companies choose to hire people as independent contractors rather than as full-time employees. This may happen if you are a temporary employee or if you work primarily from home. It is important to realize the differences between a full-time employee and an independent contractor.
An independent contractor will not be offered benefits by the their employer. Taxes will not be taken out of the check. Independent contractors will set their hours, and determine when and how to do the work. Independent contractors may have a more flexible schedule, and many work from home, all though some work on site for temporarily. An independent contractor is considered self-employed. Although you may only be working for one company at a time, you are still considered self-employed for tax purposes. It can also affect you when it comes to borrowing money over time.
an independent contractor you will need to set aside money for your taxes, and pay your taxes quarterly. You will also need to purchase your own health insurance and plan for your retirement on your own. You should also plan a larger emergency fund to cover yourself if you were to lose your job or were unable to work. Most independent contractors do not qualify for unemployment benefits. You will not be paid sick days or vacation days and you need to have extra money set aside for these situations.
are strict guidelines for when an employer can choose to classify someone as an independent contractor. If you feel that you should be considered an employee instead of as a independent contractor because of specific work hours or conditions you can appeal through the IRS using form 8919.
