As a business owner, you may have need to hire an independent contractor. Or, you may find yourself providing your services as an independent contractor.
So, what is an independent contractor?
An independent contractor provides work for a company, but is not an employee of the company. Basically, a self-employed person is an independent contractor. This is a bit broad, but works for our purposes here.
Let's look at some benefits of being an independent contractor. First, you work for yourself, not someone else. You will likely be paid more than employees of the company you contract with. Taxes will not be withheld from your pay. And you can take far more business deductions on your taxes than an employee.
However, there are some downsides. You still have to pay taxes, which will be more complicated than as an employee. You won't have paid vacation, benefits, workers' compensation, or unemployment insurance. You also have no job security. But, then again, who really does these days?
You will also have to provide your own equipment and hire any helpers you need.
For all your work, you should use a contract. This helps avoid disputes – and there will always be disputes somewhere. And, it helps distinguish you as an independent contractor, not the company's employee.
As a business owner, there are reasons to use independent contractors over employees. First, you won't be responsible for paying workers' compensation insurance, providing benefits, or dealing with tax withholdings. You also won't have to pay overtime. These can be big savings for you, but at the same time, an independent contractor may charge more than you pay employees. It's a trade off you need to weigh.
Another benefit to hiring contractors is that you can hire the extra help when business is good, but you're not in the position of having high overhead or laying people off if business is slow.
But there are also some cons to hiring an independent contractor. Because they don't work for you directly, and because they may have other clients and jobs, you may find they aren't working for you 40 hours a week. This is another area where having a contract comes in very handy, so if they aren't meeting expectations, you have some recourse.
If you do hire independent contractors, protect yourself with a good contract and make sure the IC is insured to reduce risks you might incur.
Dave Roth owns and operates
Elite Contact Management which reviews and rates various CRM Software. The site has reviews of popular brands such as
Sugar CRM, Salesforce, and Salesboom.
