Instead of hiring employees, many companies are hiring independent contractors. While these openings were once only freelance writing positions or related artistic jobs, today’s independent contractors can hold just about any open position. If you’ve been job hunting for a while, you might be ready to sign on the dotted line – but before you take a contract position, here are a few things you need to know about these kinds of jobs:
- You have to pay your own taxes.
When you’re an employee, your federal, state, and local taxes come right out of your paycheck, but as a contractor, you’ll likely have to pay this money on your own. That means that every paycheck you get will be bigger, but at the end of every quarter, you have to send in a lump sum to the government. If you don’t, you’ll owe all of this money at the end of the year when you file, and you could be looking at penalties and late fees for not paying quarterly. You’ll also pay slightly more, since in a regular position, your employer covers some of the tax costs.
- There might be a non-competition clause.
Most contracts, especially for artistic jobs, carry a non-competition clause, which means that you can’t complete any work for a competitor to the company. Some bar you for working for any other company at all, even if they’re not a competitor. If you’re working in an artistic freelance position, this could be especially important for you to understand. Make sure that the contract position you take pays well enough to cover your bills – if it doesn’t, you might have a hard time finding additional freelance work while still upholding the contract with the non-competition clause.
- Be aware of non-disclosure agreements.
Most contracts also come complete with a non-disclosure agreement, or NDA. This protects the company by saying that you can’t talk about trade secrets, future plans, or other information that the company shares with you, even after you don’t work there anymore. Some companies are very strict about this policy, so even an offhand remark on Facebook or Twitter about what you’re doing at the office could be considered a breach of contract. Keep your comments to yourself, especially on social media sites.
- Contractors rarely get raises.
Traditional employees are offered annual raises in most cases, and if you’re doing a good job, you can even ask for a raise. As a contractor, you can still ask, but it is less likely that you’ll actually get one – at least, not before your contract is up for renewal, at which point you can renegotiate. Make sure that the money they’re offering is an amount that will make you happy for the entire duration of the project.
- You probably won’t get benefits.
Full time employees get perks like health coverage and paid vacation days. Contractors are rarely offered benefits packages. Insurance coverage can be an especially large expense, so if you aren’t covered under a spouse’s plan, make sure you can afford it or you negotiate coverage with your boss.
- You contract may not be renewed.
When your contract is up, you might be politely shown the door. Yes, even if you do a good job! One of the reasons companies hire contractors, in some cases, is that they don’t want to go through the process of firing you or laying you off. If your contract isn’t renewed, you won’t get a severance package or even unemployment. You’ll just be out of work. It’s nothing personal; some companies simply do not have long-term work to keep you busy and just needed you for a specific project. In the months leading up to the end of your contract, talk to your manager about the likelihood of your contract being renewed or you being hired in a full-time position. That way, if it looks unlikely, you can start applying for another job.
- Contractors have more freedom.
It isn’t all bad news! As a contractor, you’ll likely have a lot more freedom, with many be able to make their own schedules, work from home, outsource parts of a project, and more. Contractors also generally have more wiggle room when it comes to negotiating the contract in the first place, so that allows you to work with your future employer to customize a contract that makes sense for both of you. Don’t be afraid to ask for changes before you sign!