When to hire an employee vs. a contractor
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.