14 Pros and Cons of Being a 1099 Employee

A 1099 employee is also known as a freelancer or independent contractor – or more commonly, “being your own boss.”

It’s a dream for most people, thanks to all of the benefits it provides.

However, it can sometimes be hard to see the disadvantages before you dive in headfirst.

If you’re considering going to work for yourself, understanding both the pros and the cons can help you make the wisest decision.

You’ll find some of the most common of each below.

Pros of Being a 1099 Employee

It’s hard to deny that being your own boss brings some privileges, including those listed below.

1. You Have More Control Over Your Schedule

Being a 1099 employee means being your own boss.

If you only want to work from 8 am to lunch, you can do that.

If you want to work after you tuck your kids in at night, you can do that, too.

And if you only want to work one week a month, you are free to do so – as long as your budget can support that.

2. And the Work You Do

You might have had or heard a conversation where the employee says, “That’s not in my job description,” and the boss replies with something like, “Now it is.”

That’s not something you have to worry about as a 1099 employee because you actually write your own job description.

If a client wants you to do something that isn’t in that description, you can either decline the job or increase your price.

3. And Where You Do It

1099 employees also have the opportunity to choose where they work.

To some extent, this depends on the product or service you offer.

For example, if you are a physical therapist, you’ll have to be on-site somewhere to work, but you can still choose that location.

Others that don’t offer a physical service can work from anywhere – their couch, a beach, or halfway around the world.

4. Your Earning Potential Depends On You

As a W2 employee, you work for the amount a company offers.

And that amount only goes up when they deem it’s time for a raise.

As a 1099 employee, you can actually set your own rates – which you can choose to increase or decrease as you see fit.

And you don’t have to worry about overtime, so you can work as many hours as you’d like.

In short, the only thing that really impacts your earning potential is demand and you.

5. Your Business Can Grow As Much As You Desire

You might start out offering nothing but web design, but you don’t have to stop there.

As you work with clients, you might learn other things that they need and are happy to pay for.

Over time, you can learn SEO, content marketing, and more and end up building a full website management company.

This is just one example, but the point is that, as a 1099 employee, you can grow your business and expand your services indefinitely.

6. Freedom to Focus On Priorities

As being a 1099 employee offers so much flexibility, it gives you the opportunity to focus on things that really matter.

Many 1099 employees appreciate the fact that they can schedule their work around family events, illnesses, holidays, travel, and anything else they have going on in life.

It is one of the best ways to maintain a work/life balance, which can help keep your relationships strong and healthy.

It also leaves time to focus on hobbies and your own health.

7. You Can Deduct Business Expenses

You’ll quickly learn that running your own business – no matter how big or small – requires you to pay for various tools, equipment, and more.

Though these expenses can add up, you can actually get back a portion – or all – of this money when you file your taxes.

You can deduct various things, including office supplies, insurance payments, furniture, electronics, and more.

If you work out of your home, you can even deduct a portion of your mortgage, home insurance, and utilities.

Cons of Being a 1099 Employee

When most people dream of being their own boss, they often overlook the disadvantages, such as those below.

1. You Are Responsible for Everything You Need for Your Job

As a 1099 employee, you are responsible for everything.

This means any training you might need, every pen, your electronic devices, Internet service, vehicles, websites, and everything else you need to operate is your responsibility.

Obviously, this can lead to spending a lot of money and investing time in research and purchases.

If a client wants you to use a specific type of software or tool, they’ll typically provide it.

For everything else, you are pretty much on your own.

2. And Your Own Insurance

Companies often link up with insurance companies for their employees.

Some will cover the cost of insurance for their W2 employees while others provide a hefty discount on the coverage.

This is not something that happens for 1099 employees.

Like all of your equipment and resources, you’ll be covering the cost of any insurance yourself.

Obviously, this can get pretty expensive and cut into your profits, which isn’t fun.

3. There Are No Other Employee Benefits

As a company employee, you can often enjoy some other perks.

These include things like paid time off, holiday pay, 401k matching, and more.

1099 employees don’t get any of these, which can be a bit of a downer.

Remember, though, that while you don’t get PTO, you also don’t have to request that time off – you can just take it when you need it.

In short, this “con” is not necessarily a disadvantage – it’s just a trade-off.

4. Taxes Aren’t Quite So Simple

If you’re a W2 employee, taxes are fairly simple – whether you pay someone to do them or do them yourself.

As a 1099 employee, it gets a bit more complicated.

It’s no longer simply about how much you made, how much was withheld, and how many dependents you have.

A 1099 employee has to worry about net earnings, profit or loss forms, expenses, and several other complex details.

It’s often much simpler to outsource your taxes as a 1099 employee than to file them yourself.

5. There’s Often a Lot of Trial and Error

It’s impossible to start any job fully prepared, as every position and company requires different things.

Working for someone else usually means having someone to show you the ropes and share “secrets.”

Working for yourself means learning a lot all by yourself – and every day can be different.

Everything from dealing directly with clients to setting rates will require a learning process.

And as every client is different, you’ll be wondering what to do and making mistakes more often than you’d like.

6. Creating Balance In Your Life Can Be Tough

Being a 1099 employee does offer you a great opportunity to create a work/life balance.

The problem is that finding that balance can be a challenge – especially in the beginning.

Like other areas, it will take some trial and error before you determine how to make all of your family obligations, hobbies, and work obligations operate smoothly together.

Don’t be surprised to find yourself reworking your calendar several times before finding the “perfect” blend – and then reworking it again as those obligations change.

7. It Can Be Super Easy to Overwork Yourself

You are in charge of your schedule and how much you earn – which can be a great thing.

Unfortunately, it can also lead to you working way too much.

It’s not unusual for freelancers to take on too much work with the best of intentions, such as building a nest egg or building their business, and then discover that they’re over-committed.

The best way to prevent this is to set strict rules for yourself from the very beginning.

Pros and Cons of Being a 1099 Employee – Summary Table

Pros of Being a 1099 Employee	Cons of Being a 1099 Employee
1. You Have More Control Over Your Schedule	1. You Are Responsible for Everything You Need for Your Job
2. And the Work You Do	2. And Your Own Insurance
3. And Where You Do It	3. There Are No Other Employee Benefits
4. Your Earning Potential Depends On You	4. Taxes Aren’t Quite So Simple
5. Your Business Can Grow As Much As You Desire	5. There’s Often a Lot of Trial and Error
6. Freedom to Focus On Priorities	6. Creating Balance In Your Life Can Be Tough
7. You Can Deduct Business Expenses	7. It Can Be Super Easy to Overwork Yourself

Should You Become a 1099 Employee?

If you’re ready to be in control of your time and money and feel that you can keep yourself from working too much, being an independent contractor or freelancer can be a great move to make.

However, if you work better under supervision, like clocking out and leaving work behind, or enjoy completing the same basic work each day, working as a W2 employee might be the better choice.