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Contractors Definition: 1099 Gig Workers Explained, In Simple Terms

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Since people are not formally employed in the gig economy, you may be wondering what is the contractors’ definition and how it compares to an employee or gig worker.

If you are confused about this, you are in the right place.

Keep reading to learn everything you need about a contractor’s definition, what it means to work as a contractor, different examples of contractors, and the difference between a contractor and a business.

By the end of the article, you will be well-versed in contractors and their unique place in the gig economy.

What Is a Contractor?

Contractor gig workers, at their most basic, work independently to provide a service or product.

A contractor works on a project-by-project basis rather than having a long-term employment relationship with an employer.

Independent contractors or self-employees are also responsible for their expenses.

As a result, they must be able to cover the costs of running their business or providing their service without relying on the employer for support.

Some examples of contractors include freelance writers, web designers, consultants, and app developers.

All of them were impacted by the AB-5 legislation.

What Does It Mean to Work as a Contractor?

Working as a contractor means that you are self-employed and typically work on a project-by-project basis.

As a contractor, you are your own boss and have complete control over your projects, schedule, and rates.

Contractors are free to pursue whatever gig work they want.

One of the advantages of being a contractor is that you can work with many different employers at once.

This flexibility allows contractors to be more versatile and skilled in various areas.

Overall, contractors can be an excellent option for those working on their terms in the fast-paced gig economy.

However, contractors also do not receive the benefits of a full-time employee, so gig work contractors do not get things like insurance, retirement, paid leave, and paid overtime.

What Is the Main Role of a Contractor?

The primary role of a contractor is to complete the specific jobs assigned to them.

Since they are not full-time employees, they do not need to show up daily and worry about future tasks.

Instead, contractors are focused on achieving specific goals and objectives.

Working as a contractor can be quite lucrative and rewarding, but it is crucial to understand the difference between contractors and employees.

Understanding this difference can help you decide whether contracting is the right option.

As contractors, gig workers have more flexibility and control over their independent work.

They can choose which projects or services to take on, and they have the freedom to set their schedules and rates.

Is a Contractor an Employee?

The short answer is no. Unlike contractors, employees are hired full-time and have an ongoing relationship with their employer.

Since they are full-time workers, they receive a W-2, and the company takes out taxes from their paychecks.

Independent contractors are hired by a company or a business to complete a single job or task.

As contractors, they are considered self-employed and are responsible for covering their expenses.

They also receive a 1099 form from their jobs and pay taxes independently.

Before becoming a contractor, it is crucial to know the definition of a 1099 worker.

Examples of Contractors

There are many different types of contractors in the gig economy.

These are some of the primary examples.

Educational Coaches

Educational coaches are a new type of academic support that is becoming increasingly popular.

Educational coaches focus on holistic education and work with students and their families outside of school.

Since educational coaches work with families on a case-by-case basis and are not employed year-round, they are considered contractors.

As a result, parents do not have to pay benefits to the educational coaches and can stop working with them when support is no longer needed, even in the middle of the school year.

Photographers

Photographers are another example of contractors in the gig economy.

Photographers often work on a project basis, completing commissions for weddings, events, or headshots.

Since photographers are hired on a per-project basis, they have more control over their projects and can choose clients based on the scope and type of project.

This flexibility allows photographers to focus on personal projects or choose more lucrative jobs.

However, it also means that photographers are constantly looking for new gigs.

Once each job is complete, the client is under no obligation to continue working with the photographer.

Ride-sharing Drivers and Delivery People

One of the most common types of contractors in the gig economy is ride-sharing drivers and food delivery people.

These contractors drive for companies like Uber or Lyft or deliver food through apps like GrubHub.

Since these contractors take on jobs of their own volition, they are not considered employees.

The app only provides the interface for the drivers to get their jobs.

What Is the Difference Between a Contractor and a Business?

A contractor is often a small business that consists of one self-employed person.

On the other hand, a business can be a large company employing many people.

However, a contractor can function the same way a business does.

A contractor can advertise, pay business taxes, and hire other contractors.

However, a company cannot act as a contractor.

Wrapping Up

At the end of the day, contractors and businesses are two very different entities.

A business is a company or organization that provides goods or services to customers in exchange for money.

On the other hand, contractors are individuals or companies who offer specialized services on a project-by-project basis.

As a contractor, you have a lot of flexibility on how you want to interact with the workplace, the jobs you want to take on, and the hours you can work.

It is an excellent fit for some people and an essential part of the gig economy.

Are you a contract worker? Let us know about your experience in the comments below.

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