Contractor vs. Employee
Which classification is best for you?
The differences between being classified as an independent contractor or an employee can be very confusing when you start your career as a Court Reporter. In this article, we’ll dive into the market norms for each classification, the differences between the two, and some tips to help you choose which one will work best for you.
Market norms
If you’re applying to be an Official within a court, they’ll likely classify you as an employee. For CART/Captioning, you’ll likely be classified as an independent contractor working for yourself, or through a firm. As a freelance deposition reporter, the norm has been shifting over the past few years so let’s take a look at why that is.
For the longest time, Court Reporters were classified as independent contractors working for themselves, or through a firm. As bigger firms grew their market share, they began classifying Court Reporters as employees instead. This shift in the market norm is impacting students in exit speeds as they are now faced with more decisions than ever.
What’s the difference?
In this section, we will only discuss the differences between contractors and employees as it relates to working as a freelancer within a firm.
The top three pros of being an independent contractor:
Freedom to decide when you work.
Simplified pay structure and the ability to write off expenses.
It’s easy to move firms or work in a different sector, such as CART.
The top three cons of being an independent contractor:
Limited, or non-existent, employment benefits.
You’ll need to keep track of income and expenses, just like a business, in order to reduce your tax burden.
Without vacation time, taking time off means less pay.
Top three pros of being an employee:
You may be eligible for employee benefits if they are offered by the firm.
Taxes are withheld which alleviates the stress of tax time.
The firm may provide in-house services such as scopists or proofers.
Top three cons of being an employee:
The pay structure may be complicated and/or you will be paid a lesser rate to offset the firm’s benefits, tax, and liability expenses.
The firm has much greater control over when you work, how you work, and where you work.
Employment is often accompanied by non-compete agreements and/or employment contracts which limit your ability to leave the firm, take other jobs, or move to another sector.
Which is best for you?
While there are genuine pros to being classified as an employee, it’s completely at the discretion of the firm as to whether or not they will choose to offer them. If you are considering accepting a job within a firm as an employee, it’s very important to know for certain that they are classifying you as an employee to benefit you rather than themselves.
Independent Contractors may not have any employment benefits, but the freedom and control you retain over your career is nothing to discount. Your ability to decide what’s best for you is especially important when you’re first starting out and may not have any firsthand knowledge of how different firms conduct themselves in the marketplace.
At Permian, we focus our energy on offering our Court Reporters a profitable, predictable, and persistent path to success as independent contractors. We subsidize financial advising appointments for our Reporters so they can understand how to best prepare their taxes and prepare for retirement. We structure our pay schedule so that Reporters know what their next two months finances will look like. We also invest heavily in our company culture to make Permian an enjoyable place to work.
If you are interested in knowing more about the differences between employment and contracting, feel free to give us a call so we can evaluate your personal situation and offer some guidance on how to achieve your goals.
Disclaimer: This article was not written by an accountant or tax professional. Please consult with a properly certified individual to ascertain what laws and policies apply in your area.
