Pros And Cons Of Freelancing And Being An Independent Contractor

From Untemplater — Sydney discusses the pros and cons of freelancing and being an independent contractor.  She does a great job of highlighting some of the key differences.  For the positive aspects, she writes:

“The Pros Of Working As An Independent Contractor

So you may be wondering, what are the pros and cons of freelancing and leaving the full time corporate world of cubicle life? Let’s start with the pros. These are based on my own experiences so far as well as few of my close friends who have been working independently for several years.

Flexible Hours: One of the biggest perks of being a freelancer, as you can imagine, is being able to set your own hours. There may still be times when you have to work onsite somewhere, but usually you can have a good amount of control over which days and times you work. I’m actually looking forward to being able to utilize weekends to work a bit more so that I can use weekdays to run errands and travel. I don’t like crowds, so being able to do those things when the majority of people are at work is something I’m looking forward to.

Working Remotely: There’s a mixture of part time work out there that’s done remotely versus onsite. Some companies actually prefer freelancers to work remotely because they simply don’t have enough space in their office to fit everybody, especially if they have a lot of active independent contractors. Like a lot of people, I love being able to work from home primarily because it avoids commuting. The longest commute I ever had in my career was about 45 minutes door to door, which wasn’t that bad, but I sure don’t miss it! I like being able to wake up, and just start working right off the bat.

Less Boredom And Monotony: When you work for the same company for a decade like I did, things can get really boring, and you can start to feel like you’re just running in place even after making so much progress. So the nice thing about freelancing and taking on various independent contracting gigs is that you can mix things up. Being able to take on different projects keeps things fresh and it’s much harder to get bored.

Autonomy And Control Over Your Workload: The one thing I loved about the longer I worked in corporate, was the more power and autonomy I had. As a freelancer, you don’t have to wait as long as I did to get the luxury of autonomy. Plus, you can control your workload, something very few people get to do working at full time jobs. Stress really broke me down in my career, so I’m really grateful to be able to have full control of my workload now.

Tax Deductions: You may not know that as a freelancer you get to deduct a lot of expenses on your taxes that employees can’t. Examples of business expenses that contractors can deduct from their income include office supplies, software, subscriptions, conferences, and travel expenses.

Read the full story at Pros And Cons Of Freelancing And Being An Independent Contractor

I disagree with her discussion of tax deductions. She says that freelancers and independent contractors can deduct expenses that employees can’t such as office supplies, software, and travel expenses.  IRS publication 529, states that individuals can deduct expenses that are ordinary and necessary and for carrying on a trade or business or being an employee if they are not reimbursed by the employer.  Publication 529 states:

“Unreimbursed Employee Expenses

Generally, the following expenses are deducted on Schedule A (Form 1040), line 21, or Schedule A (Form 1040NR), line 7.

You can deduct only unreimbursed employee expenses that are:

  • Paid or incurred during your tax year,
  • For carrying on your trade or business of being an employee, and
  • Ordinary and necessary. An expense is ordinary if it is common and accepted in your trade, business, or profession. An expense is necessary if it is appropriate and helpful to your business. An expense does not have to be required to be considered necessary.

You may be able to deduct the following items as unreimbursed employee expenses.

  • Business bad debt of an employee.
  • Business liability insurance premiums.
  • Damages paid to a former employer for breach of an employment contract.
  • Depreciation on a computer your employer requires you to use in your work.
  • Dues to a chamber of commerce if membership helps you do your job.
  • Dues to professional societies.
  • Educator expenses.
  • Home office or part of your home used regularly and exclusively in your work.
  • Job search expenses in your present occupation.
  • Laboratory breakage fees.
  • Legal fees related to your job.
  • Licenses and regulatory fees.
  • Malpractice insurance premiums.
  • Medical examinations required by an employer.
  • Occupational taxes.
  • Passport for a business trip.
  • Repayment of an income aid payment received under an employer’s plan.
  • Research expenses of a college professor.
  • Rural mail carriers’ vehicle expenses.
  • Subscriptions to professional journals and trade magazines related to your work.
  • Tools and supplies used in your work.
  • Travel, transportation, meals, entertainment, gifts, and local lodging related to your work.
  • Union dues and expenses.
  • Work clothes and uniforms if required and not suitable for everyday use.
  • Work-related education.”

For more information, see Publication 529 (2014), Miscellaneous Deductions

 

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.