What is an Independent Contractor?

What is an Independent Contractor?

by Louise Banks, December 2009

An independent contractor is a freelancer or self-employed person who provides a service and is hired by a company or individual to perform a specific task. Skills such as writing, graphic design and editing are frequently the types of work that are needed on a temporary or short-term basis, but almost any type of work can be done as an independent contractor.

Independent contractors are not employees of the company. They are often small business owners who hire out their services. The companies they work for are clients, not employers. As independent contractors they do not receive a salary, health benefits, paid vacations or holidays or a retirement plan. No taxes are withheld from their paychecks. Independent contractors are strictly work-for-hire and as such are responsible for paying their own taxes and in some cases their expenses as well.

In most cases there is a written agreement or contract between the contractor and the company which details the rights and responsibilities of both parties. There are standard independent contracts, but these agreements can be modified to address the concerns of either party. There is also flexibility on when or where independent contractors complete their work. Depending on the company and the work involved some contractors work on site while others work at home or in their own office. There can also be a combination of the two.

Independent contractors are increasing in numbers as both large and small companies realize the cost-effectiveness of hiring people to just do a specific job when needed instead of having full-time employees on staff.

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