1403: Contract or Part-Time: Is One a Smarter Way to Income? by Penny with Women Who Money on Career Advice

[00:00:00] [SPEAKER_00]: This is Optimal Work Daily, Episode 1403. Contract or Part-Time? Is One a Smarter Way to Income by Penny with Women Who Money.com

[00:00:09] [SPEAKER_00]: Hey there! I'm Dan. I'm your host, and I am with you every single day, including weekends and holidays,

[00:00:15] [SPEAKER_00]: bringing you this great content that we find from authors who write about all sorts of work-related topics

[00:00:21] [SPEAKER_00]: like side hustling, work-life balance, and so much more.

[00:00:24] [SPEAKER_00]: So, I'm going to keep this intro nice and short, and get to our post from Penny as we optimize your life.

[00:00:34] [SPEAKER_00]: Contract or Part-Time? Is One a Smarter Way to Income by Penny with Women Who Money.com

[00:00:41] [SPEAKER_00]: So, you've been bitten by the side hustle bug and are considering contract or part-time work.

[00:00:47] [SPEAKER_00]: You're not alone. Experts estimate nearly 44 million Americans have a side hustle,

[00:00:52] [SPEAKER_00]: and nearly half of all millennials side hustle. But when it comes to secondary streams of income,

[00:00:57] [SPEAKER_00]: not all jobs are the same. Some people might work as part-time employees,

[00:01:01] [SPEAKER_00]: while others will decide to be independent contractors. The type of job you have can

[00:01:05] [SPEAKER_00]: impact your work situation, your income, and your taxes. So, which path do you choose?

[00:01:10] [SPEAKER_00]: Which one is it? Before you can decide which type of job is right for you,

[00:01:15] [SPEAKER_00]: it's important to understand the difference between part-time employment and contract work.

[00:01:20] [SPEAKER_00]: Part-time workers fit the traditional work model. You're likely a part-time worker if these

[00:01:24] [SPEAKER_00]: criteria apply to your situation. You're assigned a supervisor. You have a single place of employment.

[00:01:30] [SPEAKER_00]: You have a specific role and likely received at least some training for it. Your work is

[00:01:35] [SPEAKER_00]: completed using workplace materials. And you receive a W-2 at tax time.

[00:01:40] [SPEAKER_00]: Independent contractors resemble part-time employees at first glance. In fact,

[00:01:44] [SPEAKER_00]: some independent contractor positions appear very similar to traditional part-time work.

[00:01:49] [SPEAKER_00]: It's not unheard of for some contractors to not realize the difference initially.

[00:01:53] [SPEAKER_00]: Independent contractors might also go by the titles of freelancers or consultants.

[00:01:58] [SPEAKER_00]: If these criteria apply to your position, you're likely to be an independent contractor.

[00:02:03] [SPEAKER_00]: You schedule and establish your role. You provide services for multiple companies or

[00:02:08] [SPEAKER_00]: individuals. Your work is performed using your own materials, like laptop, printer, etc.

[00:02:14] [SPEAKER_00]: You might perform different tasks. And you receive a 1099 at tax time.

[00:02:19] [SPEAKER_00]: Once you have a clearer understanding of the type of side hustle you're contemplating,

[00:02:23] [SPEAKER_00]: either part-time work or independent contracting, you'll want to be sure you have an understanding

[00:02:27] [SPEAKER_00]: of the differences come tax time. You will also want to explore the various benefits of both

[00:02:32] [SPEAKER_00]: types of work to determine the best fit. Tax time differences of part-time work and contract

[00:02:37] [SPEAKER_00]: work. While you may not be particularly concerned about your title, someone is,

[00:02:42] [SPEAKER_00]: and that someone is the IRS. The way in which tax collection occurs is dependent on the type

[00:02:47] [SPEAKER_00]: of work you do. As a part-time employee, you will have federal and state taxes taken out of your

[00:02:52] [SPEAKER_00]: paycheck each pay period by your employer. Other withholdings like social security and

[00:02:57] [SPEAKER_00]: Medicare will also be taken out. Then you will receive a W-2 form from your employer at tax time

[00:03:02] [SPEAKER_00]: as verification of what you earned and what you paid in taxes. An independent contractor,

[00:03:07] [SPEAKER_00]: on the other hand, can face a more complicated tax situation. Though you may pay processing

[00:03:12] [SPEAKER_00]: fees from PayPal or similar payment systems, you are not paying taxes when you receive

[00:03:16] [SPEAKER_00]: your income. Instead, you'll receive a 1099 form from each individual or company you held

[00:03:21] [SPEAKER_00]: a contract with throughout the year if you earned $600 or more. If you earned less,

[00:03:26] [SPEAKER_00]: you still have to report the earnings but you won't receive a 1099.

[00:03:29] [SPEAKER_00]: In addition to filing taxes at tax time, many independent contractors who start to earn a

[00:03:34] [SPEAKER_00]: significant side income have to file self-employment taxes quarterly to avoid fines come tax time.

[00:03:40] [SPEAKER_00]: The general rule of thumb is if you expect to owe $1,000 or more in taxes,

[00:03:44] [SPEAKER_00]: then file estimated payments quarterly. In addition to navigating self-employment taxes,

[00:03:49] [SPEAKER_00]: you will also want to explore the various deductions you may be eligible for as an independent

[00:03:53] [SPEAKER_00]: contractor. The benefits of part-time work

[00:03:57] [SPEAKER_00]: Part-time work can be an opportune way for you to explore your hobbies, talents or passions

[00:04:02] [SPEAKER_00]: while working for an established company or organization and earning money.

[00:04:07] [SPEAKER_00]: The added stability can be a great benefit to someone who is looking to earn extra income

[00:04:11] [SPEAKER_00]: without putting in additional time following leads, networking and building a client base.

[00:04:16] [SPEAKER_00]: There's also very little required of part-time workers in terms of startup costs,

[00:04:20] [SPEAKER_00]: since most companies will supply materials and perform their own training.

[00:04:24] [SPEAKER_00]: Another benefit of part-time work that's sometimes overlooked involves benefits.

[00:04:29] [SPEAKER_00]: It's true many part-time jobs do not come with benefits like 401k retirement packages or

[00:04:33] [SPEAKER_00]: health insurance but some offer more benefits than you may realize. This is why it's so

[00:04:38] [SPEAKER_00]: important to ask about everything from employee discounts and paid time off to healthcare and

[00:04:43] [SPEAKER_00]: educational assistance. More so, should your schedule permit and your workplace offer the

[00:04:48] [SPEAKER_00]: opportunity, part-time jobs can be scaled into full-time positions providing complete benefits

[00:04:53] [SPEAKER_00]: packages. While this may not translate into a raise, benefits can be invaluable.

[00:04:58] [SPEAKER_00]: The drawbacks of part-time work

[00:05:00] [SPEAKER_00]: Part-time work isn't perfect though. Just like any traditional full-time work,

[00:05:04] [SPEAKER_00]: you may find yourself with coworkers or a supervisor who doesn't share the same

[00:05:08] [SPEAKER_00]: philosophy as you. A supervisor predetermining your roles and responsibilities leaves little room

[00:05:13] [SPEAKER_00]: for you to choose your focus or cultivate entrepreneurship. Depending on the work, the pay

[00:05:17] [SPEAKER_00]: can also be low at least initially. Part-time work can also be unsteady in the sense that many

[00:05:22] [SPEAKER_00]: part-time positions are seasonal or come with large swings in the hours that are available to

[00:05:27] [SPEAKER_00]: each employee. The benefits of contract work

[00:05:30] [SPEAKER_00]: Side hustling as an independent contractor comes with many benefits as well.

[00:05:34] [SPEAKER_00]: This type of side hustle is ideal for someone who craves flexibility and independence.

[00:05:39] [SPEAKER_00]: As an independent contractor, you're able to set your own hours, determine your tasks,

[00:05:44] [SPEAKER_00]: and walk away from opportunities that don't suit you. You may also have more room for

[00:05:48] [SPEAKER_00]: income growth as an independent contractor, especially if you choose a more lucrative

[00:05:52] [SPEAKER_00]: field like something related to technology or if you cultivate a niche where there isn't

[00:05:57] [SPEAKER_00]: much competition. It also comes with the added benefit of scalability. While it may not

[00:06:01] [SPEAKER_00]: be possible for everyone who side hustles, there are certainly individuals who've scaled

[00:06:05] [SPEAKER_00]: their side gigs to the point of turning them into full-time businesses.

[00:06:10] [SPEAKER_00]: The drawbacks of contract work Of course, working as an independent contractor

[00:06:14] [SPEAKER_00]: is not without its drawbacks. Starting and building a client base can be overwhelming.

[00:06:19] [SPEAKER_00]: Additionally, there can be considerable expenses up front, including purchasing

[00:06:22] [SPEAKER_00]: materials and software, as well as enrolling in a course to learn new skills.

[00:06:27] [SPEAKER_00]: Even though most part-time jobs don't offer large employee compensation packages,

[00:06:32] [SPEAKER_00]: contractors rarely get any benefits. Work can also be unstable and unreliable, at least initially.

[00:06:38] [SPEAKER_00]: While many independent contractors set out with determination to make headlines with their income,

[00:06:42] [SPEAKER_00]: it isn't unusual for the first few months or even the first year to net a loss when

[00:06:47] [SPEAKER_00]: initially establishing yourself. Contractors can also face serious burnout even when they

[00:06:51] [SPEAKER_00]: find success. You may take on too much work, always trying to grow your business.

[00:06:56] [SPEAKER_00]: Without turning down some jobs, recognizing being overcommitted

[00:07:00] [SPEAKER_00]: or hiring help when you need to, you may turn out poor quality work

[00:07:04] [SPEAKER_00]: or your full-time job, family life and health may suffer.

[00:07:08] [SPEAKER_00]: Final Thoughts So, you're ready to try your hand at a side gig.

[00:07:13] [SPEAKER_00]: For some people that means securing part-time work, while others will set

[00:07:16] [SPEAKER_00]: out to work as an independent contractor. There's no one right way to build a

[00:07:20] [SPEAKER_00]: second income stream. But understanding the differences between part-time and contract

[00:07:24] [SPEAKER_00]: work, as well as the tax implications and the benefits and drawbacks,

[00:07:28] [SPEAKER_00]: can help you make the best decision for your particular situation and interests.

[00:07:36] [SPEAKER_00]: You just listened to the post titled, Contract or Part-Time. Is one a smarter way to income?

[00:07:42] [SPEAKER_00]: By Penny with womenwhomoney.com. This show is sponsored by Better Help.

[00:07:46] [SPEAKER_00]: We all have non-negotiables. Maybe you never skip leg day or have to take your

[00:07:51] [SPEAKER_00]: morning walks. But when your schedule is packed with kids' activities,

[00:07:55] [SPEAKER_00]: big work projects and more, it's easy to let your priorities slip.

[00:07:59] [SPEAKER_00]: Even when we know what makes us happy, it's hard to make time for it.

[00:08:03] [SPEAKER_00]: Therapy can help you reclaim control of your time and values.

[00:08:07] [SPEAKER_00]: And make no mistake, therapy is for everyone. Whether or not you've been through

[00:08:11] [SPEAKER_00]: significant trauma, therapy can be a great tool for setting boundaries,

[00:08:15] [SPEAKER_00]: learning positive coping skills, and ultimately becoming the best version of yourself.

[00:08:20] [SPEAKER_00]: If you're thinking of starting therapy, give Better Help a try.

[00:08:22] [SPEAKER_00]: It's entirely online, designed to be convenient, flexible and suited to your schedule.

[00:08:28] [SPEAKER_00]: Just fill out a brief questionnaire to get matched with a licensed therapist and

[00:08:31] [SPEAKER_00]: switch therapists any time for no additional charge.

[00:08:34] [SPEAKER_00]: Never skip therapy day with Better Help. Visit betterhelp.com

[00:08:38] [SPEAKER_00]: slash workdaily today to get 10% off your first month. That's better help,

[00:08:43] [SPEAKER_00]: H-E-L-P dot com slash workdaily.

[00:08:47] [SPEAKER_00]: And I want to thank not only our author today, Penny, but also Amy and Vicky,

[00:08:52] [SPEAKER_00]: who are the co-founders of Women Who Money. That's a website that provides helpful information

[00:08:56] [SPEAKER_00]: on personal finance, career and entrepreneurial topics, so you can confidently manage your money,

[00:09:01] [SPEAKER_00]: grow your net worth, improve your overall financial health,

[00:09:05] [SPEAKER_00]: and eventually achieve financial independence. To check out more of their content,

[00:09:09] [SPEAKER_00]: come visit them online at womenwhomoney.com where you're going to find great articles

[00:09:13] [SPEAKER_00]: like this one of course, but also links to directories, recommendations,

[00:09:16] [SPEAKER_00]: a glossary, and much more. And again, you can find all of that at womenwhomoney.com.

[00:09:23] [SPEAKER_00]: Alright, that's going to do it for another edition of Optimal Work Daily. I hope you enjoyed

[00:09:27] [SPEAKER_00]: the post today from Penny and that she'll be back again with me tomorrow where your Optimal Life awaits.