Every year, more and more people are rethinking the way they work. Many leave traditional jobs in search of greater flexibility, work-life balance, and pay. Platforms like Instawork help folks like these work on their own terms — not as employees, but independent contractors. In other words, they are self-employed.
While becoming an independent contractor brings some changes, many of them are exciting. Here are some of the key things you need to know about the process.
1. You set your own schedule
One of the best parts of being an independent contractor is that you can choose your own work hours. Most employees get schedules telling them when and how long they have to work. For hourly workers, schedules often change from week to week. This can make it hard to plan childcare, errands, and hang-outs with friends.
As an independent contractor, though, your schedule is up to you.
You can work as much or as little as you want according to your needs — not a business's.
And you can choose to work whenever it’s convenient. Are you a parent? Then you can make sure to only work at times when you have childcare available.
You can also choose when you don’t want to work. That means no more worrying that your work schedule will ruin your plans for the weekend or a holiday. You can even choose to take extended time off if you want to take a vacation — no approval needed.
2. Taxes aren’t automatically deducted from your paycheck
When you’re a salaried employee, the company you work for deducts taxes from your paycheck for you. At the end of the year, they send you a form called a W2 that says how much they paid you and how much they deducted. Then, you use that information to fill out your tax forms.
As an independent contractor, things are a little different. Every business you do work for will pay you the full amount you earned, no taxes deducted. But you will likely have to pay estimated quarterly taxes based on the income you earn. (You can find more details about how that works here.)
But you’ll still have to file annual taxes by April 15th of each year to make sure you paid the right amount. The businesses you've worked for will send you a document called a 1099 that says how much they paid you. Then, you'll use that information to fill out your tax forms. It can get a little confusing, so you may want to use a tool like:
3. You can write off many work expenses
As an independent contractor, you often have to spend money to keep your business running. Luckily, the IRS gives you a break on certain work-related expenses, like work supplies and health insurance. If you properly document these expenses, you’ll get some tax money back from the government. Here’s how:
- Learn which expenses you can deduct. Find an easy-to-understand list here, and the full IRS guidelines here.
- Keep receipts. Save the receipt for every eligible expense, and sort them by category. (One folder for work supply receipts, one for health insurance receipts, etc.)
- Log your expenses. Record your expenses in a spreadsheet, notebook, or accounting tool. When tax season comes, use this information to fill out the deduction fields in your tax forms.
- Get reimbursed. If you did everything right, the IRS will subtract the amount you paid in expenses from the amount you owe. The end result is a lower tax bill, or a higher tax refund.
Taxes can be a pain, but deductions can save you hundreds (or even thousands) of dollars a year. So don't skip out!
4. Your benefits will change
Independent contractors benefit from more flexibility and freedom. But there are certain benefits employees have that they don't. For example, companies must offer employees unemployment benefits and workers' comp. Full-time employees also usually get health insurance. (But keep in mind, it can be hard to find full-time frontline jobs.)
That doesn't necessarily mean that you shouldn't be an independent contractor, though. There are workarounds for things like:
- Health insurance. You may be able to join a plan as a dependent, or receive a free/discounted plan through HealthCare.gov.
- Retirement savings. IRAs are a good alternative to 401(k)s and pensions.
- Workers' compensation. Anytime you work a shift through Instawork, we cover Occupational Accident Insurance.
5. You can have more variety
Employees are usually hired for one specific job, and tied down to any company they sign an offer with. Independent contractors, though, have more freedom. You get to choose:
- What kind of work you do
- Who to work for
- How many clients you take on
- And more
You might work as a server for a catering company one day, and as a warehouse associate for a retailer the next. It's a good way to not only shake things up from day to day, but also build new skills.
“I get really bored working in the same place all the time... [with Instawork] I’ve been able to utilize different skill sets, and learn to my advantage.”
In the end, there's no one right way to work. It all depends on your circumstances, preferences, and priorities. The best thing to do is gather all the information you can to make a wise decision.
But if you're a go-getter who likes flexibility and variety, independent contract work may be right for you. And if it is, we'd love to have you join the Instawork community!