What Is a Contract Job, and How Does It Work in 2024?

A contract position involves hiring a worker for a specific job over a set period and for a fixed amount of money.

Businesses use contractors to scale for seasonal needs, complete short-term tasks, manage projects without hiring full-time staff, access specialized skills, and evaluate potential full-time hires.

For professionals, contract jobs offer opportunities to build a strong portfolio, expand skills, and explore new industries. They are ideal for those who value control, flexibility, and the opportunities of self-employment.

If you’re interested in hiring a contractor or doing contract work, here’s what you need to know.

Table of contents:

• What is a contract job?
• Types of jobs that are contracted
• How do contract jobs work?
• Why do businesses use contract-to-hire jobs?
• Examples of contract jobs
• Benefits of hiring contractors
• What are the benefits of a contract job?
• Contract job FAQ
  

What is a contract job?

In a contract job, a business hires a professional to complete a defined task for a specified fee and timeframe. For example, a company might hire a social media marketer to establish and strategize its social media presence, and a small business might hire a web designer to build its website and create a logo.

The contract details the responsibilities, payment, and timeline. The relationship ends once the job is completed unless the contractor is rehired for another project.

Because contract jobs have a set scope and end date, contractors don’t receive employee benefits such as health insurance. They must also manage their own income tax obligations, filing taxes as independent contractors with the IRS.

This arrangement allows businesses to access specialized skills on a temporary basis and gives professionals flexibility and variety when working on different projects.

Types of jobs that are contracted

Contract roles span a wide range of industries and skill sets, offering businesses access to specialized talent for specific projects.

On platforms like Upwork, companies can find professionals for various roles, ensuring they have the expertise needed to achieve their goals without the long-term commitment of hiring full-time staff.

Here are some common types of contracted jobs:

• Developers create and maintain websites, mobile apps, and software solutions.
• Graphic designers design logos, branding materials, and visual content.
• Social media marketers develop and manage social media strategies and campaigns.
• Copywriters craft compelling content for websites, marketing materials, and advertisements.
• SEO specialists optimize website content to improve search engine rankings.
• Virtual assistants provide administrative support, manage schedules, and handle communications.
• Data analysts analyze and interpret data to inform business decisions.
• Project managers oversee projects from inception to completion, ensuring they stay on time and on budget.
• Content creators produce videos, podcasts, and other multimedia content.
• Customer support representatives handle customer inquiries and support through various channels.
• Financial consultants offer advice on budgeting, financial planning, and investments.
• HR specialists manage recruitment, employee relations, and HR compliance tasks.

How do contract jobs work?

With contract work, a business interested in hiring an independent professional will create a job posting based on the task they want to have completed.

A work marketplace like Upwork makes it easy to create job listings that target contract workers with specialized experience. Companies can use the platform to view applicants’ profiles and portfolios to find a match for their task.

Before the job begins, the client and contract employee will determine details like the schedule for work completion and pay rate. The contractor will complete the job and receive their pay when they complete certain milestones or the full task, based on the contract.

Examples of contract jobs

Contract jobs give businesses the flexibility to bring in expertise as needed. Below are three scenarios illustrating how companies can use Upwork to find the right contract professionals for their needs.

Example #1: Hiring a graphic designer for a rebranding project

A small business looking to rebrand can hire a graphic designer on Upwork to create new logos, branding materials, and marketing collateral. The business would expect the designer to bring a fresh perspective and innovative ideas to their brand image.

Parameters of the contract:

• Scope. Design a new logo, business cards, and social media graphics.
• Timeline. Complete the project within four weeks.
• Payment. A fixed fee agreed upon before starting the project.
• Deliverables. High-resolution files in various formats and a style guide for consistent branding.

Example #2: Contracting an accountant for financial management

A startup can use Upwork to hire an accountant to manage their financial records and provide tax advice. The accountant would be responsible for bookkeeping, financial reporting, and ensuring compliance with tax regulations.

Parameters of the contract:

• Scope. Manage bookkeeping, prepare financial statements, and provide tax filing services.
• Timeline. Ongoing month-to-month contract with quarterly reviews.
• Payment. An hourly rate based on the complexity of tasks.
• Deliverables. Monthly financial reports, tax filings, and financial strategy recommendations.

Example #3: Hiring a full-stack developer for a web application

A tech company developing a new web application can find a full-stack developer on Upwork to handle both front-end and back-end development. The developer would be expected to create a seamless, high-performing application.

Parameters of the contract:

• Scope. Develop the front-end and back-end of a web application, including database integration.
• Timeline. Complete the project within twelve weeks, with a possible extension for maintenance.
• Payment. A fixed project fee with milestones for each development phase.
• Deliverables. A fully functional web application, complete with documentation and post-launch support.

Benefits of hiring contractors

Businesses can realize a range of benefits by hiring contractors. Consider how these advantages can help your organization nurture its growth and whether contractors might fit into your business strategy.

Contractors can be more cost efficient

Many businesses immediately note the cost efficiency of hiring independent talent. Contractors may bring the skills and experience of a typical employee, but they don’t incur the same costs.

For example, companies don’t have to pay employee benefits (such as health care), provide paid time off, or account for payroll taxes. They also don’t have to pay the contractor for full-time hours if the job does not require them.

The need for an independent contractor

An independent contractor can bring a wealth of experience to the business. Working with an independent contractor allows businesses to bring in a highly experienced professional to manage a task or project.

This allows teams to easily bring in professionals to help them with short-term, specialized areas of work. If you need a logo designed for your business, for example, you can turn to a contractor who has the design skills that your team members do not. You have the chance to tap into their expertise without hiring a new employee.

Freelancers can also benefit organizations by providing training. If the professional comes on board to implement a new billing system, they can provide training to help the remainder of the team capitalize on the new system.

Staffing flexibility

Contractors also make it easier to scale the workforce size as needed. For example, hiring additional contractors to handle certain jobs makes sense if a business hits a serious uptick in demand through the summer season. With contractors, organizations can scale up or down as needed.

New team members can be brought in to help with particular project areas without a lengthy recruiting or onboarding process. Businesses also save time and money by not having to worry about training costs.

Conversely, when projects end, businesses can easily scale down operations without sacrificing money or morale—like what would result when laying off full-time employees.

If you’re interested in taking advantage of the benefits of contract work to build your organization, Upwork can help. By tapping into the global workforce, you can search countless portfolios of professionals ready to help you accomplish your goals.

What are the benefits of a contract job?

From a contractor perspective, these types of temporary jobs can be an excellent way to guide and grow a freelance career while still maintaining flexibility.

Many workers appreciate the opportunities available to build their independent contracting business and define their freelance career path.

In particular, many contractors feel drawn to the part-time work available through contracting because it requires less commitment than a full-time position, helps them gain valuable work experience, and allows them to maintain flexible hours.

‍Control over your career

Contractors don’t have to maintain the same type of commitment to a company as they would if they were full-time employees. This can help them build a career that meets their personal goals.

If you excel at building websites, for example, you have the freedom to pursue the projects and companies you prefer, based on your interests and skills. You also can go after new jobs that are better paying as your capabilities expand.

What’s more, you can take on more or less work as your schedule and preferences change.

Valuable work experience

As an independent professional, you may be able to build skills quickly and more efficiently than you might at a traditional job.

For example, if you’re a startup consultant who specializes in helping new businesses determine a fundraising plan, you can work with several companies to create a strong portfolio in a short period.

If a startup instead hired you as a full-time worker, you might only work on fundraising for that one company over the course of several years.

Flexible hours

As an independent contractor, you’ll probably find that you have more control over the hours you work. Independent contractors also have the flexibility to accept or decline work and opportunities at will.

You’re also likely to maintain more control over your schedule. Although you might need to meet with team members at particular times or be available during set periods of the week, you’ll generally have greater flexibility to work when you want.

For many contractors, this flexibility means it’s easier to build boundaries between work and personal time.

Why do businesses use contract-to-hire jobs?

With a contract-to-hire job, the professional starts as an independent contractor. Then, if both parties agree to the working relationship, the job might turn into full-time employment after the contract is over.

Businesses might find that using contract-to-hire jobs provides their organizations with various benefits, including:

• The ability to gauge candidates’ performance before hiring them full time
• An improved capacity to see how the candidate fits with the company culture and the rest of the team before making the situation permanent
• The ability to see how critical the actual role is within the organization and whether the nature of the work is ongoing before hiring a permanent employee

Contract job FAQ

Contract jobs offer a unique working arrangement with specific benefits and considerations. We answer some common questions and answers about contract jobs below.

Can you make a contract job permanent?

Yes, you can convert a contract job into a permanent position. To do this, consider the business's long-term needs, the contractor’s performance, and the budget availability for a permanent role. Both the business and the job seeker should agree on the terms and benefits of the new permanent position.

Should you consider a contract vs. full-time job?

When deciding between a contract and a full-time job, consider factors like flexibility, earnings potential, and job security.

Contract jobs often offer more flexibility in terms of working hours and location (such as remote work options), allowing for a better work-life balance. They can also provide higher earnings for specialized skills.

However, full-time jobs typically offer more stability and include benefits like health insurance and retirement plans. Evaluate your career goals, financial needs, and preferred work style to make the best choice for your situation.

Let Upwork help you find contract work

Upwork makes it easy for independent contractors and businesses to connect. Our platform simplifies the process of finding jobs that match your skills and experience. After completing your profile and portfolio, we’ll even highlight jobs that may be ideal for you. You don’t even have to worry about the payment process. Take control of your freelance business and work with like-minded clients today.