When starting your own business there are many factors that need to be taken into consideration to ensure you are successful. Deciding on the right location, inventory management system, accounting service, and hiring practices are just some of the responsibilities you will face in the coming months. Many small business owners opt to start their operations by hiring contractors, but as you become more established you will inevitably want and need a more permanent solution to fulfilling your business requirements, and this will include hiring your own employees.
Pros & Cons of Hiring Part Time & Full Time Employees
There are a number of advantages to hiring your own employees. An employee is hired by an employer to perform work or services under the direction of the employer to a specific set of standards. The employer controls the details, training, and direction of the employees work during assigned work hours. Hiring employees comes with several advantages including your ability to train the employee to your specific standards and set assigned work hours to fit the needs of your growing business. On the down side, hiring employees also comes with the responsibility of understanding and adhering to labor laws and regulations including state regulated minimum wages, overtime pay and payroll tax, unemployment insurance, and workers compensation insurance.
Why Do Companies Hire Independent Contractors?
There are several advantages and disadvantages to hiring independent contractors and they are quite different to those surrounding the hiring of employees. While you can certainly maintain control by assigning duties to an independent contract worker and you can set a time frame on completing the job, you cannot dictate the specifics of how you want them to get the job done. It is important to remember that an independent contractor does not work solely for you, can set his or her own hours and may not be available when you need them. Some of the advantages of independent contractors include very few tax responsibilities other than reporting the amount of money you have paid the contractor on a Form 1099-MISC. You do not have the responsibility of withholding or paying on FICA taxes. Those responsibilities fall on the shoulders of the contractor making payroll responsibilities considerably less than those for an employee. Another bonus is that most contractors use their own tools to perform the job saving you $$$ in the long run because when tools break down it is the contractor’s responsibility to repair or replace them.
When to Hire an Employee
You should consider hiring an employee instead of an independent contractor when:
• The work performed needs to be done under your supervision
• You want to assign hours based on your business needs using tools and equipment that you are providing
• When the work is essential to the needs of your business, for example a salesperson is essential while a cleaning crew is not
Independent Contractor Hiring
Keep in mind that when you hire an independent contractor you are hiring them to perform a function that does not centrally affect your business, for example janitor services or the initial set up and installation of your computer systems. Depending on your needs its important to remember contract work is:
• Performed by a professional who does not need any supervision
• Performed short term in an agreed upon time frame
• Performed by a professional who has expertise in the choosing field
Business Consultants, Accountants, Bookkeepers & More in Everett, Bellevue, Kirkland, Renton, Kent, Tacoma & Seattle, Washington
In most instances, the decision to hire on employee or the services of an independent contractor is based on the growing needs of the business. Hire employees to provide support and contractors to perform a service.To learn more about our business consulting, accounting and tax services for your Greater Las Vegas NV, Cedar City UT, Seattle WA, San Francisco, CA business, contact the knowledgeable experts at Mark Dicus & Company today.