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3 Ways to Know if You Need a Contractor or a Full-Time Employee

Posted on April 15th, 2016 Read time: 2 minutes

There are many variables to think about when deciding whether to hire a full-time employee or independent contractor for a specific job. Consider these three factors when choosing which type of worker is right for your company’s needs.

  • Costs

Besides covering a salary, hiring a full-time worker means paying for health insurance, vacation days, payroll taxes, workers compensation, Affordable Care Act (ACA) compliance, and other expenses. Hiring an independent contractor can help you avoid these monetary outlays. Although contractors can negotiate their income they typically end up being less expensive than employees. However, you must be careful you don’t misclassify an employee as a contractor, or you’ll face large penalties. If you have control over what the worker does and how the job is performed, and the worker is regularly supervised, he/she is actually an employee.

  • Turnover

An independent contractor with a specific skill set works only for a set time period, which is beneficial if your company’s needs often change and you can replace one contractor with another to fit your situation.  Although costs for recruiting, completing paperwork, and training an independent contractor are lower than for an employee, with multiple workers coming and going, costs can add up quickly. High turnover makes establishing a strong company culture difficult and lowers your odds of long-term success. A full-time employee is typically more loyal because he/she more closely mirrors your company’s value and goals.

  • Engagement

A contractor tends to engage less with your company’s mission. He/she may have much pride in work performance, but that might not overlap with the contractor’s commitment to your business. An independent contractor may ask for additional compensation if you need them to go beyond their original scope of work and you may have less control over work performance as well. If you treat each full-time employee well, he/she is more likely to help out in additional ways, take on more responsibility, and work harder to produce top-quality output.

Deciding whether to hire a full-time employee or independent contractor can be difficult. For additional assistance with this or related topics, ask for advice from the helpful professionals at Innovative Employee Solutions today!

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