Digging into life as an Independent Contractor

As an Indiepreneur, you’re likely either hawking your products to the great masses or you’re an Independent Contractor who works like an employee without the benefits.

So that sucks, right? Maybe. Let’s dive in.

My So Called Gig Economy

When was the last time you got into an Uber? Or had GrubHub deliver you a meal?

Yes, those may be big companies, but the one person you actually talk to is not an employee (well, depending how efforts like California AB5 go down). Most likely that real life person is an Independent Contractor.

Depending on where you get your news, that could be a good or a bad thing. The baddies have something to their argument: the theoretical employee should have a stable job, benefits, time off, unemployment, and payroll taxes handled for them. The Independent Contractor gets none of those things.

Though based on some of my past jobs, the only two things listed that are actually guaranteed are unemployment and Karen in HR handing Payroll Taxes…usually correctly.

So the Independent Contractor trades in someone else doing their taxes (and potentially some benefits) for what, exactly?

Well, if everyone’s following the law correctly, it’s flexibility.

The Independent Contractor can pick and choose jobs. They aren’t required to sit in a desk for a certain amount of time per day or meet certain arbitrary behind-the-scene metrics. If they get the job done, they get paid.

“But Tim,” I’m sure someone who worked in some summer door-to-door sales position is thinking, “I had to work exactly the hours my manager told me or I was let go, and they called me an independent contractor!”

Yeah…I have a problem with that. My reading of the law is that once the employer starts telling you HOW to work, you’re an employee. But I guess it’s like making out on the beach: it looks great in theory, but gets messy in the real world.

But that’s an issue for another time.

If you’re an Independent Contractor Indiepreneur, you should be able to work for multiple clients, meeting the agreed upon deadlines by working whatever hours you choose. It’s like running your own actual business…because that’s exactly what you’re doing.

You will, for sure, have to file your own taxes. That’s a topic for another time, but make sure to set aside at least 15.3% of your income for payroll taxes. Which you’ll have to pay yourself, since you no longer have a Karen to prepare it for you. And if you want insurance or any other benefits, you’re on your own.

If I Had to Choose…

Someone recently asked me if they should stop being an employee and become an independent contractor. We looked at the pros and cons of each, and for this person it came down to personal preference.

If you have to choose, there’s plenty of factors to consider. The main one is that $1 pay as an employee is greater than $1 pay as an Independent Contractor.

For many in the Indieprenuer world, though, there isn’t an option. It’s Independent Contractor or nothing. Disney needs a new score for their movie? They don’t have an orchestra on hand, they have to pull in a group of independent contractor musicians. If Denver Post need a good shot of the action, they buy pictures rather than hiring a photographer.

Yes, being an Independent Contractor comes with downsides. But if you play your cards right and get in with a company that actually treats you as an Independent Contractor–rather than an employee it’s trying to screw over–the flexibility may more than make up for it.

Plus, since you’re running it as a business, you get to play around with things like tax planning you can’t do as an employee. We’re talking deductions, my friend. But that’s a topic for another day.