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What Is an Independent Contractor? An independent contractor is a self-employed person or entity contracted to perform work foror provide services toanother entity as a nonemployee. As a result, independent contractors must pay their own Social Security and Medicare taxes.
An employee is on a company's payroll and receives wages and benefits in exchange for following the organization's guidelines and remaining loyal. A contractor is an independent worker who has autonomy and flexibility but does not receive benefits such as health insurance and paid time off.
Whilst a contractor usually belongs to an outside organisation or is self-employed, an employee with a fixed-term contract is hired by an organisation and has all the same rights and benefits as permanent employees, they're just only employed for a specific period of time.
Permanent employees, especially those who work full time, receive paid time off for holidays and often sick, personal and vacation time. Contractual employees do not unless it is specified in their contract.
Simply put, being an independent contractor is one way to be self-employed. Being self-employed means that you earn money but don't work as an employee for someone else.
Some general protections provided under the Fair Work Act 2009 extend to independent contractors and their principals. Independent contractors and principals are afforded limited workplace rights, and the right to engage in certain industrial activities.
If you are a business owner or contractor who provides services to other businesses, then you are generally considered self-employed.
The difference between the two designations is how they earn income: Independent contractors do specific tasks for clients for a set fee. Sole proprietors may do contract work, but may also have other revenue streams, like selling their own products to customers.
Independent contractors are self-employed workers who provide services for an organisation under a contract for services. Independent contractors are not employees and are typically highly skilled, providing their clients with specialist skills or additional capacity on an as needed basis.
Definition. A permanent contract (also called indefinite contract) is a contract with no expiration date, which remains valid until either employer or employee chooses to end the agreement.