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This question is about careers.
Independent Contractor vs. Self-Employed
The difference between contractor and self-employed is important for understanding best business practices as well as the legal ramifications. Both of them revolve around working for yourself, but they do function in different ways.
An independent contractor provides work on a contractual basis, while a self-employed person earns money without being in an employer-employee relationship. Independent contractors are self-employed, but not all people who are self-employed are independent contractors.
Key Takeaways:
| Independent Contractor | Self-Employed |
|---|---|
| An independent contractor provides work and services on a contractual basis with another business or individual. | Someone who is self-employed can provide work and services on a contractual basis, but being self-employed simply means that you earn money without being within an employer-employee relationship. |
| Becoming an independent contractor is a great way to be classified as self-employed because all independent contractors are self-employed. | Not all people who are self-employed are independent contractors, as you can be self-employed without working on a contractual basis, such as owning your own business. |
| There is always a third party for an independent contractor; they are working on specific work or projects that are determined by another individual or business. | Self-employed individuals expand beyond contracted work. They can be business owners and complete many other tasks, such as hiring employees, beginning startups, and even hiring independent contractors. |
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