I know it is circumstantial and subjective but what is your opinion based on your experience(s)?
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09-29-2017, 12:39 AM #1
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09-29-2017, 02:26 AM #2
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09-29-2017, 11:11 PM #3
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09-30-2017, 10:57 AM #4
many different pros and cons to each:
Let’s take a big picture look at this inquiry. We can break the employee versus independent contractor question into categories. While I recognize that some employees are highly independent, and some independent contractors have structured tasks for a single contractor, generalizations can be made. 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 scientist’s 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 unreimbursed employee business expenses are limited in deductibility, 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 scientist may incur significant equipment costs unless he has access to the contractor’s lab.
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 scientist, 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.
I’ve been both an employee and self-employed. I’ve always told people that a big part of the difference between the two is motivation. If something goes wrong for an employee, it may not be too bad because it’s often part of a group failure; and, short of termination, the personal financial consequences aren’t devastating. There’s still a salary. A self-employed person, however, can suffer on both fronts. Often the failure is square on his or her shoulders, and the financial consequences are immediate. No sale, no commission. If the bid is not accepted, there’s no cash flow.
Compare, however, the opportunity for upside potential. An employee can share in successes, but often they are team successes. And, the financial consequences of that success first inure to the employer. The self-employed can immediately enjoy the fruits of success. My victory; my payday.
So, how did I conclude my conversation with the scientist trying to map out his career? I suggested this very basic model for consideration.
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.
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10-14-2017, 07:18 AM #5
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10-26-2017, 04:07 PM #6
Ok so I copy pasted some info from a website highlighting the difference between an independent contractor and an employee....i did not fully read all the info so yes they use a scientist as an example not a personal trainer....but the differences are the same so substitute trainer for scientist.
thank you for the negative rep points. i am clearly shady lol...just joking though my bad for posting and not fully reading.
So here it is again edited....(I think I substituted 4 words...)
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 trainers 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 unreimbursed employee business expenses are limited in deductibility, 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 scientist may incur significant equipment costs unless he has access to the contractor’s lab.
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 training logs or client files, to the employer. The independent contractor normally retains these rights. For the personal trainer, 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.
I’ve been both an employee and self-employed. I’ve always told people that a big part of the difference between the two is motivation. If something goes wrong for an employee, it may not be too bad because it’s often part of a group failure; and, short of termination, the personal financial consequences aren’t devastating. There’s still a salary. A self-employed person, however, can suffer on both fronts. Often the failure is square on his or her shoulders, and the financial consequences are immediate. No sale, no commission. If the bid is not accepted, there’s no cash flow.
Compare, however, the opportunity for upside potential. An employee can share in successes, but often they are team successes. And, the financial consequences of that success first inure to the employer. The self-employed can immediately enjoy the fruits of success. My victory; my payday.
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.
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