Should You Stick With Contracting or Look for Full-Time Employment? Key Considerations

More and more full-time employees take the initiative to become independent contractors, for good reasons. With that said, some professionals will start to fall out of love with freelancing, even if they have great clients. But is going back to full-time the right choice?

In this article, we’ll look at the pros and cons of contracting and full-time employment to help you make the right decision. We’ve also asked a few questions for people still on the fence. 

Full-time Employment Vs. Contracting: Weighing the Options

You’re probably already familiar with both employment classifications, but how are you supposed to weigh the pros and cons? In these next sections, we’ll help you with that. 

What Are The Advantages of Contract Work?

Here are some of the advantages of contract work:

• High Demand: The number of freelancers is growing in many countries, showing that their need is ever increasing. More and more employers are looking to hire them.
• Less Competition: When you’re in high demand, you face less competition in the job market. Many freelancers don’t have to struggle or wait for a great project. 
• Complete Flexibility: Contract employees are free to set their own hours and take on projects based on their interests. They can choose to reject projects or clients.
• Smaller Commitment: If things don’t work out, contractors can simply leave without a formal resignation process. Nothing is holding them to one client or business.
• Better Work-Life Balance: Since freelancers can do what they want when they want, they typically have a better work-life balance compared to their full-time counterparts.
• Increased Compensation: Contracts aren’t guaranteed to earn more than full-timers, but they definitely have the option to. Plus, they often work fewer hours for more pay. 
• Minimal Pressure: While you will hold yourself to your own standard, you don’t have an employer who pressures you to succeed. You can just focus on the work you enjoy.
• Opportunities to Learn New Skills: No client will be the same, so you’ll have the chance to learn new skills daily, even if you stick to the same niche or specialty.

As another positive, contract work can be the gateway to full-time employment. If you impress your clients enough, they may hire you or refer you to another company or big-time client. 

What Are The Disadvantages of Contract Work?

Contract work comes with a high volatility and low job stability, at least at first. When you start off being a contractor, you have to reach out frequently to new clients for work. But as you start to build connections, which you probably have as a seasoned contractor, finding work is easier.

While finding work does become easier as you grow, it’s highly unlikely you’ll receive benefits (health insurance, retirement account matching, etc.) from your clients unless you ask for them. There is no guarantee that you’ll receive benefits from clients, but because you have more control over the kinds of projects you take on, you can actually demand them in your contract.

Freelancers won’t get paid time off, but they’re usually free to take a vacation whenever they want. They can also work while overseas if they want to pick up some extra work.

All contractors have to pay a higher tax bill. Self-employed individuals often have to pay the employer’s share of the taxes, regardless of where they live. They also have to pay certain business expenses out of pocket, including travel, startup costs, and office tools.

Fortunately, independent contractors can make up this amount through tax deductions. With that said, it’s important to look at the financial benefits of freelancing vs. employment before coming to a definitive answer. For many, contract work can be more expensive when it comes to taxes.

What Are The Advantages of Full-Time Employment?

Here are some of the advantages of full-time employment:

• Job Security: Full-time employees have a more secure position and workflow from week to week and don’t have to worry about acquiring work on an ongoing basis.
• Job Benefits: Many full-time employees have the option to receive benefits beyond their salary, including health insurance, retirement account matching, and life insurance.
• Paid Vacation: Along with traditional benefits, some employees will receive paid vacation, paid sick days, and paid time off (PTO) that they can bank and use later.
• Short-Term Disability: Many full-time employees can go on short-term disability if they experience an unexpected health issue without experiencing complete financial loss.
• Potential Office Perks: If you work in a culture-first corporation, you’ll likely receive certain office perks, including office parties, social events, and gym memberships.
• Social Security: Full-time employees pay less in taxes. Their employer will take on more of the tax burden, which keeps more money in the employee’s pocket. 
• Fixed Schedule: If you’re looking for structure, then full-time employment is a great option. You’ll typically work fixed hours each weekday and be off on weekends.
• Potential Advancement: Some full-time employees will be offered advancement opportunities and learning and development opportunities throughout their careers.

While, at first glance, the full-time employment advantages eclipse those of an independent contractor, it’s important to note that not all employees receive all the advantages listed above.

What Are The Disadvantages of Full-Time Employment?

Because the advantages of full-time employment aren’t guaranteed, many of its benefits shouldn’t be considered for all jobs. In fact, they shouldn’t be considered for most full-time roles.

Let’s use US employees as an example of why full-time isn’t all it’s cracked up to be.

According to the US Bureau of Labor Statistics, 69.8% of people work full-time. Out of that population, 74% of workers receive health benefits, and 57% receive life insurance. Only 32% of full and part-time employees are engaged with their work, so culture is significantly lacking.

95% of employees in an ADP Research Institute study feel external pressure to overwork, fueling an increase in overtime. American women work an average of 8.28 hours per day, whereas American men work an average of 9.05 hours per day. This means the majority of Americans work more than full-time, and due to overtime, they also don’t have a set schedule.

Without any corporate culture, it’s very likely that employees aren’t getting any office perks or opportunities for advancement. And with increased pressure to keep working, it’s unlikely that employees are taking advantage of all of their benefits, such as vacation time or PTOs.

But that’s not all. Full-time work can also lead to stagnation, a limited resume if you’re working the same job, high stress, and a lack of control over your work. In a sense, you have to find a really good employer and like your job to get the full benefits of full-time employment.

Of course, the positives and negatives of full-time employment will depend on where you live. There are more positives to being an employee in France or Germany than there are being an employee in China or America, so it’s important to take this fact into consideration.

Contractor vs Full-Time: Which Option is Right for You? 

If you were a full-time employee transitioning to a contractor, choosing one or the other may be difficult. However, as a contractor, you’re already well aware of what the job entails. It’s also assumed that you already quit your full-time job in order to pursue freelance work.

You’ve already done the hard part, but the question remains: should you stay as a contractor?

The answer to this question depends on the follow factors:

• Are the Negatives Worth It?: Contracting comes with its own fair share of negatives, but if you’re prepared to deal with them as they come, then you’ll be happy.
• Is Full-Time Work a Good Idea?: If the thought of working full-time for someone else isn’t appealing, then that’s the best reason to stay as a contractor for a while.
• How Long Have You Been Contracting?: If you’ve been contracting for under a year, then switching back to full-time may be a safe bet. Any longer, and it could be a risk.
• Do You Have Any Regular Clients?: This is why it may be risky to go back. If you have regular clients, then you have a way to keep earning consistent income.
• Do You Have an Online Presence?: If you have an online presence, or you’re interested in building one, then you can market yourself and find work more easily.
• Do You Prefer Working From Home?: Finding a full-time work-from-home job is possible, but they’re getting rarer everyday. With contract work, you can stay home.
• Are you Open to Incorporating?: Becoming a corporation can help with your tax burden. If you’re open to incorporating, you could get rid of a major negative. 
• Would Part-Time Be Better?: You don’t have to go back to full-time right away. If you feel that contract work isn’t paying the bills, start as a part-timer and go from there.

Contracting isn’t for everyone. If you came to this article because you don’t see yourself working independently for much longer, then you already have your answer. But, if you can hold out for a little longer, you may find that staying as a freelancer was the best decision you ever made.

In Conclusion… 

Starting from scratch isn’t easy, but if you think going back to full-time is right for you, then consider taking that leap. On the other hand, if you want to stick it out as a contractor, work on your marketing. The more clients you have, the more sustainable your business will be.