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Is Employing Contractors a Good Idea? 12 Things for Small Business Owners to Consider

Did you know workers turned to freelance positions during the pandemic and will remain that way? As a business, you could hire independent workers. If you want to employ contractors, we can help.

In this guide, we’ll go over some tips on employing contractors for your business.

Want to learn more? Keep reading.

1. What Work Needs to Get Completed?

Before you hire a contractor, consider the job you need them to finish. Is this something you’ll need to complete frequently? If so, it might be worth it to hire an employee for your business.

If the project is something that needs to get done once a year, get a reputable contractor.

2. Research the Contractor

Before you hire an independent contractor, you’ll want to ask for references. You should also check the credentials of the contractor like you would with an employee.

Do a background check on all the potential contractors you’ll hire. Some states will also have rules that need background checks. People working with disabled people, the elderly, or kids will need a background check.

Is the contractor organized as a business? Try searching the Better Business Bureau to see if complaints got filed.

Find reputable workers at Global Talent Acquisition.

3. Create an Agreement

Before hiring a contractor, you’ll want to make an agreement and have the contractor sign it.

Your contract should have details about the contractor. Include sections about confidentiality and non-competition, as well as pay rates.

This should be made clear if the contractor creates work to get trademarked, copyrighted, or patented. Include a statement about the independent contractor’s status.

4. You Might Save Money

Most employers will pay their contractors more per hour compared to hired staff.

Yet, it costs an employer more to hire employees. You’ll pay for different expenses like office space, benefits, and work equipment. You will need to make regular contributions and payments on behalf of your employee.

Some payments include contributing to the worker’s compensation insurance. You’ll also provide your share of the Medicare and Social Security taxes.

You’ll also need to contribute to state unemployment compensation insurance.

5. You’ll Have More Flexibility

When you work with independent contractors, you will have more flexibility. If you need to let go of an employee, you can do so instead of worrying about legal issues. Don’t worry about expenses and legal drama with layoffs and firing.

An independent contractor will bring specialized skills to the table. Don’t worry about training and teaching the worker a new skill.

6. Limit Lawsuits

Employees will have a wide range of legal rights underneath federal and state laws. They have legal claims to bring against an employer if the boss violates their rights.

Yet, independent contractors are business folk and aren’t protected by these laws. Employees have the right to receive minimum wage, and those who qualify have a right to overtime pay.

Also, employees get protection from employment discrimination. They have the right to take time off to care for a sick relative or bond with their new baby.

Employees could also sue their boss for wrongful termination, and an independent contractor can’t do the same.

7. You Won’t Have as Much Control

You won’t have as much control when working with independent contractors. At work, you can track and supervise your team.

Yet, independent contractors have autonomy, and they can decide when to work on the task.

Also, if you interfere, the contractor will leave. If you prefer to control what the worker’s doing, classify them as an employee instead.

8. Workers Won’t Always Stay

An independent contractor will work on short-term projects. Workers will always be coming and going. For some businesses, this will seem disruptive.

The quality of the work won’t remain the same, either. If you want to rely on the same workers, you should hire employees.

9. What’s Your Right to Fire a Contractor?

As an employer, the ability to fire a contractor will depend on your written agreement. You won’t have unrestricted access to fire an independent contractor.

Your written agreement limits your right to end their services. If you fire the worker and violate the agreement, you could breach the contract.

10. Some Employers Are Liable for Injuries

If your contractor gets injured at your job site, you could get sued. Workers’ compensation doesn’t cover me.

Contractors can sue you for damages suffered on-site, and employees get covered by workers’ compensation insurance.

11. You Might Not Own Copyright

If the independent contractor creates work as a book, they might have the copyright. You won’t be the owner unless you have a written agreement that transfers copyright ownership to you.

If an employee owns the work, they could end up suing you for copyright.

12. Government Audits

Federal and state agencies want workers classified as employees and not independent contractors. The reason is a financial one.

When workers get classified as employees, tax money will flow to the government. It’s more difficult for a worker to hide or underreport their income.

Are You Considering Employing Contractors?

We hope this guide on employing contractors was helpful. Consider if you need the contractor for a few jobs or one.

You won’t have consistent results if you often work with contractors. Some contractors will up and leave, and you’ll have to find someone new.

Are you looking for more business tips? Check out more helpful guides on the blog.

Read Also: 4 Digital Marketing Tips Every Small Business Should Be Using

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