Employee Versus Independent Contractor
Making the decision - employee versus independent contractor can be difficult as both have benefits.
The decision to hire an employee or an independent contractor is an important issue that no business should take lightly. Consider the pros and cons of each to help you make a decision.
Pros of Employees - Cons of Independent Contractors
- Loyalty. This is something to consider in the employee versus independent contractor debate. Employees are regular workers for your company. Therefore, they are more likely to be devoted to the business and willing to go the extra mile needed to get new clients or help the company rise above the competition.
- Schedule. Independent contractors can usually work at anytime they want to, including in the middle of the night. By hiring employees, you can set work hours that correspond to the hours that your clients are available. This allows you to check over work while still in progress to provide direction as needed and can increase workflow.
- Set price. Independent contractors set their own prices and the most in-demand contractors will usually charge more for their services; especially if the market rates go up. Employees, however, work for a set pre-agreed upon price.
- Control. When employees don't measure up to the standards you set you can fire them. Independent contractors, however, have a contract that both parties have signed. As long as they don't breach the contract, you are still obligated to abide by it. For instance, your business experiencing a slow period does not mean you can end the contract.
- Economical. As freelancers are not employees you do not usually have to provide them with supplies to do their jobs or an office space to work in. You will also not have to deal with payroll deductions or unemployment taxes. With employees, however, you will have to weigh in all of these factors as well as the cost of health benefits.
- Flexibility. Independent contractors can be added to your business as you need them. For instance, if your company has more business during the summer months, you can contract with a freelancer just during these months to help with the overflow of work.
- Specialization. Unlike regular workers, you will not have to waste time training freelancers. Usually, these individuals are fully trained with expert subject knowledge.
- Security. A number of federal and state laws effecting employees do not apply to independent contractors. By working with this group, you can get better protection against certain types of lawsuits such as job discrimination claims.
There are of course other aspects to take into account when considering employee versus independent contractor.