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Discussion on: Free like a freelancer or secure like an employee? There's a third option: The contractor

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Sam Wight

Things to add to this (this is very US specific, your mileage may very):

  1. Taxes are higher and harder to manage when you're a contractor. It's significantly more work, even with an accountant, to track all of your income and do quarterly taxes. If you're working at an hourly rate, which a lot of contractors do, then it's very, very annoying to figure out what you think you're going to make this year and pay quarterlies on that. Having a W2 where all of your tax money is taken out for you as the year goes on is incredibly underrated and gets rid of a lot of all that stress.
  2. Contractors are usually paid slightly more (not usually the 2 to 3 times amount in my experience) because they have to pay for an accountant, health insurance, and all of the other benefits that a normal employee would have.
  3. Contractors usually don't end up working side-by-side with employees as if they're a regular employee (at least in the US). If you're working with employees like that regularly, it's probably because you're not a contractor and your employer is committing employment fraud.
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jkettmann profile image
Johannes Kettmann

Thanks for sharing your experiences, Sam. Interesting to read. It sounds like many of the things I mention are not valid in the US. That makes me wonder: What are the advantages of being a contractor in the US?

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Sam Wight

Hey so sorry, didn't get notifications on this!

I think the main advantages of being a contractor for me were:

  1. If I need a job for a variable period of time (e.g. one semester in between one of my co-op rotations), then contractor positions are usually more flexible and generous.
  2. Slightly higher pay than most other jobs. If you're in a lower income bracket (which I am, as a college student), you don't pay as much in income taxes, so the slightly higher pay is much-appreciated.

Honestly those are about all for me, I much prefer working as a W2 employee, just because it takes all the stress out of taxes and it's usually impossible for me to remember to pay my quarterlies. Highly recommend taking W2 options over contractor positions.

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aza profile image
Aza

Totally agree with no.1 and 2, but not with 3. I have been a contractor in my career and work with different contractors in my current company. Sometimes contractors are hired as a check of competency and they become FTEs later on.
But I hate how they system of hiring the contractor works here. Usually they have to go through 3rd parties who get hefty part of the paycheck. This way a contractor legally works for the third party company as FTE while he/she is a contractor for the main company where work is done.

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Johannes Kettmann

Thanks for sharing your thoughts, Eve. Afaik for a company, it's much easier to let go of employees in the US compared to e.g. most European countries. And for employees, there's not much of a notice period when you want to quit, right? If you're not even paid much more than an FTE what's the advantage of being a contractor in the US?

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aza profile image
Aza

Exactly. I have always looked for FTE roles, unless a person wants to work in different environments, then i would suggest to join some consulting company.
As for me, i don't see any benefits of being a contractor.

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jkettmann profile image
Johannes Kettmann

That's very interesting. Thanks! I'll add a note that my experience doesn't reflect the life of a contractor in the US