Positives

Being an independent contractor means that an individual is their own boss. They are hired to perform a service for another business during a short period of time but are not actually a full time employee of that business. This allows independent contractors to have freedom of choice over what jobs they choose to take on, the amount they charge for their services, and the hours that they are willing to work. Typically, independent contractors earn higher salaries than company employees because businesses are willing to pay out more in return for not having to make a long term investment in an individual. Independent contractors are allowed to receive tax deductions on certain expenses under the pretenses that they are business expenses. Independent contractors withhold their own taxes which means that their entire tax payment could be deferred until the last possible period that taxes are due. By deferring the payment of taxes, the money that an independent contractor has made can be invested or put into savings to earn interest instead of being handed over to the government.

Negatives

Job security is one of the biggest cons associated with being an independent contractor. If the market is in a down period there could be a shortage of job opportunities and the independent contractor may find themselves lowering prices and taking jobs that are not their first choice in order to survive. Independent contractors do not get the luxury of having benefits provided. This means that there are no paid vacations or sick leave. Retirement plans must be funded by the independent contractor out of their own pocket, as well as health insurance. Independent contractors are not afforded the lower group healthcare rates available to large companies. Consequently, health insurance can cost an independent contractor more than the everyday employee. There are added costs associated with some contract jobs when those jobs require that a contractor have liability insurance or require that the independent contractor pay for travel expenses. The average independent contractor has a large initial investment in the tools and equipment that they use to perform their services. An independent contractor must take on the responsibility of maintaining the upkeep of this equipment as well as investing in new technologies as they become necessary to remain competitive.

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