What is an Independent Contractor?
An independent contractor is someone who works for a company as a freelancer. Independent contractors do not get taxes taken out of their pay like a traditional employee does. They also do not get a W-2 at the end of the year.
As an independent contractor, you are considered your own business entity. Therefore, you are in charge of paying your own taxes. At the end of the year you will get a 1099 form and will pay your taxes into the IRS instead of getting a refund. Like any other business, you will also be in charge of purchasing your own equipment. Sometimes you’ll get lucky and the company will provide you with some (or all) of the necessary equipment, but you should expect to invest in your own work.
A big advantage to being an independent contractor is that you generally are able to work whenever you want. You can choose your own hours as long as they are within the normal operating hours of the company. There are always exceptions to the rules, however. There are some companies that will give you a set schedule and will not let you choose your own hours.
Another pro is that you make what you put in. That means that if you want to work all day, every day, then you can make much more than working a traditional W-2 job.
A disadvantage of working as an independent contractor is the lack of benefits. You will need to purchase your own health insurance and plan for your own retirement. Unlike a traditional employee, these accommodations will rarely be made for you.
Being an independent contractor is perfect for the person who needs schedule flexibility, who wants to base how much they earn on the amount of work they put into the job, and for someone who wants to work multiple jobs to create an independent contractor business.