Independent Contractor vs. Employee


Independent contractor positions have gained tremendous popularity since the pandemic. More and more people are resorting to working from home or remote jobs, with many of these opportunities being contractor-type positions.

I’ve been in both job positions, so here are a few pros and cons I’ve picked up since being an independent contractor:

Contractor PROS:

You are your own boss

Being your own boss comes with a lot of responsibility, and often a higher level of stress. This gives you a cutting edge and will show future employers what you’re capable of. Not everyone is willing or wants to be a contract worker, but it takes a special person who is open to take on unpredictable outcomes of contract work!

Freedom and autonomy

You most likely will not feel as tied to your company as a contract worker. You have the flexibility to do your work and get paid, but at the end of the day, you can always move on to greater opportunities without all the weight of leaving a position as an employee. When you leave a company as an employee, there are great costs that the company must pay to have you leave, as well as find someone as a replacement. As a contractor, the company will not have as much of a financial burden in having you leave, or finding your replacement.

Pay Less in Taxes

Employees pay more in taxes than independent contract workers. Check with your city, state, or provincial laws to see how much income tax you would pay as an employee versus an independent contract worker.

Start Dates

From my experience, contract positions have faster start dates. I know of many scenarios where people wait several weeks just to have a background check completed. In contract work, you’re less likely to go through a lot of these HR steps, you may skip the background check completely (they may not even ask for references), meaning you’ll jump straight into your first day and skip to wait.

Contractor CONS:

Less Job Security

Employers pay a lot of money to hire employees. Employees are hired typically in full-time, permanent roles, which are meant to be held long-term. Employers want to keep employees, as finding and hiring new is very expensive, often costing thousands or tens of thousands of dollars. In contract work, companies don’t pay these types of expenses to bring on new workers, as they do not provide the perks such as benefits, health insurance, retirement, PTO, and more. This causes a lack of job security for contract workers, though if they’re performing well, workers should not have a problem.

No Paid Time Off (PTO)

As mentioned above, most contract positions do not pay for vacation or paid time off. Yes, this means the days you take off come out of your paycheck! When given an offer for a contract position, see if you can negotiate some of your benefits, vacation being one of them!

No benefits

You can try to negotiate this part as well, though in most contract roles, you are not likely to be offered benefits, including health care or retirement saving plans. It is important you set aside money for retirement by yourself (and invest accordingly) in this case. I would try to have the best oral hygiene too. Who knows when the next time you’ll be headed to the dentist will be.

Filing Your Own Taxes

You may pay less in taxes (which is great), but you’ll still have to remember to actually file them. This does take some effort and organization on your side, like putting together the invoices and other paperwork, a task many do not want to do. You may even need the assistance of hiring a personal account to help you.

Pay For Your Own Work Equipment

Gone are the days of a company offering to cover home work equipment. Though all companies are different, many contract roles expect you to have existing and functional office equipment to use. See if you can squeeze out some dollars for equipment when signing your offer letter.

You May Not Feel 100% With The Company

This may vary from person to person, but being a contract worker is different than being an employee. There is less job security, and when the need for your role no longer exists, you’re off to the races again. Many people may not agree with this type of work, others may thrive on the ongoing change, too adventurous to ever stay stagnant.


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One response to “Independent Contractor vs. Employee”

  1. – Contract work offers freedom and autonomy, which is great for those looking to take on unpredictable outcomes.
    – There is less job security as employers don’t have to pay for benefits and can often find new employees much faster.
    – Pay your own taxes, as well as having to organize your paperwork and invoicing.
    – You may not feel completely with the company, as there is less job security.

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