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What is a self-employed contractor?
A self-employed contractor is a professional who works for a specific client on a contract basis. These contractors are sole proprietors who offer their services directly to businesses or trades. Since the entity they work for is not their legal employer, self-employed contractors often do not receive a long-term, consistent wage or salary. Rather, they receive payment from their clients for the work they complete. One distinguishing feature of self-employed contractors is that they aren't subject to employer tax withholding and payments since they aren't full-time employees.
Self-employed contractors offer cost savings and flexibility to businesses while also having the flexibility to select the contracts they accept. For example, a company can hire a self-employed contractor on a project basis to upgrade its cybersecurity system if they don't have an employee who can do the job. The business pays the contractor for their service instead of taking the time and budget to train staff for a project that may have a fixed completion date. Since the company also doesn't pay for benefits like health insurance and short-term disability, using contractors can help decrease a business's operating costs.
Self-employed vs. independent contractor
The term "self-employed" refers to a range of professionals who work for themselves and aren't employees for another entity. There are various ways to become self-employed, including owning your own business, freelancing, consulting or through another entrepreneurial endeavor. Independent contractors are professionals who perform tasks for another entity such as a business, organization or another individual on a contractual basis that usually lasts for a particular amount of time. In these cases, companies hire independent contractors to perform a specific duty within a predetermined timeframe and don't consider them to be employees.
Independent contractors and self-employed professionals fall into the same tax category, a sole proprietorship subject to special income tax regulations. However, not all self-employed individuals are independent contractors. For example, a self-employed professional can form business entities like limited partnerships and limited liability companies (LLCs), while independent contractors rarely have involvement in such activities. Professionals like doctors who run their own private practices and jewelers who operate their own stores are both self-employed but not independent contractors. Comparatively, a graphic designer creating content on a contractual basis is both self-employed and an independent contractor.
Taxes for self-employed contractors
The Internal Revenue Service (IRS) considers self-employed contractors as sole proprietorships or a business that one person operates. Therefore, the agency subjects these individuals to self-employment taxes and stipulates that self-employed professionals pay a specific percentage of their yearly income from their business as self-employment tax. It's common for the rate to change each year and these updates vary according to your industry and location. If you are a self-employed contractor, check the IRS website or consult a tax professional for more information about your tax status to ensure you are adhering to relevant laws.
Benefits of being a self-employed contractor
Here are some benefits of being a self-employed contractor:
Freedom of action
As a self-employed contractor, you're free to choose the jobs you want to do and the clients you want to work with because you are your own boss. This means you can choose the projects that best align with your strengths and interests and select clients that offer the most favorable terms. As a self-employed contractor, being focused and disciplined can help you excel in securing clients and performing the work to their specifications.
More flexibility
As a self-employed contractor, you often have more flexibility with how you complete your tasks and projects. While it's common for an employee to be in the office when their employer requires it, contractors can choose the time they want to work. If you are a self-employed contractor, you may even have the freedom to choose the methods for completing a project with no input from the client. This flexibility means that self-employed contractors can work longer or shorter hours based on the project requirements or personal preferences.
More earnings
Self-employed professionals such as independent contractors and freelancers have a higher chance of earning more compared to people who are traditional employees. The reason for this is that self-employed contractors can charge higher rates because they take care of their own taxes, training, business expenses and social security. They may also charge more depending on their years of experience, job requirements and any specializations or licenses they have in the industry.
Higher retirement savings
Unlike regular employees, self-employed contractors handle their retirement savings and they are free of the restrictions that apply to traditional employer-managed retirement plans. Self-employed contractors can save far more than regular employees in their retirement plans, as many employer-sponsored plans have a maximum contribution limit. This means they can deposit higher amounts in their self-managed retirement saving accounts if they choose and accumulate more wealth in less time.
Better work-life balance
Self-employed contractors may also enjoy a more satisfying work-life balance. One reason for this is that they usually don't have to commute to and from work every day. Many freelancers and independent contractors can also work from home or co-working spaces, which helps them better balance work and private life. These professionals have the freedom to accept and reject job offers based on their workload, interests and needs. As you establish yourself as a self-employed contractor, you may find it easier to do work that brings the highest satisfaction and financial reward.
Test new ideas
Thanks to the freedom contracting work offers, self-employed contractors typically have more opportunities to test new ideas. Unlike regular employees, they don't have to report to a management team to approve all their actions, meaning they can try new techniques, explore new fields and take more risks. This can help them gain more experience, learn new in-demand skills and have a competitive advantage over counterparts working in more conservative environments.
Lower entry barrier
Being a self-employed contractor can make it easier to start a new career. Whether you want to become a graphic designer or writer, you can start a new profession as a side gig without leaving your main employment. This helps lower your risk since you already have a means of earning an income and helps you gain the skills and experience you need to establish yourself in a new industry at a comfortable pace.
For many people, nothing is worse than waking up in the morning knowing they have a long day ahead at their boring nine-to-five job. If you’re one of these people who are tired of dealing with the rat race, then you should consider self-employment.
If you’ve always thought that being self-employed was a pipe dream, think again, because there are thousands of people making great money while setting their own hours and being their own boss. As long as you have a strong work ethic, you can easily find a rewarding, profitable self-employed job that you’ll love doing every single day.
Here are a few of the best self-employed jobs that you should consider if you’re looking for a change in your work prospects.
Become a Freelancer
If you want to be self-employed but aren’t interested in starting a small business, there are several opportunities that you could choose, including becoming a freelancer. The great thing about being a freelancer is that you can pick and choose jobs as you wish, selecting only those projects that pique your interest and fit your skill set.
For example, if you are a strong writer, there are countless freelance writing jobs that you can find online. Starting out, you may need to take lower-paying projects until you build your reputation, but once you’re established, you’ll be able to get jobs from bigger clients that offer better prices. Other freelance jobs that you could choose include content marketing and graphic design.
While the best way to find freelance work is searching online, you could also visit businesses in your area to see if they have any work that needs to be done.
Start a Home Brewery
The best self-employed jobs are those that let you do what you love while getting paid, and if you love ending the day with an icy cold beer, then a great self-employment opportunity is starting a home brewery.
Craft beers are extremely popular, and while it can be difficult to break into this competitive market, the potential rewards are well worth the effort. The great thing about starting a home brewery is that your starting materials should be very affordable. If you brew and market your beer successfully, you may eventually be able to build a profitable small business with employees of your own.
Interior Design
Every homeowner wants their house to look as attractive as possible, and to accomplish this goal, many people choose to hire an interior designer. If you have an eye for style, then becoming a self-employed interior designer can be a great decision.
The great thing about being an interior designer is that you can do your job almost anywhere, meaning you’ll never be tied to down to a single location. While some interior designers choose to use a physical office, others offer their services using only a website. To be an effective interior designer, you’ll need a portfolio that’s likely to attract clients and a relationship with furniture vendors.
Work in Real Estate
One of the benefits of being self-employed is that you can help people by performing jobs that they’d rather not do themselves. For instance, selling or buying a home can be a very difficult process, which is why many people choose to hire a real estate agent. If you have a realtor’s license, you can work as a self-employed real estate agent. The longer you work in this field, the more successful you will be, particularly if you build your reputation as a dependable agent.
If you’re not interested in the day-to-day grind of being a real estate agent but still want to work in this field, you can work as a real estate investor. With the right properties, you’ll be able to make your money work for you, which is one goal of being self-employed.
Organize Events
If you have a knack for throwing parties, then a great way to be self-employed is to work as an event organizer. People celebrate numerous events every year, including holidays, wedding anniversaries, graduations and birthdays, so event organizers have constant opportunities for work. While working as an event organizer, you will help people plan their events by finding and reserving venues, decorating, arranging for food and much more.
While there can be good money in planning events for individuals, the best way to turn a profit as an event organizer is to offer your services to businesses. Companies routinely hold events for their employees, including events meant to boost morale such as parties and dinners. If you become the go-to event organizer for businesses in your area, you should be able to consistently bring in a good deal of profit.
Self-Employed Life Coach
Are you the person that friends and family turn to when they need advice about important life decisions? If so, then you could choose to become a self-employed life coach. As a life coach, you’ll be helping people with some of life’s biggest issues, including building healthier personal relationships and a more rewarding work life.
Although many life coaches help their clients with every area of their life, you could choose to specialize in a field that interests you, such as career building or weight loss. The best thing about working as a life coach is that you don’t need training to work in this field. All a life coach requires is good listening skills and the ability to give simple, useful advice.
Catering Services
If you love spending time in the kitchen and you always receive compliments about your meals, then you can translate your culinary skills into a self-employed job by becoming a caterer. At events both large and small, people expect tasty food, and in most cases, the people holding these events hire catering services to help fulfill their guests’ expectations.
A mistake that many self-employed caterers make is trying to handle every event under the sun. A better idea is catering a specific type of event, such as weddings or parties. Focusing on one event type is a great way to grow your reputation, which should bring you even more business. You could even specialize in a type of food, whether it be appetizers, cakes, or drinks.
Technology Repair
When you’re interested in becoming self-employed, it’s important to target a job that will provide a built-in customer base. If you’re looking for a self-employed job that will allow you to easily find customers, few options are better than offering technology repair services.
People experiencing an issue with their tech devices want them repaired as quickly and effectively as possible, and if you’re tech-savvy, you can provide these repair services for a fee. In addition to repairing devices such as laptops and tablets, you could help people build computers from the ground up, which will expand your customer base even further.
While offering repair services for all types of tech devices can help you grow your business, you could also target a specific type of device such as smartphone repair.
Personal Trainer
Almost everyone cares about being healthy and physically fit, but few people know how to go about accomplishing these goals. If you have a passion for fitness and enjoy helping people improve their lives for the better, then you could work as a personal trainer.
There are a variety of ways you could work as a personal trainer. Some trainers choose to offer their services at a gym or health club. Others operate independently, visiting clients’ homes and helping them work toward better physical fitness. Depending on your clients, offering one-on-one instruction can be very lucrative, and provides much more flexible hours than working at a gym.
Before you can start offering your services, you will need to complete a certification program, which will show your clients that they can trust you to help them with their health goals.
Tutoring
Every parent wants to set their child on the path towards a successful life, which includes making sure they do well in school. When their child struggles in their studies, many parents seek tutoring services, which is another enticing self-employed job.
If you’re well-versed in an academic subject and enjoy teaching people new things, working as a tutor can be a great way to be self-employed. When you are hired as a personal tutor, you will work with your student in a one-on-one setting, helping them to improve in the subject area where they are having difficulty. If you are bilingual, you can offer online tutoring services to English as a Second Language students. In fact, ESL tutoring is currently in high demand, meaning you can easily enter this field and start making money.
Virtual Assistants
For both businesses and individuals, managing social media profiles has become a fact of life. However, many people don’t have the time or inclination to manage their profiles themselves, causing them to turn to online virtual assistants.
When you work as an online virtual assistant, you will help people build and maintain their social media profiles on platforms such as Facebook and Twitter. If you work with a business, for example, you will curate content for their profiles and may even interact with customers. This is a particularly attractive self-employment opportunity for internet-savvy individuals who don’t mind spending hours working on the computer.
Online Merchant
Virtually everyone has items around their house that they’d like to sell on an online marketplace such as eBay. Unfortunately, many people are intimidated by the process of signing up for an account, listing their items online, and completing the process of the sale. If you have experience selling items over the internet, then you can become an eBay merchant.
Working as an eBay merchant is a great opportunity for self-employment, and can allow you to work from home instead of traveling to the office every day. If you want to become an eBay merchant, you will first need items to sell. Advertise that you will help people sell their items online for a small fee. The more items that you sell, the more money you can make. You could also ask your friends and family if they have possessions that they no longer need that you could use.
Wedding or Event Photographer
For many people, photography is simply a hobby, but if you’re interested in becoming self-employed, you can turn your photography skills into a profitable job.
When people throw an event such as a wedding or birthday party, they usually want to commemorate the event with pictures, and if they take the pictures themselves, it’s possible to miss out on the fun. By offering your services as a photographer, you’ll be helping people enjoy their event while documenting the occasion. If you want to work as a self-employed photographer, you should first build your portfolio by photographing events for your friends and family. The right sample pictures will help you attract customers and book larger events.
Website Translation
Fluency in multiple languages is one of the most useful skills that a person can possess. If you’re fluent in a variety of languages, then you can find a lucrative self-employment opportunity by translating websites.
When companies start doing business in another country, they want potential customers in that country to be able to use their website, which means the original will need to be translated into a new language. If you can provide quick, accurate translation services, you can help businesses translate their websites into new languages while making good money.
Benefits of Self-Employment
While self-employment is a very attractive prospect, many people are worried that being self-employed can come with a great deal of instability. While this can be true in certain circumstances, self-employment is mostly beneficial and can be a great choice for people who are burned out on the corporate atmosphere.
The biggest benefit of being self-employed is that you will be your own boss. This means that you’re accountable only to yourself and that you don’t have to worry about someone pressuring you to get the job done.
Self-employment also means that you can set your own hours. You can work during the time of day when you’re the most productive, meaning you’ll no longer need to struggle through difficult times of the day. Setting your own hours also means you’ll be able to spend more time on your personal life, whether that means being more involved with your family or diving into a new hobby.
If you’re interested in a more fulfilling work life, then you should consider taking the plunge into self-employment.
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