Many IT professionals prefer a steady job — and paycheck — to the bumpy road of contracting, but being a contractor certainly has benefits. One, there’s no long-term commitment so you can check out a company from the inside out and see if it’s somewhere you’d like to further pursue a career. Two, despite the hurdles, contracting is a great place to get experience, which may help in career advancement. IT contracting isn’t for everyone, so before you dive into the freelance world, make sure you understand what you’re getting into.

Two Types of Contractors

There are two different types of contractors: independent contractors and employees of contracting companies. Independent contractors are responsible for important things like their own tax filings, employment insurance and legal representation. Independent contractors are also required to adhere to local and state regulations regarding business actions, for example, obtaining a business license for sole proprietorship. Employees of a contracting company such as STG, Jacobs Technology or SAIC are considered employees and may receive benefits.

Commonalities, Differences

The two types of contract positions share some things. For one, employment is dependent on the contract; contracted workers are subject to release at any time. And for many contractors, the only way to achieve promotions is to leave the company and work for another company. This prevents the average contractor from establishing tenure and is generally stressful for people as they move toward retirement.

As an employee of a contracting company, you are considered a stakeholder in the business. The success of that company is linked to your performance. As the company grows because of your efforts, you may see return on investment in way of promotions, raises and potential partial ownership of shares. Generally, larger companies will have room for promotions. If your position generates above the needed revenue, it is easier to engage in salary negotiations. However, companies tend to have few qualms about releasing contractors, and in many cases, contractors do not receive rewards for achieving above and beyond the position they have been hired to perform.

Victor Johnston is a contractor for the Office of the Secretary of Defense.