Discussing the pros and cons can help employers and workers determine whether the transition is appropriate and advantageous for both parties. The pay structure of an independent contractor is far different from a full-time employee. Since they work on a per project or per need basis, they bill their employers by the hour, or on a per project or daily/weekly/monthly basis. In December 2017, NPR and Marist found that 20% of all American workers are contract workers or independent contractors.

Two of the currently most popular types of employment include being hired full-time or contract work. That’s because you only hire independent contractors when you actually need them, they tend to be more current on the latest contract vs full time salary technologies and trends, and they offer diverse work experiences. Although quite different from the traditional payday-every-Friday model, the payment process for independent contractors is simple for the small-business owner.

You may be missing out on a 66.5% salary hike*

As a 1099 worker, you will have to buy your own health insurance, and that can be very expensive. You’ll also have to buy all of your own equipment like a computer, desk and office chair, and cell phone. And you won’t get a 401k match, and “paid vacation” doesn’t really exist for 1099 workers—if you don’t work, you don’t get paid. The employer is responsible for a lot of the cost of employing someone. If you’re a 1099 worker—you work for yourself—then you are the employer and you’re responsible for those costs and employment benefits. If you’re a W-2 worker, then you work for someone else, and they are probably responsible for those costs and employment benefits.

Independent contractors charge their clients significantly more than what they would earn as employees. This allows them to cover their self-employed expenses and personal income taxes. Therefore, a straight conversion of the contractor wage to salary is unlikely to be financially feasible for the company. Additionally, workers generally earn a lower salary on paper because they are responsible for significantly fewer overhead expenses as employees.

Contractor vs. Full-Time Employee (Pros and Cons)

Contract workers also can work remotely or from the premises of an office that isn’t managed by the company they are working for. However, if the work requires on-site work, the details are sorted while drafting a work contract. https://remotemode.net/ If you need someone that can help your company move successfully into the future, hiring a full-time employee is often the right decision. Do you need someone who can solve similar problems for you on a long-term basis?

• Contractors often have more control over their work schedules, allowing for greater work-life balance.
• How your company hires now plays a role in a larger conversation over what defines good work and how people get paid for what they do (and whether that method of payment is making the world a better place).
• As your business grows, offer more and more hours to your favorite freelancers.
• When in the market to fill a role, companies can benefit financially by turning to staffing agencies to do the heavy lifting.

That means they can often command higher pay rates than those of full-time employees. While you can gain skills and experience through different positions, you don’t want to share too much information. It is important to note, due to the proprietary nature of some work projects, contractors may be asked to sign non-disclosure agreements. To maintain a strong reputation, contractors should keep the work they do private and confidential. Hiring contract workers allows companies to scale their operations up or down based on demand fluctuations.