One of the most important considerations for a small-business owner is whether to hire independent contractors as opposed to the typical staffing option of full-time employees.
Common belief may make this choice seem obvious: full time employees are enticing with the lack of continual training and consistent reliability compared to independent contractors. But independent contractors have their own silver lining and the choice of bringing on full-time employees may not be as ideal as it appears.
In the bigger picture, independent contractors are a smoother way for companies to bring on key individuals without the cost and administration hang-ups associated with hiring full-time employees. At a glance, this makes companies more flexible and fluent, since they can respond to evolving market or organizational needs quickly without all the hassle of disconnecting with employees.
Companies needing a niche skill set for particular projects may not wish to take the time to train new or current employees. They can hire independent contractors explicitly knowing that they’re already experienced in the necessary competencies.
These independent contractors can get the project up and going, monitoring key employees, set up plans and fulfill all needs in a concise manner. Some companies need extra workers on a seasonal basis only, such as a business specializing in holiday products or a tax preparation office. These businesses can hire contract labor for the length of the event and part ways easily afterwards. This keeps the business from having to keep up with additional payroll responsibilities during off-seasons which is always a welcome benefit to any business owner.
However, one of the biggest benefits of taking on independent contractors comes in the financial perspective. Initially, contractors might come off as more expensive, especially up-front. But this cost is more than compensated by tax and benefits savings. For a regular employee, you as the employer would be responsible for withholding state and federal payroll taxes, Social Security taxes, unemployment, worker’s compensation insurance, and of course getting the right amount of money to the government. On the other end, the contractor takes care of these concerns on their own saving you a lot of effort and time.
Ultimately, despite the differences in hiring a full-time versus a contract employee, one of the common aspects shared by both groups of workers is that they can, and should be thoroughly examined and assessed before making the choice to hire. It might seem obvious, but a pre-screening or an assessment test of the employee’s level of skill, how they work with others, and what motivates them should certainly be in order and is a vital inclusion to any sound hiring.
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Next week we will explore on-demand service providers and see which responsibilities businesses should outsource. If you used on-demand providers in the past, drop us a line below with your feedback and we will include it in our next post!