The Eagle Blog

To Be An Independent Contractor Or Not?

For the technology professional (or maybe any professional) pondering the question of whether to become an independent contractor there are many questions to ask, and some very honest self-assessment to be done before making the leap.

If you talk to a true independent contractor today, he/she is very content with their status. They have a better income than as an employee, they can “choose” from multiple job opportunities rather than be told what project they can take, they can choose to take extended time off and they can even take jobs that allow them flexibility for other “interests”. The contractor does not need to be involved in the parts of corporate life that can be unappealing, such as office politics or the concern about job progression. They would not want to be an employee any more, and they enjoy the flexibility and freedom of the self-employed.

As with anything in life there are costs associated with this life choice, and they can be in dollars and cents or they can be less tangible. The overriding difference is that a contractor is not an employee, cannot think like an employee and cannot expect the benefits of an employee. A contractor is only paid when they are working … definitely the number one concern for contractors. Contractors are responsible for their own training and for keeping current with trends … its easy to be left behind and that affects job opportunities. A contractor needs to obtain their own medical benefits and insurance, typically through industry associations or other such means. The contractor needs to keep good books, to market themselves and to operate in all ways like a business. The contractor is a one person business and that can be hard for people who want to be a part of something bigger.

At the end of the day I think it’s important that the independent contractor have enough entrepreneurial spirit to take a little risk. He/she needs to be very competent at the technical aspects of their job. They also need to have better than average soft skills, an ability to communicate effectively and they must project a professional image.

I do believe that more people will choose the path of independence as we experience greater skills shortages. It will be important that those making the leap have really thought through the consequences and are ready to take the risk. It’s a great way of life for some, but not for everyone!


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4 thoughts on “To Be An Independent Contractor Or Not?

  1. Your post is very informative and reiterates the common topics that most people contemplating a move into independence have identified, researched, and possibly determined their own threshold for risk.

    As you have stated, the contractor must think like a business and not like an employee. Therefore, would you agree that the traditional business start-up tasks of writing a business plan, identifying a target market, and assessing the competition still apply? Should the contractor also consider which form of business they want to set up – sole proprietorship or corporation?

  2. Your post is very informative and reiterates the common topics that most people contemplating a move into independence have identified, researched, and possibly determined their own threshold for risk.

    As you have stated, the contractor must think like a business and not like an employee. Therefore, would you agree that the traditional business start-up tasks of writing a business plan, identifying a target market, and assessing the competition still apply? Should the contractor also consider which form of business they want to set up – sole proprietorship or corporation?

  3. The more that an Independent Contractor looks and acts like a business the better for a few reasons.
    1. Avoiding Employer/Employee issues.
    2. Agencies want to see a commitment to the contracting world. They get nervous when people say “I’ll take a contract, but I really prefer a full time job”.
    So … a business plan makes sense. Look at cash flow, plan for “down time”, training costs, technology, fees for advisors (accountants, lawyers etc.) As for incorporation, that is a personal decision of course and I am not an expert who is certified to give advice. I will tell you that from an agency standpoint an incorporated contractor is always preferable and you will receive a T4 as a “sole proprietor”. There is lots of information on the web, however a company called Wall & Associates has a website focused on the IT contractor. Worth a visit … http://www.ca4it.com/industry/index.html

    Hope that helps.

  4. The more that an Independent Contractor looks and acts like a business the better for a few reasons.
    1. Avoiding Employer/Employee issues.
    2. Agencies want to see a commitment to the contracting world. They get nervous when people say “I’ll take a contract, but I really prefer a full time job”.
    So … a business plan makes sense. Look at cash flow, plan for “down time”, training costs, technology, fees for advisors (accountants, lawyers etc.) As for incorporation, that is a personal decision of course and I am not an expert who is certified to give advice. I will tell you that from an agency standpoint an incorporated contractor is always preferable and you will receive a T4 as a “sole proprietor”. There is lots of information on the web, however a company called Wall & Associates has a website focused on the IT contractor. Worth a visit … http://www.ca4it.com/industry/index.html

    Hope that helps.

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