Should you hire contract workers?

Should you hire contract workers?

The question of whether or not you should hire contract workers is one every business must confront and consider. First, it’s necessary to know what specifically the differences are; then, it must be considered, whether it is advantageous to you as a business entity to then focus your policies on hiring contract workers.

The United States Small Business Administration highlights the major differences between independent contractors and your employees.

“An Independent Contractor: Operates under a business name; Maintains a separate business checking account; Advertises his/her business’ services; Invoices for work completed; Has more than one client; Has own tools and sets own hours; Keeps business records.

“An Employee: Performs duties dictated or controlled by others; Is given training for work to be done; Works for only one employer”

It might seem initially strange why you would need separate kinds of employment. But, as BizFilings notes, once you recognise what that looks like, you might recognise we see this all the time. You’d want to hire independent contractors to do work that isn’t essential to the core service function of the business.

“Many consultants advise companies to contract out any function that is not directly related to the production of the company’s core products or services. For example, many white collar-type businesses contract out their building maintenance work or food service functions.”

The obvious reason is that you will not need such folk on staff – i.e. on hand – all the time to consistently produce a profit. While contractos might be necessary for external or beneficial products that benefit the business, that does not mean they are part of what constitutes the business core foundation; you won’t advertise the building and service functions if your business is about software.

There will be cost savings, due to saving on facilities, taxes, etc., for this person; but mainly it has to do with flexibility.

As Carmine Palazzo says:

“Hiring contractors allow an organization to remain flexible in an ever-changing market place. Whether you are launching a major project or preparing for a seasonal change in business, hiring contractors allow you to add to your workforce to satisfy specific needs. Should there be an unexpected downturn in business, you are not obligated to renew the contract once it expires. Utilizing contractors effectively allows you to remain lean when budgets are of concern, and to expand as business moves forward.”

These are just some reasons to start considering the contract workers, which, like normal employees, can be paid in multiple ways, such as in cash, EFT payments, etc.. This means while the method of payment remains, why you do so might differ and benefit.

(image source: ResoluteSupportMedia / Flickr)

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