The gig economy is a booming trend. It represents a way that people have been able to find jobs with the independence and flexibility that they need. With this trend, more and more people are going freelance. One of the biggest reasons for this is because the gig economy has made it so much easier to go independent.
As an independent contractor, you’ll have to be your own boss and find your own clients. You’ll also need to be self-motivated and disciplined. But what are some of the pros and cons of being an independent contractor? Let’s take a look!
1. Flexibility and Choice
The gig economy has opened up the opportunity to be your own boss. You’ll have more freedom and flexibility with your schedule. If you want to work a bit longer, you can do it. If you want to work a bit later or earlier, you can do that, too. As an independent contractor, you’ll be able to work when you want. This is the biggest pro of being an independent contractor.
If you’re not the most self-driven person, then being responsible for your own schedule may be somewhat detrimental. The most successful independent contractors are people who are constantly on the go and take on different projects.
2) No Paystubs (Though You Can Generate Your Own)
Independent contractors don’t typically receive paystubs like salaried employees would. An employee’s paystub would typically hold information like tax withholdings, benefits, and contributions, which are calculated by the company’s payroll office. But an independent contractor is responsible for their own taxes.
An independent contractor can generate their own paystubs using an online paystub maker, which is useful if there are deductions that need to be made, like for healthcare.
3) No Employee Benefits
Independent contractors do not receive benefits. An employee is responsible for paying for their own health care.
A contract employee can potentially be injured on the job, which means they would need workers’ compensation insurance. That would make them a salaried employee and their compensation could be contingent on their employment. A contractor can work for a business or part of a business as they need and have no accountability to how much money they bring in.
4) Better tax deductions
As an independent contractor, you can take deductions, including the home office deduction, on your federal tax return. So while technically you might pay more in self-employment taxes, you can offset this a lot by taking business deductions, such as buying supplies for your business, traveling expenses, and just a wide range of other amazing tax benefits afforded to independent contractors.
5) An Independent Advantage
One of the biggest benefits of being an independent contractor is that you have the ability to choose which clients to work with and which projects you want to take on.
But you do have to be aware of the repercussions of working with certain types of clients. Some types of clients have a reputation of being difficult to work with, and some may require a high level of control.
Your success in the business depends on how you stay on top of that, and what you do to maintain the quality of your work and the client relationships.
6) Chasing Down Payments
As an employee, you’re pretty much guaranteed a paycheck. Especially if you work for a large company with automatic payroll systems. But as an independent contractor, you will need to be persistent to get payment from clients, and sometimes you have to be ready to send follow-up reminders that your invoice is past due. In some cases, you might even get burned by a client that just doesn’t pay you.
Establishing long-term relationships with clients is always beneficial, so you know who you can trust, rather than simply taking work from anyone