{"id":19339,"date":"2022-10-13T13:55:16","date_gmt":"2022-10-13T17:55:16","guid":{"rendered":"https:\/\/www.hireheroesusa.org\/?p=19339"},"modified":"2022-10-13T13:55:16","modified_gmt":"2022-10-13T17:55:16","slug":"contractor-vs-employee-understanding-the-differences","status":"publish","type":"post","link":"https:\/\/www.hireheroesusa.org\/contractor-vs-employee-understanding-the-differences\/","title":{"rendered":"Contractor vs. Employee: Understanding the Differences"},"content":{"rendered":"\n

Contractor vs. Employee: Understanding the Differences<\/h1>\n\n\n\n
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The modern work era affords job seekers multiple opportunities for employment that meet their specific needs. Two employment pathways are the traditional employee vs. the independent contractor. Independent contractors represent approximately 1 in 10 workers<\/span> according to NPR<\/span><\/a>. Employees who take this path want to supplement income, have better job flexibility and desire to gain career experience for career success.<\/span> Let\u2019s begin by exploring some of the key differences between independent contracting and a regular employee.<\/span><\/p>\n

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What is an independent contractor?<\/b><\/p>\n

An independent contractor, <\/span>according to the IRS,<\/span><\/a> is considered self-employed and is subject to <\/span>Self-Employment Tax<\/span><\/a> which is made up of Social Security and Medicare taxes currently at the rate of 15.3%. Types of independent contractors include consultants, freelancers, trade workers, artists, entrepreneurs and contract to hires.\u00a0<\/span><\/p>\n

The contract and tax laws<\/b><\/p>\n

A contract is a document that outlines the specific details of the work to be completed and is signed before beginning work with a client. The contract should contain the company name, payment, expenses, length of the project, termination practices, and relationship of the parties. For taxes as an independent contractor, you are paid by the client without any taxes withheld and are responsible for setting aside money for the tax amount owed when you file your annual tax return. The amount you owe is based on your total income from all contracts in that calendar year. Speaking with a tax professional is recommended to help you determine how much money you might owe for your tax return and what tax considerations you need to take into account. <\/span>The IRS has a helpful website for choosing a qualified professional.<\/span><\/a><\/p>\n

Health insurance and additional benefits\u00a0<\/b><\/p>\n

Unlike employees receiving insurance and benefit options from their employer, independent contractors must seek these out on their own. The <\/span>Health Insurance Marketplace<\/span><\/a> is the most accessible place to find coverage with options based on estimated yearly earnings. Additionally, if your spouse has health insurance and you recently left a job and became self-employed, you can get added to their health insurance coverage as a special enrollment due to a <\/span>Qualifying Life Event (QLE). <\/span><\/a>\u00a0Most independent contractors do not have benefits including 401K matching, paid time off, short-term disability, and <\/span>unemployment benefits. However, you can negotiate for additional benefits when outlining the specifics of the contract with the client.\u00a0<\/span><\/p>\n

Pros to independent contracting<\/b>\u00a0<\/span><\/p>\n