Companies are finding it very difficult to maintain employees. Like it or not they are burdened with so many laws and regulations associated with having employees. From employers’ perspective, they are no longer employers only but they are tasked to be a “daddy” instead. They have to provide safe place to work. They have to pay for your health. They even have to pay you in the event you want to become a parent. There may be merits for providing benefits to the employees. But they surely cut into employers’ profits. So the employers opting out for hiring people as contractors rather than as employees.
As an independent contractor (IC), you contract to perform services for a company without having legal status as an employee. In essence, you are in business for yourself. Independent contracting has been used in highly specialized or technical fields, such as computer programming, engineering, and accounting. But ICs are being used in almost every field, from construction to marketing to nursing.
Independent contractors reap many rewards that regular wage earners may never experience. As an IC, When you're an IC, you're your own boss, with all of the risks and rewards that entails. You can choose how, when, and where to work, for as much or little time as you want. IC is able to work with more than one company provided there is not direct conflict. Interestingly, the amount of money they make is directly related to the quantity and quality of their work.
As an IC, you will be earning more than as an employee. According to the Wall Street Journal, ICs are usually paid 20% to 40% more per hour than employees performing the same work. That is because the firms don't have to pay Social Security taxes or unemployment compensation taxes, provide workers' compensation coverage, or provide employee benefits like health insurance and sick leave.
Being an IC, you will enjoy many tax benefits that are not available to employees. For example, no federal or state taxes are withheld from your paychecks. This means you can hold on to your hard-earned money longer before you have to turn it over to the IRS. It must be noted here that you need to pay estimated tax and you can’t underpay.
Furthermore, being an IC, you are eligible for business-related tax deductions that are not available to employees. ICs can also establish tax-advantaged retirement plans such as SEP-IRAs and Keogh Plans. This enables you to shelter a substantial amount of your income until you retire. Because of these tax benefits, ICs often pay less tax than employees who earn similar incomes.
There are major drawbacks for being an IC. If a company has no work, you will not get paid. So it is essential, that as an IC you will need to be associated with several firms. You are responsible for your own health insurance, retirement plans.
Some ICs have great difficulty getting their clients to pay on time or at all. When you're an IC, you bear the risk of loss from deadbeat clients. As an IC, be sure to address the payment of your services from the firm. You should also add penalty clause, if you are not paid in time. Many ICs contracted with government agencies can get paid as late as for 1 year.
Being an IC means you are in business for yourself. As an example, If you are getting paid $20/hr. as an employee, your company charges their client anywhere from $50 to $100 for your services. The point is that as an IC, you will be able to ask much as $75 an hour for your services.
As stated earlier, ICs were used in specialized fields but firms are opting for ICs in other areas such as administrative areas. As firms lack expertise and do not wish to employ a full time employee(s) for social media presence, this need can be fulfilled by ICs. For five hours per week of work a social media specialist, you can easily charge a firm $250 to $500 per month. As an IC, if you have contract with just 10 regular firms you are likely to earn $2500 to $5000 per month. That is not bad for only 50 hours per week- in most case; you will earn that without leaving your home.
If you are personal trainer, it is likely that you will be employed at $15 to $20 an hour. But as an IC, you could contract with many local health clubs at $10 to $20 more per class or person. If you are trainer in special areas such as- yoga, Zumba, Bollywood dancing, spinning bike- you are likely to get heft contracts.
Check out the areas that you may be able to become an IC.
- Being An Actor
- Being Social Media Specialist
- Being A Tutor
- Getting Paid To Speak English
- Getting Paid To Take Photos
- Being Belly Dancer Specialist