Key Distinctions Between an Employee and an Independent Contractor
A worker can be categorized into two categories, the first category being an employee and the other independent contractor. When you want to start a business, you may not be in the know. In the event that you are joining staff somewhere or starting your own business, you should note that the types of workers have many variances. Besides differences, examine the advantages and disadvantages of each type. The following paragraphs will highlight the key distinctions between the two types of workers.
To start with, one of the best ways you can differentiate the two types of workers is by looking at their tax situation. With an employee, the benefit comes in place by the fact that the employer handles the brunt of tax-related documents. On the contrary, the disadvantage is that the employees are given payroll taxes.
As compared to an independent contractor, an employee is paid a consistent wage. Any employee is a permanent asset of any business or company, and this makes them eligible for things like a healthcare plan. An employee also has the full benefit of things like workers’ compensation, severance package, and specialized training.
An employee basically has a schedule strictly ordered and monitored by the employer. This can be a good or a bad thing depending on an individual, discover more. It is undefinable that a set schedule can be constricting, nevertheless if you thrive on accountability, you can be more productive, find more info.
As compared to an employee, an independent contractor best suits those that want freedom. Freedom maybe the advantage, but the disadvantage is that you will have more responsibility as an independent contractor. The advantage is that an independent contractor carries the burden of tax papers on their shoulder, and this can be a pain in the back.
Take keen consideration that as an independent contractor, you are self-employed according to the international revenue service. As an independent contractor, you will only receive a paycheck once the given project is done. You will get the agreed amount so long as you deliver good work.
The difference between an independent contractor and an employee is that the independent contractor is not entitled to benefits like the healthcare plan. A company may benefit from having an independent contractor, but in this case, as an independent contractor, you will be missing out. In conclusion, before you start a business or join work, ensure you understand the differences so that you can make an informed decision.