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The Upsides and Downsides of a Contracting Job

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Who is an independent contractor?

People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors.

If you are an independent contractor, you are self-employed. 

(Source: IRS.gov)

 

Contracting may be for you if you relate to these points:

  • You want the choice to be selective of those you work with and work according to your preference.
  • You love variety in your life – “Are you kidding? One job for a life?!!” or even the thought of working for the same employer for 5-10 years brings shivers down your spine!
  • You want to be in control; the independence to manage your time is the major lure for working independently.
  • You are a fast learner and know how to implement your ideas independently. The learning curve is also very high when working independently; you learn marketing sales and finance management all at the same time.

However the wants may be many but reality hits hard if you cannot meet your needs first. No matter how much you may want the independence, the variety and being in control freedom, you have to bring in a steady income and plan on sustenance of your business. Work hard to hone your business acumen to ensure a steady start and ongoing success.

The above are most certainly the upsides of a contracting job, however the downsides sometimes outweigh the upsides of a contracting job:

Why being a contractor can be tough?

  • No or limited benefits, contract positions are generally not covered under 401(k) plans and other benefits that are available to a permanent employee.
  • No guaranteed income you maybe in a good paying contract for months together but be prepared to be “on the bench” for a long time too – especially when the going gets tough for the employers, the first headcount crush comes to the contracting positions.
  • Your vacations are unpaid and you may not even take leave during a contract depending on the project deadlines or contracting agreement.
  • You would end up paying your own Social Security and income taxes and for those ever-expensive health coverage, so keep in mind all these points when setting your hourly rates as a contractor.
You may also want to read this informative piece on SBA.gov outlining the differences between a contractor and an employee: Independent Contractors vs. Employees

Estimating your asking rates


One question that most new contract employees have tough time deciding –

What should be my hourly rate, especially in the tough economy, will the employer pay what I ask for?

One of the most tested way to decide on this is first to look up or check with other professional contractors in your field and assess accordingly on your asking rate.
And of course, statistics always are the best way to come to a final close figure. As you have read in the downsides above – you are the person responsible for the many payments on health care, social security and other business expenses (plus covering all costs when no steady income is coming in).

Salary.com has an relevant article on this topic, they say:

If you work as an independent contractor without going through an agency, you have some leeway in establishing your professional fees, but you should charge close to market. To calculate this rate, start with the prevailing full-time salary for that job. Then divide by 2080, the number of work hours in a year (2080 = 52 X 40). This is the hourly rate for your job if benefits are being paid for by the employer.But as a contractor, you need to pay for your own benefits, as well as additional Social Security contributions, so the number needs to be higher. Salary.com uses an adjustment factor of 30 percent to convert an hourly wage for a salaried employee to an hourly wage for a contract employee. Multiply your unadjusted hourly rate by (1 + 0.3) to get your adjusted hourly rate. For example, if your unadjusted hourly rate comes out to $20 per hour, your contract rate should be $20 * (1.3) = $26.

An example shows how this works for a senior-level web designer in Kansas City. A Web designer III working in Kansas City makes $66,244. The unadjusted hourly rate for this position is $66,244/2,080, or $31.85. Adjusted by 30 percent, the contract rate comes to $41.40.
Contracting may or may not be the right option for you; though the downsides may loom large over the positives it is up to you in the end to make a contracting position most beneficial and profitable. And during an economic downturn when most of the permanent positions are being axed left and right a contract position could be an alternative.

 

Question: What has been your experience with a contracting job? Would you prefer it as opposed to a full-time job?

 

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How to be a Good Employee – 5 Lessons from the Golden Rules of Buddhism

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Procrastination is [moral] defilement, continued procrastination is defilement. By non procrastination [punctuality] and knowledge, root out your darts [of sin].
(Utthana Sutta, v. 4)

Get the work done now, meet deadlines and keep your boss posted on the updates. Do not procrastinate.

He who walks in the company of fools, suffers a long way; company with fools, as with an enemy, is always painful; company with the wise is pleasure, like meeting with kinsfolk. (Dhammapada, v. 207)
Therefore one ought to follow the wise, the intelligent, the learned, the much-enduring, the dutiful; one ought to follow a good and wise man as the moon follows the path of the stars. (Dhammapada, v. 208)


Keep good company at work; collaborate with those more knowledgeable than you are and impart knowledge to new hires. Make your day at the workplace more meaningful and fulfilling.

From whomsoever a man learns the Law; he should worship him, even as the gods worship Indra. The learned man, being thus honoured, his mind pleased with [his disciple], makes the Law more manifest.
(Nava Sutta, v. 1)

If you have a mentor – thank him/her, if you don’t seek one. Respect your job and thank those who impart you the knowledge to do better.

 There exists no spot on the earth, or in the sky, or in the sea, neither is there any in the mountain-clefts, where an [evil deed does not bring trouble to the doer].

(Udanavarga, ix, v. 5) 


Don’t lose your work ethics and always work towards the better good and development of your team and company. Plan and act towards the greater benefit for your team and company; make your daily contribution – howsoever small, when put together it results somewhere in big revenues for your company.

 The fault of others is easily perceived, but that of oneself is difficult to perceive; the faults of others one lays open as much as possible, but one’s own fault one hides, as a cheat hides the bad die from the gambler.

If a man looks after the faults of others, and is always inclined to detract, his own weakness will grow.
(Dhammapada, vv. 252, 253)


Your boss or your co-workers may not always be right and there could be office politics that you detest; the best way to focus on your work and personal development is to steer clear of it all. Do not accuse colleagues or bosses; do your job and if the going gets tough work towards finding a solution not retaliation.


Source of the Buddhism teachings: The Golden Rules of Buddhism Compiled by H.S. Olcott

 

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Layoffs are Detrimental to Marital Health

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The struggling economy is hurting many Americans’ mental health: Anxiety, depression, sleep problems and money-rooted marital conflicts are growing, experts around the USA say. (Source: ABC News)

Is the recession straining marriages? Is more time spent together at home post layoffs resulting in more divorces?

This article focuses on the two aspects – have the divorces and strained relations in marriage increased or have they gone down since the economic downturn which has affected millions of lives in the United States itself.

Keren Blankfeld of forbes writes:

“Recession has always been a factor raising divorce rates,” explains University of Chicago Business School economist Gary Becker. In fact, based on studies Nobel prize winner Becker conducted back in 1977 and published in the Journal of Political Economy, couples that experience any sudden significant and unexpected change in income–positive or negative–are at risk of divorce.

Elizabeth Bernstein in an interesting article in the WSJ writes:

We’ve all heard the jokes: “Retirement means half as much money—and twice as much spouse.” “For better or worse—but not for lunch.” Generations of retirees have chuckled knowingly at them.
But now, thanks to the recession and the millions of layoffs it has produced, many young couples far from retirement age are discovering there’s more than a little truth in the humor. When one spouse (or both) stops working, the impact on the relationship can be profound.

So is there a solution to the bickering and naggings if that is what has come to since the more-than-required interaction between spouses? Of the few out there, it is very important to be as positive and supportive to each other and also be open on the financial issues you face post layoff. And here is another simple and good suggestion:
(Source WSJ article):

Although it isn’t always easy, experts recommend that couples do everything they can to keep the lines of communication open. “Deliberately practice being supportive and validating,” says Diana Kirschner, a New York psychologist and author. “It’s also called ‘being nice.’”

But as always there are two sides to a coin and this story is no exception, there have been some news reports in the last few months citing less divorces being filed since the recession picked up.

Jennifer Levitz of WSJ writes:

It’s still unclear how the recession is affecting divorce rates overall, because of lags in government data. But courts in some major population centers say fewer people have been filing for divorce since the downturn began in late 2007. In New York County 9,349 couples filed for divorce in the first four months of 2009, off 14% from 10,848 in the same period in prerecessionary 2007, according to records from New York State Unified Court System.
In Los Angeles County, divorce filings in the first four months of this year dropped 3%, to 9,048, from the same period last year and are down 9% from the comparable span in 2007, according to records from the Los Angeles Superior Court.

MCClatchy-Tribune information services, says:

Unhappy couples are staying together. They can’t afford the attorney fees. Child support is impossible to pay. Paying to support two homes is unreasonable in a time when they can barely afford one home together. So they decide to stay together.
Does this mean a “happily ever after?” Usually, no. It means that unhappy people are forced to stay together. The environment in the household erodes even further. They fight even more. If they have children, the kids are subjected to it for even longer.
For better or for worse some are indeed sticking together but the long-term impact would be immensely negative to the family if spouses do not show empathy and support towards each other.

This too will pass, all that matters is how did you fare when the going was rough?


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Filed Under: Career Woman, Layoff Tagged With: , ,

When the World Shrank

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What happens when you do not access emails for a month or more, when you don’t find time to blog for more than 50 days, there is no twitter on what you are doing now and no voicemail to respond back too – nothing happens (trust me!) but it just means you had a super long electronically deficient vacation.

Yes alright, if you have noticed inactivity on the Careerbright blog, the person I am talking about is me. Without the electronic devices and internet the world indeed shrank. It shrunk to the closest in my life, kids and family members, just watching the kids giggle playing in the water and trying to “invent” something was fun; emails and the world news did not matter at all.
Though it is fun to be in an “offline” mode for sometime, getting back online is fun too. We all need change and perhaps that is what brings in the best in us.

Hello Blog and welcome the “other world” where we connect with people unknown but as humans share similar thoughts and vibes. Of course it is good to be back and looking forward to be back again for a complete time again sometime with family – where distractions and world news does not bother or affect the mind, just giggles and tickles to refresh all around….

Careerbright – Career Article and Information for Professionals and Working Women
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Filed Under: Career Self-Help
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