The Pros And Cons Of Contract Jobs

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With the rise of the gig economy and the transience of people under 40, contract jobs are at an all-time high. As the economy grows and changes, more people are working for themselves than there were a generation ago. Also, the cultural spirit of "being your own boss" is on the rise. This freedom is welcome to some workers. For others, it's not as enticing.
If you have a young family or a disability, the mobility required for the contracting economy can be frustrating. For some people, working via contracts is more lucrative than being tied to a single company. To help you understand what's right for you, we've put together the pros and cons of working a contract job.

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The Pros

If you got years of experience working in your field, there are probably lots of companies interested in your talent. For people who are sick of being stuck behind a desk and want to be able to travel for work, a contract job will do the trick. Companies will be a little warier hiring people without any experience for a contract position.
They want someone who can jump in the water, make a big splash, and catch up with the rest of the team. In case you're older and have a lot of experience, you might be able to impress an employer who you may not have been able to work for before. If you're in high enough demand, ask for a salary beyond what you're currently making.
Use that figure as a jumping off point for negotiations on your next contract. When tax time comes, you'll be able to write off more things than an average office worker could. Your travel, meals, and working from home expenses could all be tax-deductible

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Cons

Being a contracted employee might be good for your wallet, but it's not always ideal for people who enjoy working on a team. With everyone knowing that you'll be leaving soon enough, you won't be invited into the inner circle of the company. You might find that you're left out of inside jokes or office traditions.
When the end of the year comes, you need to think about your taxes. Your employer hasn't been paying taxes on your behalf, so you'll have to foot that bill yourself. Unless you're working in a state with no income taxes, what may have sounded like a big payday upfront might turn out to be a dud. You also need to think about your benefits.
If you're not putting away money for a 401k or a retirement plan, your employer certainly won't be doing that for you. Make sure you consider this aspect when negotiating your pay for contract jobs. Add an extra 20 to 30 percent on top of what you want so you can cover these extra expenses.

Also read: How To Prepare Your Accounts For New Hires

Be Smart When Accepting Contract Jobs

The only major hurdle to accepting contract jobs is whether or not you feel comfortable. Even if a contract seems like your dream job, if you don't feel happy doing it, it's not a good fit. So, are you ready to start hunting for the perfect contract job?
Let's help you create your paystub in minutes and account for your wages.

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Frequently Asked Questions

Yes, contract jobs can sometimes lead to permanent employment, either through the extension of the contract or by being offered a full-time position with the company.

Contract workers typically do not receive the same employee benefits as permanent staff, such as health insurance, paid leave, and retirement plans, but some organizations may offer limited benefits.

Contract workers are often responsible for managing their own taxes, including paying estimated taxes throughout the year, tracking business expenses, and filing tax returns as self-employed individuals.

Job security is generally lower for contract jobs, as contracts often have a fixed end date, and there is no guarantee of contract renewal or additional work.

Contract jobs often offer higher hourly rates compared to permanent positions, but the overall income may vary due to the project-based nature of the work.

Strategies can include budgeting for periods of unemployment, networking to find new opportunities, and diversifying your skill set to appeal to a wider range of clients.

Some benefits include flexibility, higher pay rates, diverse work experiences, networking opportunities, and the potential for better work-life balance.

Some disadvantages include lack of job security, fewer employee benefits, inconsistent work, potentially higher taxes, and the need to constantly search for new contracts.

Industries that often have contract jobs include information technology, engineering, healthcare, consulting, creative fields, and construction, among others.

Contract job durations can vary greatly, from a few weeks to several months or even years, depending on the project and the needs of the employer.
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The Pros And Cons Of Contract Jobs
James Wilson

After graduating from McCombs School of Business in Texas, James joined ThePayStubs as a CPA to make sure the numbers we provide our clients are correct. Read More

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