What Sets Independent Contractor & Employee Apart — Our Guide
Employment has seen various improvements today compared to yesteryears. Undeniably, the evolution of the workforce has allowed people to seek for a setting that is more suitable for them, or at least, adjust to it a lot easier.
Employment is no longer exclusive to the traditional work setting where an employee works for their employer. Today, one has the option—provided that their nature of work allows it—to work as an independent contractor. Even so, the difference between independent contractor work and traditional employment is still not as fully grasped by many people.
Below is a guide that summarises the differences between a contractor and an employee, which could help you decide which setup is better for you.
Employee versus Contractor
To put it simply, an employee works for an employer as part of its human resource and internal workforce. Meanwhile, a contractor, also known as self-employed or freelancer, is essentially an external human resource who is under a contract to provide services to the employer.
Common differences between the two
An employee is commonly employed under a full-time, part-time, or casual agreement, while the contractor is typically working under a project-based agreement. Additionally, an employee will receive all the benefits, such as superannuation, leave pay, work cover, etc., while a contractor is responsible for their own benefits and taxation.
Advantages of working as an employee
Working as an employee means that you are protected under a range of legislation that requires employers to abide. That means that you’re not only entitled to the discussed salaries and benefits that you and the employer agreed on, but you are also backed by the government as the following are within your rights:
Unfair dismissal or unlawful termination protection
Minimum work conditions
No personal liability in the case of a work defect on your part
Relevant coverage in the event of an injury or illness while at work
Taxation, superannuation, and other contributions from your employer are arranged for you
Advantages of working as a contractor
While working as an employee has many benefits, independent contractor work or project-based work has its own perks too. The main idea behind working as an independent contractor is the sense of freedom, and full control over your work is more apparent. Most people describe this as being your own boss.
Contractors have more control over working hours, resulting in increased productivity and less stress. Additionally, contractors have full ownership of their work by default, unless the contract says otherwise.
The common advantages of working as a contractor or freelancer that make more people seek this type of setting include:
The flexibility of work (working hours and working location)
Ownership of brand and business
Intellectual property (unless stated otherwise)
Freedom to incorporate their ideas and perform work the preferred way
Ability to work with multiple clients
Now that you have an idea about the main differences between an independent contractor and an employee, you can now weigh in your preferences or determine which type of setting is perfect for you. Also, if you’re going to work as an independent contractor, you understand that doing your taxes will be crucial, just like how a small business would do it.
You can hire an accountant in the Gold Coast to do the taxes part for you! If you’re looking for an accountant for your small business, get in touch with us today and see how we can help.