee, though. Here are ten things no one tells you about being an independent contractor, but that you really should know:

  1. Taxes – Unlike an employee, when the company pays you as an independent contractor, they aren’t going to pay on your income, Social Security, and Medicare taxes. That means that, come the end of the year, you will owe the IRS. Take the appropriate deductions out of your paychecks as you get them to avoid being caught off guard.
  2. Intellectual Property – More often than not, you actually come out ahead when it comes to intellectual property as an independent contractor. You’re going to want to read your contract very carefully, though, to know the exact terms of what you own. You can always re-negotiate a contract, but once it’s signed you can’t get any work back that you’ve already agreed to give away.
  3. Transitioning – Contracts give you a unique opportunity to try out a company and its culture before signing on full time as an employee. Not all contracts are contract-to-hire, though. Again, read your agreement carefully to see if it’s a terminal contract, one with potential for renewal, or one that could lead to a full time hire.
  4. Benefits – Occasionally, contractors get benefits from generous companies, but for the most part they don’t. Your client or company is not required to provide you with benefits like insurance, retirement, or anything else.
  5. Payment – As a contractor, you get paid for the work you do. Generally, this comes in the form of either hourly or per project payment. If you get paid per project, be careful. Even if the price seems good to start, if you end up working more hours than originally estimated on the project, you could end up making below minimum wage with no recourse for additional compensation.
  6. Business Planning – Your client might be a company or it might be an individual, but at the end of the day, they’re your client – a totally separate entity. You’re not protected under your client’s business plan, which means you need one of your own. Don’t be afraid to set yourself up as an actual business. Incorporate to protect yourself and develop a full business plan. Look into insurance, too.
  7. Accounting – Just like you’re not protected under your client’s corporation, you likely aren’t going to get access to their in-house accounting. That means you need to set up a means of bookkeeping for yourself. Quickbooks has an edition especially for contractors, as do a few free parallels.
  8. International Work – The laws for independent contractors are different in every country. if you’re working with an international client, they may not be required to follow the regulations you are in your home country. Check into the differences and how they impact you before you start the job.
  9. Better Opportunities – Contractors generally get more options when it comes to work environments and projects and an expanded network overall. This means that a little hard work leads to a lot more opportunities.
  10. Experience – You’ll get a lot more experience working as contractor than simply working in a single job as an employee. This makes you more valuable if you do choose to settle down with one company later on.

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