Finding work, even if you can’t find a “job” – is that really possible? If you’ve done a job search anytime recently, you know all too well that hiring isn’t happening at a very rapid pace. Yet, look at the earnings reports from many of America’s largest corporations over the past two years or so, many of these companies have consistently posted very solid profits. This means that even though there isn’t a lot of new hiring, business is still getting done; products and services are still being bought and sold.
So, how is all this work getting done, without new employees being hired? There’s no doubt that existing staffers at American businesses are, by necessity, working harder than they have before. But businesses are also increasingly utilizing the services of independent contract workers, rather than hiring new employees. And there is opportunity available for those of us who learn how to work independently.
When you’re an independent contract worker, you work for a company on a “per project” basis. That is, you agree with a company or another individual that you’ll provide a particular product or service to them, in exchange for an agreed-upon amount of money. This type of arrangement is usually spelled-out in a simple, written contract document that both parties sign, and most independent contract projects call for the worker to get paid on a monthly basis.
There can be a real “upside” to working as an independent contractor. Some of the benefits include:
- You are your own boss – you will generally set your own hours and create your own environment for getting the work complete.
- You may be able to charge more for your services – on a strict, “trading your time for money” analysis, you may end up earning more money by providing a particular product or service on a per-project basis, than you might otherwise earn being an employee at someone else’s business.
- You may have some tax advantages – working as an independent contractor allows you to deduct certain expenditures from your federal income taxes each year.
On the other hand, there can be a “downside” to working as an independent contractor. Some of the disadvantages include:
- You have no” job” security – the idea of “job security” is rather illusory anyway, but the point here is simple – once the business and the contract worker fulfill their obligations to each other, they’re “done” with each other, unless they decide to develop another contract project together.
- You must pay self-employment taxes – yes it’s true, the IRS essentially penalizes you for being industrious and for taking initiative. But it is what it is.
- You may have to spend money on equipment and materials – depending on what kind of work you’ll be doing, you’ll probably need to furnish your own computer and office supplies, telephone, tools, and perhaps other materials. When you’re an independent contract worker, you don’t simply ask “the guy in the supply room” for a replacement ink cartridge. Even if you don’t have a formal office for your business, you are nonetheless a business in and of itself – which means that you are your own “supply room guy,” as well.
- Taxes, insurance, and benefits – when you’re an independent contractor, you are entirely responsible for paying all your taxes; you have no employer-provided medical, dental, worker’s compensation or unemployment insurance; you have no “Employee Assistance Program,” and no employer contributions to your retirement savings.
So, are you still ready to dive-in and find work, even without finding “a job?” I hope so. The list of “disadvantages” is not meant to discourage you, rather, it’s intended to provide you with the truth. Working as an independent contractor can be very rewarding. But it is also one of the most basic steps towards business ownership, and it requires a level of personal responsibility that is generally not required of a person when they are employed in someone else’s organization.
Before you begin searching for projects and independent work opportunities, be sure to check-in with your advisors, and the appropriate government authorities:
- Consult your tax preparer – tell your tax preparer what you intend to do as an independent worker, and find out what you need to do to be in compliance with IRS and state tax laws. You may need to acquire a federal Taxpayer ID number, and you might need to make quarterly tax payments. Get professional advice on this before you begin working.
- Get the appropriate licenses and permits – depending on what kind of work you’ll be doing, your city, county or state government may require you to obtain licenses. Will you be providing printing services in your home? Your city may determine that you need a city business permit for that. Will you be doing household fix-up work? You might need a Handyman’s license. Your local, or state Chamber of Commerce, should be able to provide guidance on this. You may also wish to check with your state’s Secretary of State office for guidance, as well.
- Cover your bases with insurance and bonding – Again, depending on what kind of work you’ll be doing and where you’ll be doing it, you may need additional insurance. If an accident occurs while you’re conducting business, your renter’s, homeowner’s, and personal automotive insurance policies might not cover your costs adequately. Consult with a good business attorney and your insurance agent to get the facts.
Once you’ve done the preliminary set-up work, get started searching for organizations and projects that can use your talents and skills!