Independent contracting provides benefits on both sides of the employment equation. For employers, ridding themselves of managing the myriad of payroll issues can make it well worth the choice. For the employee being your own boss is only part of the equation. You also can take many tax deductions for expenses related to your business, you generally get paid more (because the hiring firm is not paying your Social Security tax, unemployment, worker's compensation or employee benefits) and there are no withholding taxes taken from your check (although you are still responsible for these payments in quarterly installments directly to the IRS or state taxing agency).
Why, then, has this not become even more widespread? Clearly there are some downsides. Cash flow may be one of the biggest for most entrepreneurs. Not only can there be times when you don't have work lined up, but you also are responsible for collecting the money and paying all appropriate taxes. If you are not a relatively well-organized, plan-ahead type of individual, this can be daunting. All of a sudden you need marketing and accounting skills in addition to your regular work. Time management and self-discipline in getting your work done become critical. Producing appropriate reporting and presentation of your work are necessary to both obtain jobs and to summarize work done.
Additionally, all those benefits that come with most traditional jobs come at a cost once you are on your own. You must provide your own health, disability, and life insurance. Retirement planning is your responsibility. And vacations and sick days mean money out of your pocket.
Most independent contractors develop both resource bases and strategic alliances to help them in their work. Resources that you may want ready access to are graphics design, technical/computer support, marketing, financial/accounting, legal, secretarial, and printing. When you are in a bind on a deadline is not the time to start looking for these services. Look carefully at your skills and anticipate what added resources you might need ahead of time so you are not panicking and paying exorbitant rates for last minute servicing. Consider using one of the virtual assistant services proliferating on the web. The response to their services so far has been very enthusiastic.
Strategic alliances are mutually beneficial business relationships that you develop with other affiliated services and/or peers. You may be able to add value to each other entrepreneur's services, provide referrals from other assignments or you may even offer them finders fees for referring projects of a certain size to you. Professional associations are a great way to "network" with others to build working relationships. Side benefits are the credibility that membership in the right association can bring to your resume and perhaps reduced rates on benefits such as health insurance.
Another possibility is to form a "cooperative" with a group of independent contractors with affiliated skills. For instance, a writer, an illustrator, a photographer and a musician may form a professional cooperative. They may share space, get group insurance together, yet work as independents, sharing clients if it seems appropriate. One can also subcontract for part of a larger job contracted by a larger contracting agency or one of your allied contractors.