When you’re a small business owner, you have a lot of decisions to make. One of the most important is how to staff your business. Do you hire employees, or do you contract with independent contractors?
There are pros and cons to both approaches:
Employees
Pros
- Employees are typically more committed to your business than contractors.
- Employees can be trained to do specific tasks.
- Employees can provide your business with a steady stream of labor.
Cons
- Employees come with a number of costs, including payroll taxes, benefits, and workers’ compensation insurance.
- Employees can be difficult to manage.
- Employees may not be as flexible as contractors.
Contractors
Pros
- Contractors can be less expensive than employees.
- Contractors can provide your business with flexibility and expertise.
- Contractors are not subject to the same rules and regulations as employees.
- Contractors can be easier to manage than employees.
Cons
- Contractors may not be as committed to your business as employees.
- Contractors may not have the same company-level set of skills and experience as employees.
- It can be difficult to find qualified contractors (but becoming easier).
So, how do you decide whether to hire an employee or a contractor? Here are some factors to consider:
The level of control you need. If you need to have a lot of control over how the work is done, then an employee may be the best choice. However, if you need more flexibility, then a contractor may be a better fit.
The length of time the work will be needed. If you need someone to do a short-term project, then a contractor may be the best option. However, if you need someone to work for an extended period of time, then an employee may be a better choice.
The cost of hiring. Hiring an employee can be more expensive than hiring a contractor, because you have to pay their payroll taxes, benefits, and workers’ compensation insurance. However, the cost of hiring a contractor can vary depending on the skills and experience they have.
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