In many cases, contractors are not eligible for state unemployment benefits because they're self-employed and must fund their retirement accounts. Must pay for their own health insurance and benefits.They may also have to submit quarterly estimated taxes to the IRS. Contractors must withhold their own federal, state, and local taxes. Employers like contractors because they can avoid paying for taxes and benefits, meaning those costs fall entirely on independent contractors. Unlike employees, independent contractors are required to withhold their own federal, state, and local taxes. Independent contractors also may deduct more business expenses than employees typically can claim. Companies might be willing to pay more for independent contractors because the companies don't have the enter into expensive, long-term commitments or pay health benefits, unemployment compensation, Social Security taxes, and Medicare taxes. As an independent contractor, you may earn more money than as an employee. According to the Common Law Rules enforced by the IRS and the Fair Labor Standards Act issued by the Department of Labor, the difference between an employee and a contractor largely hinges on the degree of control and independence granted by the client. While you and your client will negotiate on the final product (and the pay for that final product), you alone decide when, where, and how the work is done. Your clients can, however, require certain results in return for the fees they pay you. Greater control over the work you accept.However, these folks are not your supervisors they are your clients and, as such, may not direct your work as they would with an employee. If you're a contractor who works out of a client's location, you might work shoulder-to-shoulder with that company's employees, managers, and bosses. As an independent contractor, you are your own boss, which for some, is the main reason why they decide to become a freelancer or independent contractor.
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