Jigsaw piece puzzle

Independent Contractor: Definition, Example and Related Terms

What is an Independent Contractor ?

An independent contractor is a person or business that provides services to another entity under a contract or agreement, but is not an employee. They are self-employed and have the freedom to control how they complete their work. This means they can choose when, where, and how they work. They also provide their own equipment and tools to perform the services. Sometimes, they even hire their own employees or subcontractors to help complete the work. Independent contractors are also responsible for managing their own taxes and benefits, as these are not provided by the hiring company.


  • Scenario Description
    A software company needs to develop a new mobile application but lacks the necessary expertise in-house. The company hires an independent contractor who specializes in mobile app development. The contractor is responsible for designing and developing the app, and is paid a fixed fee for this service. The contractor uses their own computer and software to complete the work, and decides on their own work schedule. Once the app is completed, the contractor's work is done, and they are not entitled to ongoing work or benefits from the software company.
    A business wants to improve its marketing strategy and decides to hire a marketing consultant. The marketing consultant, as an independent contractor, creates a comprehensive marketing plan for the business. They use their own resources and tools to develop the plan and execute it. They are paid based on the terms outlined in their contract, and they handle their own taxes. Once the marketing plan is implemented, the consultant's job is done, unless the business decides to hire them for further services.