The Benefits of Independent Contracting

How people work is changing. Flexible work options, creating a better work-life balance, and getting the chance to earn a bigger paycheque are more popular than ever. If these sound like things you’re looking for in a job, then becoming an independent contractor might be for you.

Contracting work isn’t like having a typical job. You’ll be working with many different clients and businesses instead of just one. You’ll be brought in to help with a specific project or assignment, and when your contract ends, you’ll be on the hunt for your next gig. You’ll get to meet lots of different people and possibly work within different industries.

Contracting isn’t for everyone, but it can be a rewarding career move if you’re motivated and a hard worker. Let’s take a closer look at what contracting is, the benefits and risks of the role, where to find contracting jobs, and how independent contractors can protect themselves on the job.

What is contracting?

An independent contractor is someone who provides their labour or services under a contract. When you are contracting, you will usually negotiate your own fee and may be able to work for more than one client at the same time. This is the same as being a subcontractor, another name for independent contractors.

To be considered an independent contractor, you will typically:

• Have a specialised skill or expertise
• Own your own business
• Work for clients on temporary, short-term projects or assignments
• Work for multiple clients during the tax year
• Use your own tools or equipment to do your job

Independent contractors are not employees of the companies they work for. This means that you may not have access to many of the benefits and perks that a regular employee does, but you also have more freedoms (more on this later).

Why become an independent contractor?

There are some great reasons to become an independent contractor.

1. Be your own boss

Contract work puts you in charge. You get to choose the clients you work with and when. While you will need to follow directions from your client, you do have a greater say in your job than a traditional employee.

2. Control your schedule

Contracting lets you set your own schedule. You have more freedom to set your own hours and can work around your personal calendar. For example, you might choose to contract part-time while you finish university or test the waters. This can be a great way to create the work-life balance that you want.

3. Great earning potential

Independent contractors are paid by the hour and can typically charge a high wage, especially if your skills or knowledge are in high demand.

4. Test out different employers

Contract work is one way to test out different employers. You can get a feel for a company and their culture and ask current employees what it’s like to work there. If a permanent role is advertised in the future, you may also have a leg up on the competition because you’ve worked with them before!

Pros and Cons being as an independent contractor

While there are many great reasons for being a subcontractor, this work style isn’t for everyone. There are cons too, and you should be aware of them before jumping into contracting work.

It can be hard to weather work slowdowns

Contracting work isn’t always steady, and in some industries, it might even be seasonal. You could be out of work for weeks or even months between contracts as you search for your next job. This can be stressful, particularly if you’ve not budgeted for these lulls.

You won’t have access to many benefits and perks

Permanent employees are guaranteed certain benefits that independent contractors are not. For example, you won’t be entitled to paid leave (such as annual leave, carers’ leave, or long service leave) as a subcontractor. You may also need to pay for your own superannuation.

You’ll need to manage your own taxes

Unlike a traditional employee, your clients won’t deduct income tax from your paycheque. You’ll need to pay your own tax and GST (if applicable), so you’ll need to budget for this throughout the year so you’re not stuck with a nasty tax bill.

You’ll be an outsider

Contractors don’t belong to the companies they work for. You might not be invited to staff meetings or asked to contribute to strategy and planning. Some full-time employees may be wary or even resent you, particularly if they think you’re making more money than them.

Where can I find independent contracting jobs?

Being a subcontractor might sound great, but you may be wondering how people find these types of jobs. As the popularity of contracting work grows, it’s getting easier to find these types of gigs. You might look for contract jobs:

• Online job websites – Companies often advertise short-term and contract roles on job search sites. Some sites allow you to bid on the contract, so you can set your wage immediately.
• Government websites – Public sector contracts are typically found through government sites, as you’ll likely need to take extra steps to work with them.
• LinkedIn and other social media – Businesses often use their social media reach to advertise positions and short-term contracts.
• Your network – Your family, friends, and professional contacts might have a lead on a contracting role that’s right for you!

Protecting Yourself as an Independent Contractor

Before you set up contract work, you may want to consider business insurance. Independent contractors are responsible for all parts of their business, which often means taking on more risks than a traditional employee. You might want to create a safety net for yourself—just in case.

There are different types of insurance that you might consider as a contractor, including:

Professional Indemnity – Even a small mistake in your work can cause big problems on a project. Professional Indemnity insurance covers you for errors, negligence, and other types of professional wrongdoing that can happen in the delivery of your services.

Public Liability – Accidents happen, even when you’re being careful! Public Liability insurance covers you for client injuries or damage to their property resulting from your negligent business activities.

Cyber Liability – Cybercrime is no laughing matter. Cyber Liability insurance covers you against things like malware, data breaches, and false billing scams.

Business Insurance – These policies can prepare you for just about anything! Business Insurance can be customised to cover business interruptions, theft, equipment breakdown, and other events that might apply to your work as an independent contractor.

Being a subcontractor comes with many risks and rewards. Insurance can help you minimise the risks, so you can take full advantage of the rewards!

Compare coverage for independent contractors with BizCover. We’ve made the process of comparing and buying business insurance easy, so you can protect your small business with no dramas. Get online quotes from some of Australia’s top insurers now!