Did you know that Millennials have become the largest generation in the workforce? In fact, they account for a whopping 35% of workers in America.
When it comes to being a worker, the two main types of employment are an independent contract and a traditional employee.
If you’re a millennial joining the workforce or thinking about starting your very own business, then you’re probably wondering how these two types of employments differ. Keep reading to learn all about the difference between an employee vs independent contractor.
Have you ever asked yourself, “What is an employee?”
The best way to determine what kind of worker is involved in a project is by looking at their tax situation. If you’re an employee, make sure you get your W2 online today.
The benefit of being an employee is that the employer often handles the brunt of tax-related paperwork. The downside is that employees are given payroll taxes.
Another huge difference is that an employee is paid a consistent wage. Since they’re a more permanent asset to the company, they will often receive certain benefits, such as a healthcare plan. Other benefits include a severance package, specialized training, and even worker’s comp.
An employee’s work schedule is more strictly dictated by their employer. Depending on your personality, you may find a set schedule too constricting. On the other hand, it could make you more productive if you thrive on accountability.
An Independent Contractor
Now you’re probably asking yourself, “What is an independent contractor?”
This option is great for people who want more freedom. However, this is also at the price of more responsibility. For starters, all of your tax paperwork is on your shoulders, which can become a bit stressful.
It’s also worth noting that, in the eyes of the IRS (Internal Revenue Service), an independent contractor is considered self-employed.
Instead of receiving a regular paycheck, independent contractors get paid after every project they complete. All these could come from a single business or several different ones. As long as you’re good at what you do, you can expect to get paid as much as a traditional employee, if not more so.
Another downside, however, is that you won’t get the same benefits as an employee, which means important things like healthcare will be up to you.
When it comes to an independent contractor vs employee, it’s better to spend some time weighing the pros and cons of each rather than jumping into one or the other.
Ready to Choose Between An Employee Vs Independent Contractor?
Now that you’ve learned all about the difference between an employee vs independent contractor, you can decide what would best suit your needs. A lot can depend on your personality and work habits.
Whether you’re starting a business or are trying to find your footing within the workforce, we can provide you with all of the essential tips and news. If you want to stay up to date, then don’t forget to bookmark our site.