01Be Your Own Boss
If you have been in the workforce for more than a few years chances are that at some point you have had a boss you disliked and/or worked for an organization whose management philosophy was inflexible or unresponsive.
The typical "boss from hell" creates a toxic work environment by belittling subordinates, taking credit for others work, or being rude or abusive. Equally demoralizing for employees in larger organizations is the stifling bureaucracy - performance reviews, "personal development goals", dress codes, attendance policies, and endless red tape.
Being your own boss frees you of all of the above and puts you in charge of your own destiny. You will be fully responsible for your own successes (or failures) and there are no limits to what you can achieve when self-employed.
02Choose Your Hours and Place of Work
One of the biggest advantages of self-employment is greater flexibility in setting your own work schedule and place of work. Being shoe-horned into a cubicle in a featureless office from 8:00 to 5:00 every day is not an appealing prospect for many people nowadays.
The ability to set your own work hours allows you to customize your work schedule to suit your work preferences and family life. Many people are more productive in the evening, for example, or prefer to work morning and evening and have afternoons off. (Read more about how you can be your most productive.)
Other than attending scheduled meetings or work sessions with your clients it is up to you how you plan your time.
Unless you reside in the upper levels of management having your own office is becoming non-existent in the workplace of today, where most office employees toil in small, noisy, cramped cubicles with little or no privacy. Provided you can work from anywhere and don't need to be on the client's premises full-time, being a contractor allows you to set up your own office space in a suitable location.
For example, as an IT contractor I have a large, quiet, fully-equipped home office with dual large-screen monitors, bookshelves, speakerphones, and a comfortable chair. As a work environment it is far superior to any that I ever had as a salaried employee and I am never embarrassed to meet with clients in my home.
03Contract Employment Allows for More Life Flexibility
As a salaried employee you are typically eligible for 2-3 weeks of vacation time per year (to start). In my experience as an employee taking vacation is always subject to the discretion of the employer - and vacation requests were often grudgingly accepted.
In many cases too certain times of year are "off limits" for employee vacations. Taking extended leave to (for example) travel or care for a sick spouse or relative is often not possible - quitting your job is the only option.
As a self-employed contractor you have much more flexibility - your contract is an agreement to perform services for your customer for a (normally) fixed period of time as defined in the contract. When the contract expires neither you (nor your client) has any obligation to renew the agreement. Whether you accept an offer to renew an existing contract, search for other opportunities, or take time off is up to you.
Having the ability to take time between contracts is especially advantageous for mature self-employed individuals who have established businesses, have achieved a level of financial security, and wish to spend less time working and more time enjoying the fruits of their labors.
See also: How to Have a Worry-Free Vacation
04Being a Contractor Gives You Business Expense Tax Deductions
As a self-employed contractor you are eligible to deduct business expenses from income tax. This includes:
- Automobile expenses - If you've purchased a vehicle to use in your business you can write off the vehicle purchase over several years using Capital Cost Allowance (CCA) - for more information see Motor Vehicle Expenses Related to Buying a Motor Vehicle. If you are using a personal vehicle for business purposes you can write off business mileage (you must keep a log of mileage usage for business).
- Accounting and Legal Fees related to your business activities.
- Travel, Conference and Convention fees, Membership dues (when business related).
- Promotion expenses
- Office Rental, Supplies, and Equipment. If you are running a home-based business you can deduct a percentage (based on the square footage use for business purposes) of your mortgage, insurance, property taxes, and maintenance and repairs (see Calculating The Home Business Tax Deduction).
For a complete list of deductible business expenses in Canada see the Business Expenses as Tax Deductions Index.
The Advantages of Being a Contractor
According to a study by Intuit, more than 80 percent of large corporations plan to substantially increase their use of a "flexible" workforce. The study predicts that by 2020 "contingent" workers will exceed 40 percent of the U.S. workforce.
Obviously, the trend to contract employment is here to stay - the traditional "job for life" that many of our parents and grandparents enjoyed no longer exists and nowadays it is not uncommon for someone to have multiple careers and work for many different organizations before retirement.
For many people, this is not a bad thing - while some may miss the safety, security, and other benefits of a permanent job (see The Disadvantages of Being a Contractor) others see a lifetime of work for a single organization as a dead end route to boredom and burnout. Dealing with constant change can be stressful but is also challenging and invigorating.
If you have an entrepreneurial spirit, love a challenge, and a degree of uncertainty in your life won't prevent you from sleeping at night, a career as a self-employed contractor can be very rewarding. Alternatively, if you are currently employed and have some spare time and wish to try your hand at self-employment why not try contracting part-time? (see Got a Job? Start a New Business!)
In this article, we will explore some of the advantages of becoming a self-employed contractor.