Independent Contractor: 4 Things You Need To Know
Ah, the life of an independent contractor. Doesn't it sound glamorous? You get to work when you want, for who you want, where you want. You get to work in your pajamas if you want to! Unfortunately, as awesome as being your own boss sounds, there are actually some pretty important things to be aware of before you sign on the dotted line:
Your Work May Not Belong To You
Generally, you own the copyright to anything you create under intellectual property. That being said, your contract as an independent contractor may state that any work you do for them belongs to them. Make sure you’re okay with this—most independent contractors aren’t.
You Pay Mad Taxes
If you’re an employee somewhere, your employer will pay half your Social Security and Medicare taxes. When you’re an independent contractor, you have to take care of it all yourself. This will most likely be a significant difference (up to 25% of your income), so be sure saving up for this. The good news? Any business expenses you incur such as transportation or supplies can be written off--a major bonus.
You Have A Lot Of Control
The only thing someone can actually ask of you as an independent contractor is what they’re looking for in the finished product. How it is done, however, is up to you. That means you can take time off without asking (kind of), work wherever you want to, pick your own hours, and complete the project they hired you for in whatever way makes sense to you personally.
You Don’t Get Benefits
If you’re looking for financial security via insurance, sick days, vacation time, or pension, don’t become an independent contractor. This is something that’s taken care of for you as an employee of someone, which you aren’t. It doesn't mean you can't have all of this, but it does mean you have to finance it yourself!
It's okay if the independent contractor life isn't for you. Everyone likes to work in a different way, and for some, the benefit of having total freedom over how they spend their time is worth the tax loss. The important thing to realize is that if this is an option you're considering, you're looking at it from both angles--the good and the bad.