Employees or Independent Contractors? How to decide which is right for your business
Have you ever wondered: Should I hire Employees or Independent Contractors? If you are a business owner or hiring manager, there’s a good chance you’ve asked yourself this question at some point, and with good reason. It’s an important decision for your business!
You may have heard that Independent Contractor hiring is on the rise, and the benefits they offer your business are quite appealing. But is this the right approach to employment for your business? Or should you stick with traditional Employees?
Let’s take a deep dive into the pros and cons of Employees vs Independent Contractors so you can be better equipped to make this decision.
Employees equal control (for you!). When you choose to hire an Employee, you get to control what will be done and how it will be done. You can dictate how this person is trained, what they will do during work hours and whether or not they can work for anyone else. This level of control may be important for your business and some of the positions you find yourself hiring for.
On the other hand, hiring an Employee comes with a lot of laws and regulations that have to be followed. Business Owners are required to withhold income taxes, pay Social Security and Medicare taxes, and pay unemployment tax on wages paid to their Employees.
So, you get a lot of control (if that’s something you want), but you have heavy payroll responsibilities.
Hiring Independent Contractors
On the other hand, when a business chooses to hire Independent Contractors, the exact opposite is true. Business owners give up the control they would have if they instead hired Employees. With Independent Contractors, they can assign duties and deadlines, but that is where their control stops. They are not responsible for deciding how the work is done, where the work is done or when it is done. This is in the hands of the Independent Contractor.
However, the reporting and tax responsibilities are significantly simpler. The Employer must report the amount paid each year on a Form 1099-MISC, but that’s it. Sounds much easier, right? Band Of Hands makes hiring Independent Contractors even more simple by leaving the 1099’s up to the payment processor, therefore leaving you with no paperwork at all.
How do I choose: Employee vs Independent Contractor?
So, which is right for your business? You must consider what’s important to you, and what makes the most sense for your business.
- Consider hiring an Employee if you need to have control over work environment, hours, training and tools/equipment used. Also, this route may be appropriate if you are hiring for a long-term position where the work is essential to your business and needs to be supervised.
- Consider hiring an Independent Contractor if control is much less important to you and the work being done is not integral to your business. This option is appealing for short-term projects that need little supervision.
Additionally, it’s important to consider the nature of the work that this Employee is going to be doing. The National Labor Relations Board recently reaffirmed that “entrepreneurial opportunity” is an important factor in determining the classification of a worker. How much of a role does this play in the position you are filling? If it’s substantial, then you may need to hire an Independent Contractor. To learn more about this, read here: https://www.constangy.com/newsroom-newsletters-852.
Remember that your workforce might be a mix of Employees and Independent Contractors, as many are these days. Just be sure to carefully look at each position, and understand what is important to you as a Business Owner and what is important to the business as a whole.
In need of Temps or Independent Contractors? Contact our sales team to learn how Band Of Hands is the best solution to meet your hiring needs – 858.284.3700