Employee or Independent Contractor?

If you've been thinking of making a career change, one possibility you may have considered is to go to work for yourself. “Yes!” you may respond. “Be my own boss! Live the good life!”

But is it the good life? Or is it even better than you could dream?

As an Employee:

• Your job is usually limited to 40 hours a week, and you may have benefits.
• If you lose your job due to cutbacks, you may qualify to receive unemployment wages.
• At tax time, if you have employee expenses, you may be able to deduct whatever your employer doesn't reimburse.
• You can usually count on a steady paycheck.

As an Independent Contractor:

• You have control over your hours, how much you charge and how you do the job.
• You may have difficulty finding jobs, or face a lot of competition.
• You’re responsible for your own health insurance, as well as other expenses such as licensing, training, uniforms, tools, etc. These expenses can be deducted on your tax return.
• Remember that income taxes are technically due when the income is earned. This means you’ll have to pay quarterly taxes or potentially face a large liability when you file your return. And don't forget self-employment tax - this includes your Medicare and social security taxes.

Remember to contact your tax preparer to discuss your individual situation.

Becoming your own boss requires a lot of forethought, but if you decide that's the path to follow,  we wish you all the best!