What Is a Contractor?

If you’re looking for a career change, you’ve likely been bogged down by the high levels of unemployment in recent years.

If you’re struggling to find full-time or even part-time unemployment, you might want to consider the advantages of being a contractor.

With this option, you work as your own boss and you might have an easier time finding work than a prospective employee.

But what is a contractor and how is it vastly different from an employer?

Here’s how to become a contractor.

What Is a Contractor?

A contractor is a freelance worker who specializes in one skill or a set of skills.

They’ll often distinguish themselves as being specialists or generalists depending on the demand in their local economy. Depending on what skills are in demand, different types of contractors will be needed.

For example, you might use your construction skills during stable times in your local economy. During more challenging times, you might have to offer your plumbing or electrical skills more often.

As a contractor, you’ll get to choose your own gigs and schedule. You can choose to reject a gig that doesn’t interest you. You can also choose when you wish to work and when you want to take time off.

This high level of freedom is what attracts many professionals to becoming a contractor. You can check out this guide on becoming a contractor if this interests you.

Of course, you have to determine whether you want to become a contractor to replace your main income or to create a side income. For the former, you might find that you’ll have to work more than you did as an employee!

What Are the Responsibilities of a Contractor?

Now let’s look at the responsibilities of a contractor in comparison to a traditional employee.

As a contractor, you’re responsible for setting your pay rate. A contractor’s salary is based solely on how well that contractor can market their skills. In most jurisdictions, there’s no minimum wage for contractors.

As a result, you can charge $20 per hour for plumbing work. You can also charge $100 for the same work. You have to find a way to seek clients willing to pay this amount.

You’ll also be responsible for paying taxes on your own. As you don’t have an employer, you won’t have someone else paying a portion of your taxes for you.

Depending on the scope of work you offer, you might also want to hire a lawyer to help you set up a business structure.

Become a Contractor

Now that you know what is a contractor you can decide if this is the ideal route for you.

You’ll choose the skills you want to offer to the market. You can choose to work as a generalist with many skills or a specialist with one skill. You can also choose your schedule and what gigs you’ll like to take.

You have the added responsibility of setting your pay rate. You’ll also have to pay your own taxes in full and you might have to set up a business structure.

You can find a few great business tips on our blog!