Starting a career as an independent contractor or freelancer allows you the flexibility of deciding your own schedule and the ability to really focus on your professional strengths. This comes with many benefits that the constraints of working for an employer would never allow, giving you the freedom to balance work and life to suit you.
However, being an independent contractor comes with many drawbacks that come as a result of having no employer. Essentially you are responsible for yourself and your professional reputation.
Want to consider this further? If you are considering starting work as an independent contractor, consider the following pros and cons.
You Are Your Own Boss
Becoming an independent contractor can be the dream for those looking for more freedom and independence.
Those looking to progress and build their professional reputation alone may love the ability to define their progression in all aspects of business, set their own goals and have the independence to decide who they work with.
Taxes Can Be Complicated
Usually, your employer would deal with your taxes. However, when you are an independent contractor you will have to handle the planning, paperwork and processing yourself.
If you choose to hire someone to help you with this, it could get expensive. Filling in your tax forms can also be a time-consuming process. Yet this might be a challenge, but it doesn’t have to be an insurmountable one. Indeed, you can download IRS approved tax forms in programs which link to accounting software, which can make this process super easy.
Smart use of tools and software can help to replicate that back office help you’d get as an employee and get over the boundaries you might expect to find from being an outside contractor.
You May Earn More than Employees
Without the restrictions of an employer, independent contractors can earn more than regular employees as they are able to decide their own price for their services.
This is also because much of an employee’s pay is normally made up of benefits such as pensions and medical insurance, of which independent contractors do not receive.
Robert Wood suggests in a Forbes article, that up to 30% of an individuals salary can be made up of benefits which can be a big sacrifice!
No Job Security
Without an employer, you remain vulnerable to changing markets and work has the potential to dry up along with your income.
As an independent contractor, savings will be more important than ever to tide you over in these circumstances.
If you mainly take on short-term contracts, job security can be even more vulnerable. Put simply, if you are not working then you are not able to earn.
You May Pay Lower Income Taxes
As this article in the Wall Street Journal explains, people who are self-employed have more opportunities to cut taxes than regular employees. Be smart, understand the system and make use of very chance to take a tax break when it arrives.
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Work Life Balance
For some, becoming an independent contractor is perfect for those looking to have freedom from the workplace.
Perhaps the digital nomad life is beckoning, or you’d like time to look after your kids.
Working for yourself allows a level of flexibility that means you can work as and when you want.
However, for workaholics this may cause issues with work-life balance and a routine needs to be structured to prevent burn out and stress. This will depend on your personality and your work.
For most however, becoming an independent contractor provide the opportunity to work in a way that suits them the most.