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. As a young entrepreneur thinking of your own business, you may not be in a place to know this information. If you are thinking of venturing into a business, you should know that there are distinctions between employees and independent contractors. Apart from variances, see to it that you know the benefits and demerits of an independent contractor and employee, click this website. The following paragraphs will highlight the key distinctions between the two types of workers.
In the first place, take keen note that the major difference between the two types of workers is the tax situations they are in, read more here. The main advantage that an employee has is that the employer takes care of the brunt of paperwork related to taxes. 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. The fact still remains that the employees will be recognized and the permanent assets of the employee and therefore have specific benefits like the healthcare plan. Among the packages that they enjoy include; specialized training, severance package, and workers’ compensation.
An employee basically has a schedule strictly ordered and monitored by the employer. While the statement seems disadvantageous, it also has benefits depending on the employee, check this site. You may find the tight schedule limiting, or you can use it to your own advantage and be more productive.
When it comes to an independent contractor, the advantage is that you have more freedom and, therefore, a great choice if freedom is among your priorities. Freedom maybe the advantage, but the disadvantage is that you will have more responsibility as an independent contractor. As an independent contractor, you have full responsibility for your tax documents, and this can be overwhelming.
Note that an independent contractor is considered self-employed by the internal revenue services. Regarding independent contractors, you are not consistently paid, but you can be sure of the payment once the job is completed. So long as the work is done as per the required standards, you are always sure of getting paid.
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.