2018-02-13 00:00:00 Managing People English Hiring independent contractors instead of full-time employees can be advantageous for your business, but consider these factors. https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2018/03/Independent-contractor-works-with-small-business-owner.jpg Pros and Cons to Using Independent Contractors at Your Small Business

Pros and Cons to Using Independent Contractors at Your Small Business

2 min read

If you’re looking to expand your small business and bring on additional staff, adding the right type of person can make a big difference. Hiring an independent contractor instead of a full-time employee can make sense in some situations. Knowing the advantages and disadvantages of bringing an independent contractor on board, as well as understanding the needs of your business, can help you make the right choice for your organization.

Consider the Total Cost of the Hire

Independent contractors typically come at a higher per-hour cost than full-time employees, but that number only tells part of the story. Employees require additional costs, such as paid benefits, payroll taxes and insurance. Independent contractors don’t require those expenses and usually end up costing less overall. The total benefit cost that comes with hiring a full-time employee can end up adding 20% or more to the worker’s salary.

Contractors normally don’t require the same time investment that employees do. With contractors, you can target individuals that specialize in your specific need and bring them on with a phone call. Employees usually need to be recruited, screened and trained before making a meaningful contribution.

Consider the Type of Work You Need Done

Are you looking to fill a long-term need for your business, or do you have a specific project with a finite time frame in mind? Independent contractors offer a great deal of flexibility, and you can bring them on and let them go relatively easily. An accounting business, for example, might only need extra help during tax season. In this situation, a contractor can be brought on for four to five months to help with the increased demand and let go after the tax deadline.

Consider the Overall Work Environment

While independent contractors can fill a temporary business need, bringing in too many contractors can potentially cause more harm than good. If you have fluctuating customer demand or many different short-term needs, you could find your business struggling with a constant flow of different workers coming and going, potentially affecting the results that clients see. If you’re looking for a greater degree of consistency in your workplace, long-term employees may be a better choice.

Contractors also typically have a greater degree of freedom than employees do. Whereas employees usually work a traditional 9-to-5 schedule, contractors may prefer to come in a little later and work off hours, which could affect overall office productivity.

Consider the Time You Have Available for Training

If you don’t have the time to train an individual for a particular job, a contractor may be the way to go. They typically come with a great deal of experience and can often hit the ground running quickly.

A contractor may also work better if you don’t have the skill set for what you need to have done. If you’re in need of a systems upgrade, for example, you may not even know what to do; a specialized contractor would already understand what you need to do and how to do it.

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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