What is a contractor?
A contractor is someone who performs a job or service for a specified period of time. The term “contract” is the agreement between a company and a contractor who functions on a per-job basis instead of an offer for consistent employment.
Companies hire contractors as outside employees. Contractors aren’t officially part of a company but are instead hired to complete specific tasks for a business as needed. A company could hire a contractor for a one-time job or give them consistent work over a certain period of time. They are compensated based on a negotiated rate for a project or per hour of work.
What is a full-time employee?
A full-time employee completes consistent work on a daily basis. Full-time employees follow a set schedule and job function that guides their regular tasks.
A full-time employee is an internal part of a company and may be able to make decisions that guide their work. Full-time employees are also compensated based on their prior experience and work history within the company. They work with a team and can build lasting relationships through shared work experiences over their time of employment.
Full time vs. contract
Full-time employees and contract employees work within separate and distinct guidelines. Here is a list of the differences between full-time and contract employees:
Full time
- Work within set hours
- Work year-round guaranteed
- Receive regular pay (through hourly wage or a salary)
- Receive internal paid training
- Complete specific work procedures
- Earn company benefits
- Have taxes withheld and managed by the company
- Use equipment and tools provided by the company
- Receive payments on a regular schedule
- Do not work with competing companies
Contract
- Work flexible hours in most positions
- Work only for a specified length of time
- Work seasonally or only when a company has a need
- Receive one-time payment for services or hourly pay
- Do not receive internal paid training
- Work under adaptable procedures
- Do not earn company benefits
- Manage their own taxes
- Purchase their own equipment or tools to complete work
- Are usually paid when work is completed and approved by the client
- Work for competing businesses in some instances
- Work remotely or in their own facility in some positions
Advantages of being a contractor
Some of the advantages of being a contractor include:
You can set your own schedule
Unless you are hired on contract for a specific hourly role within an office setting, you often choose the hours you work and are not held to a set schedule like a full-time employee. This is attractive to those who act as caregivers, people who hold multiple jobs or those who simply want flexible work hours. Although contractors need to meet deadlines, they are not required to log in using a time clock system.
You can choose projects
A contractor can choose the projects they accept as well as the companies they work for. This means you can also gain experience across multiple industries or find a specific niche within your own skill set as you seek contract work.
You can work for multiple companies at once
Contract employees have the opportunity to find employment through multiple businesses at once. They have an easier time working multiple jobs at once than full-time employees due to the flexibility of their employment.
Advantages of being a full-time employee
Some of the advantages of being a full-time employee include:
You are guaranteed work
Once you accept a job as a full-time employee, you are guaranteed work from the company. You don’t have to seek out your next project after a certain contract ends but instead work continuously in your role within the organization. Guaranteed work means full-time jobs offer more stability to support specific lifestyles.
You are guaranteed certain earnings
Because full-time employees are guaranteed work, they are also guaranteed wages. This makes it easier to budget and plan your finances over the course of a year. Unless something unexpected disrupts your ability to work, you can plan on a consistent monthly income.
You earn benefits
One of the most attractive advantages of choosing a full-time position is the benefits that come with the job. Along with paid time off, companies offer health care plans that are partially or fully covered by the organization. Companies also offer other benefits like life insurance and 401(k) options to full-time employees.
You can utilize tools and training provided by the company
Full-time employees have the benefit of receiving the main tools needed to do their jobs. Working full-time for a business also allows you to take advantage of advanced training and professional development opportunities offered by the company. They may pay for you to attend conferences and seminars that will add to your knowledge and skills to advance your career.
How to decide between being a contract or full-time employee
When considering whether to pursue contract work or full-time employment, think about the following distinctions between both types of work:
- Determine your financial and lifestyle needs
Think about how each type of job fits into your financial needs and lifestyle:
- Compensation: One of the main differences in contract work versus full time is your compensation. Although contract work usually offers higher wages, you can earn benefits and paid time off as a full-time employee.
- Stability: Full-time work provides financial stability, while contract work may offer a higher earning potential over a shorter period of time.
- Flexibility: Think about whether you need a more flexible work environment or an adaptable schedule for work hours.
- Connections: Consider if you are a person who thrives on collaboration and building team relationships or if you prefer to complete a task and move on to the next opportunity in your career.
- Consider your occupation and skill set
Certain jobs lend themselves to contract work. However, there are still diverse options for contract work across many industries. Nurses, skilled trade workers, creative artists and even information technology professionals can all work on a contract basis. If you feel you can meet your financial and lifestyle needs better through a contract position in your industry, you may decide contract work is a better choice.
- Network with other professionals
When you’re considering whether contract or full-time work is best for your career, find professional connections who can offer you advice based on their experience. Many contractors are part of networks that connect freelancers to potential employers and each other. Full-time employees can also connect with networking groups that share professional expertise among members.
