Why Being a Contractor Can Be Better Than Being an Employee

There are some benefits to being a contractor that full-timers don’t get

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The standard relationship between employers and workers is changing as more people choose to be independent contractors. Being an employee means having a boss, receiving an hourly pay or salary with benefits, and often working full-time on a set schedule.

But contractors typically run their own businesses. Contractors may work as consultants, temporary employees, freelancers, or other non-payroll positions. A contractor is not under an employer’s control regarding the manner, means, and results of work performed. They operate their own business and offer their contracted services to the public.

Many people are embracing this way of working. Despite not always having a consistent income, contractors enjoy advantages that full-time employees do not.

Key Takeaways

  • Contractors can work for multiple clients instead of a single company.
  • Independent contractors enjoy more freedom and flexibility to choose assignments and work hours than traditional employees.
  • Contractors can typically work from anywhere and have more options to prioritize their schedules for better work-life balance.
  • Downsides of contracting include irregular hours and less financial security.

What Are the Advantages of Being a Contractor?

The gig economy has increased in popularity in recent years. At least 57 million Americans, or 35% of the U.S. workforce, freelanced in 2019, according to a survey by Upwork and Freelancers Union. What’s the appeal? Here are some key benefits of working as a contractor.

Be Your Own Boss

One of the biggest advantages of being a contractor is having independence. Since you’re self-employed, you control your work hours and the projects or assignments you take. You can also contract with multiple companies instead of a single employer, which in many ways can provide greater income security.


While paying taxes on self-employment income becomes the contractor’s responsibility, you may also qualify for deductions for expenses such as a home office. Speak with a professional tax advisor to learn more.

Work From Anywhere

If you favor less commute time and more freedom, independent contractors typically can work anywhere. For instance, as a freelance writer, you can work from home, at your favorite coffee spot, or even while traveling around the country. As long as you have access to a computer and a stable internet connection, your workplace can be wherever you are.

Set Your Own Schedule

Being a contractor versus being an employee means not being locked into a rigid schedule. You can build as much flexibility as you need into your day. With control over the hours you work and the projects you accept, you can create a work schedule that fits into your life instead of the other way around.

More Work-Life Balance

Trying to juggle work and home duties can challenge employees working on a fixed schedule. But working as a contractor can give you more work-life balance and the ability to prioritize important things in your life. By avoiding hours in traffic, you’ll have more time to spend on favorite activities with your family and friends. You may also find increased productivity when working for yourself, with more opportunities to decompress during the day.

Who Is a Best Fit for Contracting Work?

An ADP Research Institute study shows that 72% of independent contractors state they chose contracting work over a traditional job. People who want the freedom and flexibility of choosing their own assignments, work hours, and clients are likely the best fit for working as an independent contractor.

Conditions some contractors may find challenging include working irregular hours and purchasing their own work equipment. Other challenges mentioned in an independent 2019 contractor study conducted by Washington State’s Department of Commerce include: 

  • Enforcing contracts
  • Personal safety
  • Isolation
  • Weaker sense of economic security
  • Fears of financial instability if making mistakes
  • Lower consistency in reported earnings

Notably, the study’s participants said the benefits of flexibility and choice outweighed any economic insecurity.

One example of a good fit might be a virtual assistant who wants to work with many clients instead of a single employer. Other examples are people who frequently move, such as military spouses, or people who like to work remotely while traveling.

The bottom line is that deciding if working as an independent contractor is the best fit for you depends on your priorities and the trade-offs you’re willing to make.

Frequently Asked Questions (FAQs)

Are independent contractors entitled to unemployment benefits?

Companies generally pay into a fund for their employees, making employees eligible to receive unemployment benefits. Contractors are typically not eligible for state unemployment benefits. However, if you were misclassified as an independent contractor versus an employee, you might qualify for unemployment benefits.

Can independent contractors get health care benefits?

An employer typically doesn't provide health care benefits if you’re an independent contractor or otherwise classified as self-employed. However, some companies could offer contractors health, dental, and vision insurance benefits to develop quality relationships. Other options include purchasing freelancer health insurance through the Health Insurance Marketplace, or you could qualify for Medicaid based on income.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Freelancers Union. "Freelancing in America."

  2. IRS. "Self-Employed Individuals Tax Center."

  3. ADP. "Illuminating the Shadow Work Force."

  4. State of Washington Department of Commerce. "Independent Contractor Study."

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