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Working as an independent contractor should be contrasted with three other things: traditional employment, business ownership, and welfare receipt.

Independent contractors receive no health (medical dental eyecare) benefits from an employer or from state-run welfare programs. The independent contractor handles his/her own taxes. The independent contractor operates based upon his/her own name and at his her own liability. The independent contractor will have no paid sick leave or vacation time accumulated.

While the independent contractor would seem to have limitless freedom, this is not necessarily the case. The independent contractor is held civilly liable to perform the mutually agreed upon covenants of a written contract and can be sued for failing to deliver.

An employee bears the indemnity of their employer for their good faith actions and will not typically be sued for the mistakes or misdeeds of the corporation or it's parent firm(s). The employee has sick time, vacation time, educational reimbursements, employee stock options, health care and more in many cases. The employee has to answer to his/her superiors in a heirarchy and must report in on time to work each day on a time-clock system. The employee is subject to periodic reviews, termination without prior notice and high stress work loads.

Business entrepeneurs start their own firms and can delegate work to their own employees and contractors. They can outsource their labors or keep them in-house. A person setting up a sole-ownership business can have relatively low filing fees, get relatively cheap liability insurance and find affordable group health plans. Business owners are a step removed ("at arms length" in legal terms) from their clients and less and have greater leverage in negotiating contract deals between their firm and the client to which they are providing their skill, knowledge and labor. Small firms will acquire distinct taxpayer identification numbers and maintain seperate books than the individual independent contractor will have.

Welfare receipents will collect monthly payments from the state agency, have few opportunities afforded to them from inside a insular system, be forced to turn down jobs for fear of losing their benefits and have the people pay for their health care by playing a system.

As a small business owner, the advantages of hiring independent contractors for me is clear, but there are few advantages to being one over the value of starting a business for yourself.

Learn more about this author, Dr. Anderson.
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