Freelance or contract work is defined as an employment arrangement that does not involve the same level of commitment as employer-employee relationships, thus the term, "independent contractor."
If you are currently unemployed, know that many recruiters and employers view your work as a freelancer / contractor as a very positive sign that you are serious about your career. This work is also proof that you are a motivated worker with in-demand skills.
[For more about short-term temporary jobs, which are less of a career (or business) than freelancing, see Job-Hunt's Guide to the Temporary Work Option.]
Being a contractor/freelancer can be a good "gap-filler" on your resume and LinkedIn Profile between "real" jobs. Contracting can also be the start of your own business, independent of any single employer. This second approach is one many economists think is the way most of us will make a living in the future.
Other terms often used to describe someone doing contract work are "freelancing" and also "self-employed" if contracting is the only work they do.
People may have a "real" job, and do independent contracting or freelancing when they aren't at work, particularly if their jobs are part-time.
Contract work usually lasts for a defined time frame -- typically weeks or months, sometimes (rarely) years in duration. Often, the timeframe changes, becoming longer or shorter than expected.
The work may also be completing a defined project for a specific price, and the timeframe may be days, weeks, or months. There is usually a deadline by which date the work must be completed. But, if you finish sooner, you typically still get paid the same amount (depending on the wording of the contract, of course) as long as the project is completed.
Contract work is growing rapidly as a preferred method for many employers to meet short-term need without adding employees. A look at Indeed's Job Trends for contractor job descriptions shows that they have increased dramatically following the recent recession, particularly in 2014.
Working as a contractor can be an excellent way to fill the gap (for both the resume and bank account) between a previous job and the new full-time job you are seeking. With so many people unemployed, freelancing may be a good short-term solution that could develop into permanent self-employment.
As an independent contract worker, you are independent of any single employer. You are not defined as an employee, and you have the flexibility of working independently with more than one employer at once.
Contractors do not fall under the same IRS guidelines in the USA as employees, but your employer must comply with the IRS definition of a contract worker for you to work in that capacity.
The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work but not how it will be done.
Typically, the contractor provides all of his or her own tools (computer, uniforms or other special clothing that may be required, etc.) and takes responsibility for training, personally. The contractor may work in their residence or at the employer's location, depending on the job and the agreement.
The earnings of a person who is working as an independent contractor are subject to Self-Employment Tax.
Be aware that your local government also will most likely have rules about what is a "contractor" opportunity and what is not. The reason is typically to protect workers from employer abuse, but that doesn't mean workers don't need to pay attention to the "rules" where ever you live. The smart thing to do before you launch a contractor/freelance career is to contact your local government to see how acceptable contracting is defined.
In many cases, the only qualification you need to become a contractor or freelancer is to find a client willing to pay you to do the work.
However, in other cases, you need to meet specific professional requirements and become licensed to do a job. For example, the fields requiring licenses typically include: attorneys, teachers, nurses, stock brokers, pharmacists, and big-rig truck drivers. They may also include insurance agents, interior designers, social workers, and many other fields.
These requirements vary by state, so be sure to check with your state to see if what you want to do requires a license. If you have that license, fine. If you don't have it, you'll need to find out how to get that license, and then get it before you can do the work. Employers will typically check to be sure you are properly licensed before hiring you for a job requiring licensure. The license gives you permission to do the job.
Not surprisingly, working as a contractor or freelancer usually (but not always) involves signing a contract, and contracts vary widely in detail and in language.
Most often, the contract will describe the work to be done and the timeframe in which it will be completed. It may also specify quality standards that may need to be met by the contractor.
In addition, the contract should also obligate the employer hiring the contractor to pay for the work -- sometimes a lump sum, regardless of the amount of effort required, and other times an hourly rate for a specified period of time.
Signing a contract is not trivial! You should definitely read every word of a contract before agreeing to it. If possible, have the contract reviewed by an attorney before you sign it.
[MORE: Contracting Basics.]
Online job search expert Susan P. Joyce has been observing the online job search world and teaching online job search skills since 1995. A veteran of the United States Marine Corps and a recent Visiting Scholar at the MIT Sloan School of Management, Susan is a two-time layoff “graduate” who has worked in human resources at Harvard University and in a compensation consulting firm. Since 1998, Susan has been editor and publisher of Job-Hunt.org. Follow Susan on Twitter at @jobhuntorg and on Facebook, LinkedIn, and Google+.