Independent Contractor vs. Employee: What Every Driver Should Know
If you're a courier, delivery driver, or gig worker, you've probably heard the term “independent contractor” used often. But what exactly does it mean — and how is it different from being an employee?
In this guide, we’ll break down the key differences between independent contractors and W-2 employees, and explain what it means for your rights, responsibilities, and income as a driver.
What Is an Independent Contractor?
An independent contractor (IC) is a self-employed worker who provides services to a business without being an employee. You're in charge of your own taxes, work schedule, equipment, and expenses.
Delivery drivers working through apps like Uber Eats, DoorDash, and many courier platforms are typically classified as ICs.
Key Differences: Contractor vs. Employee
FeatureIndependent ContractorEmployee (W-2)Taxes Withheld?No – you pay your ownYes – employer withholdsReceives Benefits?NoOften yes (health, PTO, etc.)Sets Schedule?You decideEmployer controls hoursProvides Equipment?You provide your own car, phoneEmployer may supply toolsEligible for Unemployment?Usually noYesForm at Tax Time1099-NECW-2
Pros of Being an Independent Contractor
Control over your schedule
You decide when and how much you want to work.Multiple income streams
You can drive for multiple apps or companies.Tax deductions
Mileage, gas, maintenance, and gear can all reduce your taxable income.No cap on earnings
Your income depends on how much you work and how efficiently you operate.
Cons of Being an Independent Contractor
You handle your own taxes
No paycheck withholding — you must pay quarterly estimated taxes.No benefits
No health insurance, retirement, or sick leave unless you buy it yourself.Variable income
Work may fluctuate by season or region.You cover all expenses
Gas, wear and tear, tolls, and insurance are on you.
Taxes as an IC: What to Expect
You'll receive a 1099-NEC from each company you work with (if you earned over $600).
You must file a Schedule C for business income.
You’ll also pay Self-Employment Tax (15.3%) in addition to income tax.
Many ICs pay quarterly estimated taxes to avoid penalties.
To learn more, check out our full post: Self-Employed Taxes 101 for Delivery Drivers
What If You’re Misclassified?
Some companies mislabel workers as contractors when they meet the legal definition of employees. The IRS considers factors like:
Who controls your schedule and how you work
Whether the company provides tools or equipment
Whether you’re economically dependent on that one company
If you feel you're being treated like an employee but classified as a contractor, you can file IRS Form SS-8 to request a worker classification review.
Final Thoughts
Being an independent contractor comes with freedom — and responsibility. As a driver, knowing your classification helps you understand your rights, plan your taxes, and decide what opportunities make sense for you.
If you like setting your own hours and maximizing income potential, the IC path may be a great fit. Just make sure you keep records, understand your obligations, and treat your work like a real business — because it is.
Recommended Resources
IRS: Independent Contractor vs. Employee
IRS Form SS-8
Self-Employed Tax Tips (Blog)
