EMPLOYEE vs INDEPENDENT CONTRACTOR

Not one or the other – both

For most of my life have been an employee while at the same time taking advantage of other talents that I have and offering them to those who would hire me.  I made a conscious effort to never work for a unionized company, so I never had to contend with that financial burden.  I have been careful to never operate in the gray area of the federal IRS guidelines defining employees and contractors.  I may be a fairly rare specimen who has had two distinct careers, so here is how I did it.

1.       1. I am a holder of a master’s degree in Theology.  I have been engaged by churches for           varying amounts of times and for specific deliverables.

2.      2.  I am fluent in four languages so I am always available for translating/editing projects.

3.           I offer my education and my life experience to a travel company and organize                       pilgrimages.

4.      3.   For years I maintained a relationship with a multi-level marketing organization.

   4.    Twice in my career I did work for a former employer as a contractor.  This happened when I left my job to follow my spouse to another city far beyond commuting distance.  This was possible because I was talented enough to carry some projects with me and deliver the results according to set deadlines.

For the last twenty years I have not been a full-time employee.  For the last 15 years I have not been a direct employee at all.  I take advantage of my social security benefits, including Medicare and I continue to make my personal talents and abilities available to those who want them.

Being a pure independent contractor can be lucrative for those who have the ability and talents but I personally want to caution the reader to be sure to consult professional people who can inform and teach the aspiring contractor concerning the intricacies of law and practice.  The legal framework around employment is complex.  The ability to “be on your own” is not given to all who would be attracted to it.  One of the reasons why I split my energies is the attraction of funding my social security/Medicare account, the insurance coverage offered by employers (Life, health, workers compensation, steady work schedule, etc.) and the national and international networking opportunities that come from working for a large, successful enterprise.  The split endeavors that I practiced served as training for the day (now) when I would not be an employee but could continue working and earning.

Oh, I almost forgot.  No, not really.  I was keeping it for last. Taxes, remember them?  This is one of the areas that require study and constant attention if the independent contractor wants to take advantage of the tax code of the USA.  This is the point of this post.  

The independent contractor who is not a direct employee at the same time may have income tax advantages but these advantages can be wiped out by other aspects of the tax structures present in every American’s life.  Don’t forget the taxes that are required but are not necessarily refered to as "taxes, i.e. social security, Medicare, IRS, State income tax, higher automobile insurance rates, etc.  It is possible to lessen the tax burden if while being a contractor there is a direct employer carrying the basic, if not full tax burden that every employed adult incurs.

Being independent can be nice.  I enjoin you to educate yourself about the regulatory world into which you will be plunged if you become “independent.”  I pray that you will be successful and I remind you not to cry at my funeral.