She has also published articles on business formation, business software, public relations and human resources. This article is for business owners who want to understand how to classify their workers. Choose W2 employees with an eye on the future of your small business. Of course, you have a position to fill now and you certainly want to choose carefully to find a good fit. However, you also have to consider how this person will fit into the business model in the future.

• Do you want to work in an office or have the freedom to choose where you’ll work from?
• Now, we’ll dive a bit deeper into some of these main differences to try and provide a clearer picture.
• They will be able to tell you what types of jobs are in high order and get you on the right track for a fulfilling career.
• Hiring a contract employee requires a far different pay structure than bringing someone on full-time, meaning you need to embrace a unique set of trade-offs.
• Although quite different from the traditional payday-every-Friday model, the payment process for independent contractors is simple for the small-business owner.
• According to Chris Dwyer, VP of a research and consulting firm, “There are six-month CFOs or two-year CEOs who do what they need to do. Then the person goes on and starts new projects.”

Tech is diverse, flexible, and innovative by nature, and despite the recession and downsizing, it is currently booming. With career opportunities in tech at a record high, the industry is growing at a pace significantly faster than every other profession. contract vs full time Bureau of Labor Statistics, an estimated 316,000 jobs are expected to be created by 2029. A southeastern Ohio native, Justin Johnson is a finance professional with accounting and financial planning experience in various manufacturing industries.

What Happens When the Contract Ends?

Since they work on a per project or per need basis, they bill their employers by the hour, or on a per project or daily/weekly/monthly basis. Another difference between an employee and a contractor is the degree of flexibility they have in their work. An employee works for one company and is, therefore, subject to the rules and obligations set forth by that company. A contractor, by contrast, has the choice to work for one or multiple organizations; in fact, it is common for contract workers to juggle several clients at one time. One of the biggest differences between independent contractors and full-time W2 employees is who pays for all the supplies.

• We believe everyone should be able to make financial decisions with confidence.
• However, many employers create contract-to-hire career paths for their contractors to gain their loyalty and ensure more committed work.
• Nearly every industry is hiring contractors in positions up to and including C-suite level executives.
• As explained on the eHealthInsurance website, contract labor, also called contingent labor or temporary labor, refers to individuals who provide services to an employer but are not considered an employee.
• Enhances your resume with new skills to aid in new career prospects.

At its most basic, contract employment implies that an individual has been hired to perform a specific job at a defined rate of pay. Typically, contract employment is limited to a set duration of time.

Contract vs. full-time workers

Full-Time Employees generally work more than 4 days or 30 hours a week and are permanently employed, as opposed to being temporary or seasonal. In many countries, a Full-Time Employee is also entitled to health-care benefits and vacation pay among other legal employment standards. As a part-time employee, you will have federal and state taxes taken out of your paycheck each pay period by your employer. Other withholdings like Social Security and Medicare will also be taken out. Independent contractors might also go by the titles of freelancers or consultants. If these criteria apply to your position, you’re likely to be an independent contractor. Working as a W-2 employee the staffing agency pays you an hourly rate, takes out your taxes and you should be eligible for unemployment benefits when the assignment ends.