From Computer Solutions —
What I seek to do is highlight typical circumstances distinguishing the employed from the self-employed.
FINANCIAL
An employee only has to pay the employee part of FICA, Medicare, etc. An independent contractor must pay the higher self-employment tax. As this agents income increases, he will face a noticeably higher employment tax burden as an independent contractor.
An employee may be able to obtain better benefits than an independent contractor. Employer subsidized health, life, disability and retirement benefits represent part of the “hidden paycheck” for employees that independent contractors don’t always enjoy.
An employee does not have the same tax advantages as the self-employed for business expenses. While un-reimbursed employee business expenses are limited in deductible valu, the independent contractor can write off all reasonable and necessary business expenses.
An employee will probably not have many costs beyond commuting, business clothes and other costs of the profession. Independent contractors, however, often have office expenses and staffing costs. This agent may incur significant equipment costs if he doesn’t already have a computer with internet.
An employee would not have start-up costs; an independent contractor will.
BUSINESS
An employee will likely have to assign any intellectual property created during employment, such as patents, to the employer. The independent contractor normally retains these rights. For the agent, this could be a major distinction.
An employee often has required hours; an independent contractor does not.
An employee receives a salary and possible bonus; an independent contractor has no barriers or upper limits to gain.
EMOTIONAL/PERSONAL
Consider the emotional negatives for both. Employees have to deal with the politics of working for a single employer. An independent contractor may have to deal with solitude and loneliness.
Consider the emotional positives for both. An employee gets to collaborate with others and have a social structure within the workplace. An independent contractor gets to be his or her own boss.
Working for a single employer, the employee can hit a glass ceiling, be limited in career opportunities and generally feel less in control of upward mobility. An independent contractor may have to constantly “resell” to sponsors and be at the mercy of their end-of-year budget planning.
An employee has the structural motivation to succeed because either the boss or the team expects results. An independent contractor must be self-motivating…..
If you want to be a collaborator, part of a team, and comparatively free of many operational business decisions, you should consider seeking employment.
If you want to be an entrepreneur, your own person, have a brand, you should consider being an independent contractor.
Read the full story at http://wccomputersolutions.com/employee-vs-independent-contractor/
