October 26, 2012
Is independent contracting right for you?
David Robison was laid off from his full-time job more than a decade ago. Soon after, the Seattle resident began contracting as a user-experience designer -- and has never looked back.
“Starting a new career as an independent contractor was a gift,” he says. “It allowed me to be in control of the kind of work I wanted to do.”
People turn to contracting for a variety of other reasons beyond making ends meet after a layoff or keeping skills sharp between jobs. Some want more flexibility and control over the hours they work and the types of projects they take on -- even the amount of money they want to make.
Here are some factors to consider when deciding whether contracting is for you.
Agency vs. independence
Going out on your own doesn’t necessarily mean starting your own business. Local staffing agencies such as Aquent or Terra will negotiate your contracts and handle your paycheck and tax withholding. Some agencies also offer access to retirement and health benefits.
Going this route means you essentially become an employee of the staffing agency, and it will put you at the front of the line for contract jobs at companies such as Microsoft and Amazon.com. In turn, the agency takes anywhere from 5 percent to 30 percent of your hourly rate, and, chances are, you’ll need to work on-site.
Steps for starting a business in Washington state
State of Washington business license information
Tax matters: Washington State Security Department independent contractors information
The other option is to be a self-employed independent contractor. You’ll have to find your own work, market yourself, pay your own taxes, cover your own expenses (including health insurance) and forfeit company-sponsored benefits such as vacation/holiday pay and retirement plans. But there are some great benefits in the way of small-business credits and tax deductions.
Flexibility vs. paid time off
When you are a contractor, gone are the days of having to take vacation time to see the doctor or volunteer in a child’s classroom. Ann Pottier, a Seattle mother of two and contract OEM (original equipment manufacturer) account manager at Microsoft, switched to contracting for this very reason. She was able to cut her travel and work 20 hours a week from home, and now enjoys more work-life balance.
Sarah Parr Gire, a contract project manager for Vendaria Media in Seattle, has a school-age daughter and loves the flexibility that her job affords her. She got her assignment by setting herself up as an independent contractor, networking and reaching out to local companies until she found the right fit.
Robison, the independent UX designer, says that contracting allows him to be both a stay-at-home parent and an entrepreneur. It’s a win-win situation for all three of these contractors, who are able to rely on spouses with “regular” jobs to provide health insurance and other benefits.
Short-term vs. long-term
This is where things can get a little tricky. Remember that case against Microsoft concerning long-term temporary employees (“permatemps”)? The result is that all contract work at Microsoft must be “vendor approved” (i.e., you’ll need to go through an agency), and you may be subjected to a mandatory break.
Other companies have limitations, too; be sure to ask before you get started. “We can anticipate this and get our talent lined up for other assignments ahead of time,” says Cheryl King Berry, a senior vice president at Aquent in Seattle.
Freedom vs. stability
Agency jobs are almost always temporary and lack the job security of full-time employment. If you’re OK with the risk, contracting allows you to obtain new skills and take charge of your career in a non-traditional way.
Says Lisa Hufford, owner of Simplicity Consulting of Kirkland: “Know your passions. What do you want to do with your life? Contracting allows you to leverage your skills and create your own unique destiny.”
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