Job Description for an Independent Contractor

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Freelance photographers typically work as indepedent contractors.
Freelance photographers typically work as indepedent contractors. (Image: photographe image by razorconcept from Fotolia.com)

Independent contractors are self-employed individuals who perform many of the same functions as a regular employee. However, they typically work on an assignment basis and are not tied to one employer. In fact, it is usually beneficial for them to be associated with several companies to ensure ongoing work. Independent contractors can be found in a variety of work environments.

Significance

Independent contractors are not considered employees of a company even though they may work for it on a regular basis. They typically work under contract on an as-needed basis, so it's possible they could go for extended periods of time without performing work for the company. They usually have the option as to whether they wish to accept an assignment when it is offered.

Types

Independent contracts are common in a variety of fields. Freelance writers and photographers work as independent contractors for newspapers and magazines. Insurance agents may enter into an independent contractor agreement to sell insurance products for companies. Individuals with computer expertise may consult with small businesses concerning technical issues.

Benefits

A major benefit of being an independent contractor is the opportunity to be one's own boss. Contractors can work for a variety of companies and develop relationships that lead to ongoing work assignments. There may be certain tax advantages of being an independent contractor, such as being able to deduct business expenses and the use of a home office from income taxes. Employers benefit by having work completed as the need arises without having to offer fringe benefits as they would to regular employees.

Considerations

While independent contractors have a great deal of freedom in their work life, some disadvantages exist. Contractors must obtain items such as health insurance on the open market, which is often more expensive and more difficult to obtain. They do not have the security that is associated with working exclusively for one company, and may be in a situation where they are constantly looking for work. No taxes are deducted from their pay, so they must be proficient at managing their finances and setting aside money to pay their taxes.

Misconceptions

Sometimes it can be a fine line as to whether an individual is to be considered an employee or an independent contractor, especially if she performs consistent, ongoing work for a company. According to the Internal Revenue Service, an individual should be considered an independent contractor only if the employer controls the end result of a work assignment and not the method of accomplishing it. For example, if a publisher agrees to pay a writer $200 for an article, the publisher is paying only for the finished article and not the actual method or time it took to write the article.

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