Differences Between Employee and Independent Contractor
A worker can be categorized into two categories, the first category being an employee and the other independent contractor. When you want to start a business, you may not be in the know. Note that the two types of workers have differences that you should know of. Besides differences, examine the advantages and disadvantages of each type. The following paragraphs will highlight the key distinctions between the two types of workers.
To start with, one of the best ways you can differentiate the two types of workers is by looking at their tax situation. 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.
Another difference between an employee and an independent contractor is that the employee is given a consistent salary. The employees are also considered as the permanent assets of the company, and in most cases, they will receive benefits such as the healthcare plan. Among the packages that they enjoy include; specialized training, severance package, and workers’ compensation.
More often, an employee is subjected to a tight work schedule suggested by the employer. As an employee, you can find this disadvantageous or advantageous, check it out!. You may find the tight schedule limiting, or you can use it to your own advantage and be more productive.
As compared to an employee, an independent contractor best suits those that want freedom. Nevertheless, it demands that you be more responsible, click for more. 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. The other variance between an independent contractor and an employee is that an independent contractor gets paid only when the task is completed, click here. You have the assurance of getting the full amount so long as the work is approved.
As much as the employee has essential benefits like a healthcare plan, an independent contractor does not get to enjoy such benefits. In the case that you own a company, you may benefit from this fact, but when you want to join a workforce, it may be a limitation, especially if you don’t have a healthcare plan. In conclusion, before you start a business or join work, ensure you understand the differences so that you can make an informed decision.