8 Pros and Cons of Software Engineer Contract Work You May Not Be Aware of

8 Pros and Cons of Software Engineer Contract Work You May Not Be Aware of

Article by Brenton Thornicroft

From September 2008 to March 2010, contract work increased 2% and part time jobs increased 16%, while temporary, permanent and full-time positions decreased significantly (-19%, -36%, -4% respectively). Read on to discover why software engineer contract work may prove to be a safer, smarter career move for you.

Software engineer contract work offers many benefits over permanent positions, although it has its downfalls. Here are some characteristics of contract work which may help determine whether or not it is a good fit for you:

Contract work pros:

Money – usually the pay will be better than permanent positions since there is less overhead incurred by the employer.

Flexibility – since you are paid on an hourly rate, you are not obliged to go over your set weekly hours. In many cases you are on your own time. Also, taking contract positions allows you to work on several different projects with different companies.

Experience – contract jobs allow you to gain experience and training in several different areas of expertise. This can be a great resume builder, however, you want to avoid being labeled a job-hopper, so show some concentration in specific areas.

Work from home opportunities – many contract employment opportunities are work from home. While some employees feel the need for a structured environment, many love the freedom offered by working from home (and its gas saving benefits!). If you work from home, you may qualify for a tax deduction for a home-based office.

Tax-deductions – contractors can claim tax-deductable business expenses. Make sure to keep record of any money you spend on office supplies, phone calls, and anything else related to job expenses. Also keep a log of the amount of miles that you travel in your car to get to and from your contracting job, as this can be another deductable expense.

Contract work cons:

Less benefits – this isn’t always the case if you find a generous company that is willing to negotiate your contract terms.

Uncertainty – during the economic downturn the average job-seeker was searching primarily for job stability. Now that things have eased up, contract work is gaining back its desirability for those who enjoy its benefits.

Taxes and health insurance – While full-time employees have taxes withheld from their paychecks, contractors must take care of their own taxes. Contractors are responsible for paying self-employment tax, which covers social security and Medicare. Additionally they are responsible for paying estimated taxes, which consists of self-employment and income tax in quarterly installments based upon what they expect to earn in the year.

Contract work can be highly beneficial to some, while not so fitting for others. Since much of software engineer work is project based, many of you in the field should be comfortable with this position type. In many cases software engineer contract work will be the most sensible choice for those in the industry and I highly recommend experiencing it at some point in your career. It can always be used as a gateway into a permanent position and is a great way to test if the company is a good fit for you. Always remember, over 70% of contract jobs turn into permanent positions, so there is a good chance it will open up opportunities down the road (Source: IBISWorld).

Employment agencies are often a good resource for finding contract work. Another option is to use freelancing resources.

Brenton T. is a recruiting specialist at Forceite, Inc. with a strong expertise in software development employment.

Visit www.forceite.com for recruiting solutions and software development jobs.

For more information and advice on gaining an advantage in this highly competitive job market, visit Forceite’s software developers jobs blog.










Question by techengr36: How do I take advantage of no state income tax when doing contract work in that state?
I live in Alabama and have a 1 year contracting job opportunity in Texas. My family will stay with me in Texas during the summer but go back when school starts. What do I have to do to keep from paying Alabama state income tax? Do I need to change residences? Do I need to buy instead of rent? Would a W2 arrangement be preferable to a 1099? Thanks for the help.

Best answer:

Answer by lizzgeorge
If you change residencies to Texas, then you will no longer be obligated to pay Alabama state income taxes. But talk to a CPA to make sure you time it right. I think it depends on what state you reside in as of December 31 of whatever year you are filing taxes for.

All you have to do is maintain an address in Texas to become a Texas resident. You can rent or buy (obviously you should rent if you’ll only be there a year). You don’t even have to actually stay there. You just trade in your AL license for a TX one and register your car in TX. Ta-da, you’re a Texan.

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