Seems to be that more and more, companies are opting to choose independent contractors over hiring full-fledged employees. Perhaps it is because of financial reasons, or maybe their talents are only needed part of the time. Or maybe the talent themselves prefers the independent contractor life because they love to keep their schedule flexible and be able to explore other areas of their career. Whatever the reason, there are pros and cons to both. As the weather gets (slightly) warmer and everyone is coming out of their Holiday Haze, more business means more hands needed. So, which is best for you, contractors or employees?
- The most obvious pro here is the cost savings. You are only paying for the work that you are getting and the contractor is responsible for paying their own taxes.
- You can get flexible hiring and firing. Since contractors work on contracts, you can hire them for as long, or as little as you would like. You also have the opportunity to test a contractor out if you are unsure of their ability to complete the task at hand.
- The contractor brings outside inspiration and ideas. Stay with me on this one. Since the contractor is (most likely) simultaneously working on other projects for other clients, they may be able to bring a fresh look to something that you may be struggling to understand.
- You have less control over their schedules than an employee. Knowing that they have other plates spinning, you might not be able to have their attention exactly when you want it. Now, if you are their biggest client, you may have (what I like to call) the “lion’s share” of their time but you are still subject to getting bumped if something important comes up
- Unfortunately, there can be less brand/company loyalty with a contractor. You are hiring THEM for THEIR talents so when it comes to marketing, it is more likely that they are going to market themselves and their talents rather than your company’s
- This is possibly the scariest: you subject yourself to a tax audit. If you have a contractor that feels like they have been wrongly classified, they can call up those lovely people over at the IRS and your company could be liable for paying back taxes on them. To avoid this headache, make sure that you and the contractor are 100% on the same page. Plus, having them sign a contract that has them agree to their independent contractor classification may help avoid and hiccups come tax time.
- They are officially in your tribe. Having someone all-in, totally focused on your company and your brand cannot be underestimated. Being an “employee” can feel more stable making the employee more relaxed and able to execute without the stress of managing multiple contracts.
- You train and onboard only once. One of the things we wrap our brain around weekly at Priceless is the onboarding process. Whether it is clients or new team members, it is a step in the process that is time consuming but very important. Choosing an employee over a contractor means that you only have to go through that process once.
- From a money standpoint an employee’s their hourly wage ends up being less than what you would pay a contractor.
- On the other side of the financial spectrum, you are paying taxes, health insurance, and any other perks that come with being an employee. That can definitely add up fast. Especially if you are bootstrapped or a smaller team.
- Also related to money, paychecks are expected on the same day(s) every week/month. Whatever your schedule is, employees bank (literally) on their paycheck. This gets daunting because no matter what your business financials are like, you have a huge legal responsibility to your employees.
- Sometimes new blood is necessary for company growth but turnover inside an all-employee environment can be viewed as having a toxic company culture. Finding ways to keep employees engaged and giving you their best can be challenging.
What are my thoughts? I believe in finding work happy-mediums. I am a lover of flexibility and freedom so sometimes I am all about contractor work. On the other hand, my human need for stability creeps in at times and makes me think that the only way to feel safe is with an official full-time job. How do both things live in unison? It comes down to balance. If you have a team of contractors, love them like employees. Make them feel appreciated, and needed. On the flip, if you are the proud boss of a gaggle of employees, give them some flexibility and feed their hobbies. Getting the most out of whoever works for you comes down to treating them the way you want to be treated.