There are numerous benefits associated with being an independent contractor. For example, you may be able to cherry-pick the projects that you want to work on, and you may earn a slightly higher rate. Because you are self-employed as an independent contractor, you also have the ability to set your own schedule within reason. These are exceptional benefits that ultimately entice salaried professionals to branch out on their own. Nonetheless, there are also numerous risks associated with being a private contractor that must be analyzed and mitigated when possible.
Unstable Income
While the rate that you may charge as a private contractor is often higher than the rate an in-house employee may earn, income is not always steady. There may be lulls in activity when you may not have income for several weeks or longer. In addition to this financial instability, you will not receive benefits like health insurance and an employer-matching retirement plan. Your personal finances should be able to sustain these financial possibilities.
Potential for Personal Injuries
In addition to the financial risks associated with being self-employed as a private contractor, you may also face risks associated with personal injury on the job. When you are injured as an employee, you have access to workplace compensation to cover lost wages, medical bills and more. If you have an issue receiving this compensation, you may hire a worker’s compensation lawyer. On the other hand, when you are injured at a worksite, personal injuries may be yours to deal with financially unless you can prove that the company was somehow liable. Receiving compensation as an independent contractor may require you to file a lawsuit.
Liability Risk
You also face liability risk that may not be present as an employee. For example, if you fail to do your job properly, you could be sued for damages. This may include physical damage to a company’s property, injuries sustained as a result of shoddy work and more. Independent contractors may benefit from a liability insurance policy that could cover some expenses if this becomes an issue.
As beneficial as it may be to work as a private contractor and to be self-employed, you can see that there are also tremendous risks that you need to know about and prepare for. If you are on the fence about becoming an independent contractor, carefully assess these risks. Consider researching ways to decrease your exposure to risk before you get started. By doing so, you can make the most informed decision possible about your professional future.