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Small business

When to hire an employee vs. a contractor

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So you need new talent to lighten the workload, but you aren’t sure about how much you should commit. If you’re wondering if you should hire an employee or an independent contractor, you’ve come to the right place. First, you need to break down exactly what you need and what you can afford.

Depending on your resources and projects, an employee might be better than a contractor. Then again, there are a few unique benefits to hiring a contractor. Here at Komando HQ, we’re always happy to give small business owners tips.

For example, we put together a guide on introducing remote employees to the team. Tap or click here for a few ways to properly onboard someone who’s working from home. Overall, many factors come into play when you’re analyzing contractor vs. employee pros and cons. Keep reading to find the best answer for you.

The risks and disadvantages of hiring contractors

The main difference between an employee and an independent contractor is the amount of say you have over the way they work. Sure, you can assign them tasks and ask them to follow deadlines. But they aren’t a part of your company, so they don’t have to follow all the in-house rules.

For example, independent contractors often set their own hours. They can even work for other companies while working for you. Compare that to an employee: As an employer, you can write contracts asking them not to work for other companies.

So if you need to supervise the people who work for you, an employee would be better than an independent contractor. If you’re just looking to fill a peripheral position, though, consider a contractor. They’re also great for short-term projects you need complete within a specific time period.

You’ll find another benefit to using independent contractors when tax time rolls around. You need to report how much you paid them on Form 1099-MISC. But you don’t have to worry about paying FICA taxes, so that’s a big benefit.

Just keep these limitations in mind

Contractors are short-term workers. Sure, you can renew their contract, but if you need them by your side for a long period of time, it’s better to hire a new employee.

You also can’t fire contractors the same way you’d let an employee go. There are different rules at play. Here’s all you need to know about letting a contractor go.

Don’t demand company loyalty, either. Since they aren’t employees, contractors have no obligation to promote your brand and ignore your competitors.

You also need a written agreement if you want to copyright any work they created. For example, you might hire a contractor to take pictures or write articles for your site. If you don’t take the necessary steps to copyright them, the contractor can recycle their pictures and articles for other companies they work with.

You might even be liable for them … under certain circumstances

For the most part, you aren’t liable for what independent contractors do. There are a few exceptions to keep in mind, though. Say a contractor gets someone hurt while they’re working for you. If you were negligent in instructing them, you may be liable for any harmful accidents.

For example, you might hire a contractor who mops your floors. If someone walks in and slips, they could get you in trouble for not instructing the contractor to put up a caution sign.

You might also be responsible for contractors if you have the right to control the way they perform their job. Here are a few more examples of how vicarious liability could get you in trouble.

The best place to find talent on the web

Small businesses have unique needs, and it’s more important than ever to have the right people on your team. That’s why I trust LinkedIn Jobs to help. LinkedIn Jobs matches your open role with qualified candidates and puts your post in front of members every day so you can hire the right person faster.

Find the perfect fit for your business with LinkedIn Jobs. And, for a limited time, post a job for free — just visit to get started today!

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