Small Business Bootcamp: Employee vs. Contractor vs. Independent Contractor

TMP Small Business Bootcamp

Business is growing. New projects and more deadlines are lining up. You need to fill a critical role in your business with fresh talent. It's time for you to hire, but whom do you hire? What's the financial risk? What's the degree of control? What specific skillsets does your business need? What are you in a position to provide as a business owner? 

So many considerations! Let's start by understanding your options when it comes to filling needed roles. Whether it makes sense to hire an employee, work with an independent contractor or fill a position through a contract hire all comes down to the level of the degree of control and responsibility you're comfortable with. 


A contractor is a W2-employee working on a contract basis for your company but typically sub-contracted through another company responsible for taxes, workers compensation, unemployment insurance, benefits, and such. A contractor might be a good fit for a specific project requiring specific skills for a particular amount of time. 


Business is expanding, and you have long-term commitments and multiple projects that will need to be handed off to trusted team members. Sounds like you need "employees." 

Hiring an employee means taking responsibility for withholding taxes, contributing to workers' compensation and unemployment insurance, and possibly, providing health insurance. It also means more control over what work is done and how it's done. If the duties performed by the role are long-term, integral to your business's success, you need an employee. One of the upsides of having a permanent hire who understands your company's workload and rhythm is the ability to pivot project priorities or merge roles to meet goals. You'll also have more control over wages. Do your homework to determine the ROI. 


 What if you're looking for limited smaller-scale projects to be completed on a short timetable? Consider an independent contractor.

Unlike contractors who oversee larger scope projects while using subcontractors, independent contractors don't outsource. They focus on smaller-scale deliverables for a limited time according to the contract terms.  Like with a contractor relationship, a small business owner doesn't pay employee-related costs but will need to pay an upfront rate established by the independent contractor. This rate might be higher on the front end than an employee's hourly wage since bypassing the cost and time of putting an employee on payroll, managing benefits, absorbing payroll deductions, taxes, providing workspace and supplies. 



Whether you ultimately decide to hire a contractor, independent contractor, or employee,  The Mom Project can help you find the right talent to fill a critical role. Learn more about The Mom Success Factor and begin your search and hire with confidence. 


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