As a small business owner you may be fortunate enough for you to need to hire more employees and many owners are considering the hire of an independent contractor rather than a hired employee.  With around 73% of small businesses now hiring contract employees in some shape or form, this may seem like a no brainer for your company, however there are a few things you will need to decide before moving forward and some professional considerations to keep in mind when hiring anyone.

Before you start the hiring process, however, it’s important to be understand the difference between a contract employee and a hired employee.  The Small Business Association describes a contractor as someone who often has more than one client, has their own tools of the trade, sets their own hours, and sends an invoice after a completed project.  An employee, on the other hand, works only for the business owner, has set parameters for continued employment is given training for the position they will be filling within the company.  Knowing the difference between a contractor and a hired employee is important from a legal standpoint since, as The New York Times points out, the IRS and federal government have ramped up their labor law enforcement for small businesses and those utilizing independent contractors.

Before moving forward in the hiring process, small business owners need to be clear on their needs.  Will they need this employee for the long term or is this a shorter project?  How soon do they need someone to fill this position?  These are just a few of the considerations Gary Swart encourages small business owners to keep in mind before making their final decision on whether an independent contractor will fulfill their needs needs sufficiently.

Another issue you will need to consider is the cost difference between hiring a employee full time and contracting a specialist for a specific project.  Don’t be deceived though by the initial pay scales of full time employees, base pay is only the starting point.  As David Ingram notes in his Houston Chronicle article, employers also need to take into account employee benefits, taxes, and insurance considerations before deciding whether hiring full time or contract would be most cost effective.

Hiring a full time employee or an independent contractor can help a small business owner grow , but often it can be difficult to decide which would be the best type of employee for their business.  By doing thorough research into the laws of contractor/employee hiring and the cost differences, as well  as, taking the time to hone their project needs, small business owners can make the best decision for their companies every time.

What advice would you give a small business owner about the hiring process?

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