Are you planning on hiring an independent contractor and do you want to know how independent contractors work? You are in the right place.
In this article, we will discuss how independent contractors work, the difference between hiring an independent contractor versus hiring a permanent employer, and also the pro and cons of hiring an independent contractor.
More: Time Management Strategies for Managers.
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Without further delay, let’s dive in.
Who is an Independent Contractor?
Independent contractors are self-employed individuals who work on a contract basis for their clients.
This type of employment is becoming more and more common as companies look to reduce payroll taxes, benefits costs, and other expenses that come with permanent employees.
Generally, any individual or group of individuals working as a freelancer is an independent contractor, which includes virtual assistants.
Difference Between Independent Contractor and Employee.
When it comes to being an independent contractor vs. a traditional employee, there are many differences that exist between the two types of workers.
Some of the differences are as follows:
- Employees work under one company for their entire career, while contracted employees can work with several companies in different industries at the same time.
- Traditional employee is paid an hourly wage, while an independent contractor charges by the project or by hours worked.
- Traditional employees receive certain benefits depending on their employer’s policies. Independent contractors are responsible for paying their own insurance and retirement funds.
Independent Contractor vs Employee: Which is Better?
The answer to this question depends on what one is looking for in a position. Both types of employment offer advantages and disadvantages, so the choice will depend on personal preference, the current situation of your business, and the type of work you need to get done.
How do Independent Contractors Work?
Independent contractors typically work on a per-project basis and may choose to do something for one person, follow through with the project and then move on to another.
They charge by the hour or offer their services at a flat fee. Independent contractors often have more freedom than employees as they can set their own hours (within reason) and decide which projects to take on.
For example, a computer programmer might work for one company and then decide to take another job with an entirely new client while pursuing other interests in the meantime.
It is becoming more common for employers of independent contractors to ask them to provide some proof that they are able to do the project or task independently before hiring them.
Some businesses are specifically looking for contractors to bring in new ideas and suggest innovative ways of working.
Other businesses might simply want an independent contractor to complete the work that they are unable or unwilling to do themselves, such as IT support or providing administrative support.
It is important for employers who hire people on a freelance basis to know how their company actually works so that they can give them the right tasks to do.
Pros and Cons of Hiring an Independent Contractors
Pros of hiring an Independent Contractor
The pros of hiring an independent contractor over hiring a permanent employee include:
- They can be more flexible and work around your schedule.
- No need to pay for benefits such as healthcare or sick days, vacation time, etc.
- You don’t have to worry about paying payroll taxes like you would if they were an employee (employers must withhold a percentage of their employees’ wages and make matching contributions to the government for Social Security and Medicare).
- Independent contractors provide their own equipment, tools, materials.
- You don’t have to worry about complicated things like working hours or breaks as they are self-managed.
- You don’t have to pay unemployment insurance.
Cons of Hiring an Independent Contractor
The cons of hiring independent contractors over a permanent employee include:
- As a business owner, you will be responsible for their work not being up to par or at all and there is no one else to blame it on.
- Your own employees may become resentful as they are now competing with independent contractors who can do the same job but for less money.
- It can be difficult finding reliable independent contractors for very long-term projects because they may have other clients that pay them more than you do and they will most likely take those jobs instead of yours at some point.
Conclusion
Hiring independent contractors are generally easier than hiring a permanent employee, but when it comes to which one you should hire, that depends on your business needs and your personal preferences.
However, the best way to figure out if hiring an independent contractor is best for your business is to hire one in a small, short period project, and make a decision based on the final outcome.
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Lastly, I hope you find this article helpful, if you do feel free to share it using the social media buttons. You can also check out How to Start a Successful Business with No Money Investment and Benefits of Hiring a Virtual Assistant.
