What is an Independent Contractor?

Many job listings and job opportunities list independent contractor, what does this term mean exactly?

"Independent contractors are people whom are in business for them selves; they earn their livelihoods from their own independent businesses instead of depending upon an employer to earn a living."

What exactly does this mean for you when applying for a position that says you will be your own Independent Contractor? In simplest of terms, it means you are responsible for your own taxes. You will be paid a set amount and the employer will not be taking out any state or federal taxes from your check. Most independent contractors pay estimated taxes directly to the IRS quarterly.

One of the benefits of being an independent contractor is you can also claim your business expenses should you have any. Such as your Internet service provider, 2nd phone line, etc.

Two downfalls to being an independent contractor are you will have no job security and you are now responsible to pay self-employment taxes. Unlike employees who have half of their Social Security and Medicare taxes paid by their employers, self-employed people must pay their own Social Security and Medicare taxes.

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