Part two and three will explore the risks involved in hiring an independent contractor and the various tests used to determine if the individual is an independent contractor or employee. They earn their livelihoods from their own independent businesses instead of depending upon an employer to earn a living. In spite of the facial clarity of these descriptions, it is often difficult to provide a precise definition of an IC that is adequately specific, and at the same time, encompassing enough to apply to all the factual situations that may arise. It is because of this lack of a clear-cut description that it is necessary to study the various factors considered by governmental agencies in determining whether an individual is an employee or an independent contractor. When a person decides to become an independent contractor, they essentially become their own boss, along with all the risks and rewards that entails.
Most ICs enjoy the freedom that comes from being in business for themselves.
They consider themselves master of their economic fate because the amount of money they make is directly related to the quantity and quality of their output. ICs are not dependent upon a single company for their livelihood and the hiring and firing decisions of any one firm does not have the impact on them as they have on employees. Independent contractors typically earn more money than an employee doing similar work. Even with the IC paying taxes and benefits themselves, they can still earn more per hour than regular employees through creative marketing and negotiations. Another benefit of being an independent contractor is having more control of money earned because of the many tax benefits.