Independent Contractors & Outsourcing

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Dear Holly,

I do appreciate your insights–but, this latest email hits where it hurts…in my current independent contractor, art director, pocketbook. Yes, you suggest employers save money by hiring graphic and web designers as independent contractors, but we're the ones stuck with the double SS and FICA tax!

To have to subtract 25% of my meager pay for taxes, it doesn't make this kind of work worthwhile. It kind of makes us indentured servants at the employers will, to just dispose of if we make too much noise about inadequate pay. And it makes it that much harder to land a full time position.

(But, as you say, there are many hungry workers out there…). Please, some helpful hints for the designer caste?

— Ron L.

Dear Ron,

I wish I had better news for you, but independent contractors like yourself are in the exact same position as me and the other self-employed business owners who are hiring you.

Whether you realize it or not…you are in actuality a small business owner yourself. In YOUR case, your business is the service you provide to other small businesses.

Like you, all small business owners must pay both the employee and employer taxes and other withholdings. There are no easy answers. If you're self-employed, you're going to pay double to Uncle Sam.

However, there IS good news…

If you structure your business right, you can earn more as a self-employed small business owner than you ever could as an employee. You can also provide yourself with more job security than you'd have if you worked as an employee for someone else.

— Holly Cotter