Many small business owners debate between hiring independent contractors or
employees. The IRS and labor laws classify the two differently creating
benefits and risks of either. IRS.gov and Business.gov have information on those
differences.
However, are there difference in regards to loyalty, performance, and
managerial effort? Share with us your experience with independent
contractors compared to your employees.
I have had good and bad experiences with both independent contractors and employees. What it really boils down to is the character of the individual and their work ethic. Currently I am hiring all independent contractors because of the state of the economy. I have lost a lot of clients over the last 2 years due to businesses closing, or operating on bare minimum. I own a bookkeeping, payroll, and tax preparation service. So I find that small businesses will hold off on paying for bookkeeping throughout the year. Then at the end of the year, or when filing bankruptcy, or trying to modify their home loan, etc. they find that they need financial statements & taxes in a hurry. So my work load fluctuates extremely. Unfortunately, I can't consistently pay an employee and provide a solid income that they can depend on because my work flow follows that of my clients. With an independent contractor I can have the extra help that I need when I need it, with the understanding that I don't have long term employment for them at this time. If my situation changes then we can look at making changes. I offer a flat rate for the work completed with a deadline. The right individuals will make $50-$100/hr. by completing the work efficiently way ahead of schedule. Then they are free to earn other money elsewhere. They do a good job for me and always have the opportunity of additional work when I have it available. I like to build a lasting business relationship with a responsible individual with the capacity and drive to work independently & be involved in several projects as well as possibly refer clients to me through their other professional connections. I believe that there is also a multitude of experience out there right now. I can think of several highly qualified individuals who don't want to be either an employee or an owner of a business because it requires them to be there full-time. They have children's schedules or they are retired, etc. They want short term challenges that provide income and engage their intelligence, but aren't available to be tied down full time. Of course you add to this the savings in insurance and taxes and it makes hiring independent contractors a clear choice for my type of business.
Independent contractors offer many benefits for small business owners the first would be saving money. While in the military I worked with many contractors and they brought great benefits to the government, since they did not have a guaranteed job and knew the contract had an end date they worked harder to get the job done, plus their was no training time or benefits to be paid.
Rafael
---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.
Independent contractors offer many benefits for small business owners the first would be saving money. While in the military I worked with many contractors and they brought great benefits to the government, since they did not have a guaranteed job and knew the contract had an end date they worked harder to get the job done, plus their was no training time or benefits to be paid.
Rafael
---This post was edited to remove a commercial link. Read our discussion policies for more Community best practices.
I started out as an independent contractor in my field. As a young, go-getter, it was an excellent way to feel responsible for your own work, and build a reputation and business connections for the future. So, for many folks, being a contractor is a preferred status.
And in the current job market there are many talented, but unemployed, individuals. Contract work can help both businesses and individuals needing work during this somewhat difficult economic time.
I started out as an independent contractor in my field. As a young, go-getter, it was an excellent way to feel responsible for your own work, and build a reputation and business connections for the future. So, for many folks, being a contractor is a preferred status. And in the current job market there are many talented, but unemployed, individuals. Contract work can help both businesses and individuals needing work during this somewhat difficult economic time.
In my business, which revolves around online marketing, I deal with contract employees and outsourcers constantly. I find the challenge is finding people who can live up to their promises.
Most local workers ask for more than double what they are actually worth. A part of my business is designing small videos to advertise local companies on youtube. I spent months advertising for videographers and there are many of these unemployed in Nashville right now. But they all asked for more than I was charging my client for the entire project.
I had one person who had no camera or computer equipment and almost no experience demand one hundred dollars an hour. Too many independent contractors simply price themselves out of work.
Of course international independent contractors are a whole other headache. They try to change their rate after you have agreed to a project, they always deliver late and they will lie about their ability levels.
It's hard to grow a business when you don't have a lot of experience hiring people. Even hiring sales staff is a challenge.
In the end my experience is you have to do it all yourself.
promomanagers | Window Shopper |
10/21/2010 - 8:23 am
Show Replied Text…
In my business, which revolves around online marketing, I deal with contract employees and outsourcers constantly. I find the challenge is finding people who can live up to their promises. Most local workers ask for more than double what they are actually worth. A part of my business is designing small videos to advertise local companies on youtube. I spent months advertising for videographers and there are many of these unemployed in Nashville right now. But they all asked for more than I was charging my client for the entire project. I had one person who had no camera or computer equipment and almost no experience demand one hundred dollars an hour. Too many independent contractors simply price themselves out of work. Of course international independent contractors are a whole other headache. They try to change their rate after you have agreed to a project, they always deliver late and they will lie about their ability levels. It's hard to grow a business when you don't have a lot of experience hiring people. Even hiring sales staff is a challenge. In the end my experience is you have to do it all yourself.
Your experiences in the web programming area mirror mine. It took us several attempts to find reliable contractors. We found one that was extraordinary only to have him leave the industry due to financial concerns/lack of work due to the economy. As you know, once someone is out of the programming business for awhile they might as well have changed careers and he's long been gone. Finding others that will answer calls or emails has been very difficult.
Your experiences in the web programming area mirror mine. It took us several attempts to find reliable contractors. We found one that was extraordinary only to have him leave the industry due to financial concerns/lack of work due to the economy. As you know, once someone is out of the programming business for awhile they might as well have changed careers and he's long been gone. Finding others that will answer calls or emails has been very difficult.
I've had pretty good experiences with independent contractors. They seem to be more eager because they ARE on a contract and provide really good service and communication as well because they need the recommendenations.
promomanagers | Window Shopper |
10/26/2010 - 9:27 am
Show Replied Text…
I've had pretty good experiences with independent contractors. They seem to be more eager because they ARE on a contract and provide really good service and communication as well because they need the recommendenations.
IC's arrangements are used by many of the larger financial firms for new 'hires' as it is a way to gauge performance without the full committment. In the marketing business they are used almost exclusively but with mixed results. There are pros and cons to each, and laws that at one time prohibited IC's from working in areas and fields after leaving have long been shot down.
We are a subcontractor with manufacturing and fabrication abilities. In recent years, in part due to the economic changes, we expanded our scope to include an installation process of fabricated materials we had not worked with in the past. Independent subcontractors were the most profitable, or so we though, but there are few in this particular field and demand is high for their services. Some were better than others. Being where they need to be and when can be an issue because they are obligated to others and schedules collide. Communication is a work-in-process, and noticing poor workmanship or product is almost non-existent. After several losses, we determined low profit was better than no profit and our employees have since performed the work enough times we have a regular crew that nets better profit than the subs did at the onset.
I dont know if this is related here but whenever we get a boost in orders. We prefer to just get an independent contractor rather than employ more employee.
Advantage :
Don't have to allocate more work space to accomodate more employee
Don't have to train this new employee and thus save on time and headache.
Don't have to be lack in with this employee when orders do died down.
You can just hire an addition employee to check the work of this independent contractor.
Lesser payroll headache and ofcourse insurance.
Can take on order that are usually beyond your capacity to produce.
Disadvantage :
The independent contractor are not usually exclusive, so chances are your design (measurement, etc.) would be copied by other company.
You dont have direct control on the quality of material that are not visible to the eye.
They tend to find the cheapest way to do the product and thus increase there profit without notifing you about it.
Sometimes some independent contractor take on more than they can produce and thus delay their own delivery time to you and thus you would earned your buyer wraith and sometimes order are cancelled.
I dont know if this is related here but whenever we get a boost in orders. We prefer to just get an independent contractor rather than employ more employee.
Advantage :
Don't have to allocate more work space to accomodate more employee
Don't have to train this new employee and thus save on time and headache.
Don't have to be lack in with this employee when orders do died down.
You can just hire an addition employee to check the work of this independent contractor.
Lesser payroll headache and ofcourse insurance.
Can take on order that are usually beyond your capacity to produce.
Disadvantage :
The independent contractor are not usually exclusive, so chances are your design (measurement, etc.) would be copied by other company.
You dont have direct control on the quality of material that are not visible to the eye.
They tend to find the cheapest way to do the product and thus increase there profit without notifing you about it.
Sometimes some independent contractor take on more than they can produce and thus delay their own delivery time to you and thus you would earned your buyer wraith and sometimes order are cancelled.
Thank you for the responses, what successes have you seen? Increased business? Easier the second time around?
I dont know if this is related here but whenever we get a boost in orders. We prefer to just get an independent contractor rather than employ more employee.
Advantage :
Don't have to allocate more work space to accomodate more employee
Don't have to train this new employee and thus save on time and headache.
Don't have to be lack in with this employee when orders do died down.
You can just hire an addition employee to check the work of this independent contractor.
Lesser payroll headache and ofcourse insurance.
Can take on order that are usually beyond your capacity to produce.
Disadvantage :
The independent contractor are not usually exclusive, so chances are your design (measurement, etc.) would be copied by other company.
You dont have direct control on the quality of material that are not visible to the eye.
They tend to find the cheapest way to do the product and thus increase there profit without notifing you about it.
Sometimes some independent contractor take on more than they can produce and thus delay their own delivery time to you and thus you would earned your buyer wraith and sometimes order are cancelled.
The independent contractor are not usually exclusive, so chances are your design (measurement, etc.) would be copied by other company.
I suppose that this depends on what kind of contract you have. You can gain exclusive rights on created content.
Well you paid for it so it's yours.
rhim12 | Window Shopper | 10/11/2010 - 4:45 am
victoryeagle | Creator | 10/13/2010 - 3:05 pm
JonathanSynnd | Window Shopper | 10/16/2010 - 10:30 pm
promomanagers | Window Shopper | 10/21/2010 - 8:23 am
mandyjune | Window Shopper | 10/22/2010 - 2:56 pm
promomanagers | Window Shopper | 10/26/2010 - 9:27 am
cyndiga | Window Shopper | 10/6/2010 - 6:57 am
jthorf | Contributor | 10/2/2010 - 11:01 pm
zovision | Window Shopper | 10/3/2010 - 4:03 am
Developex | Performer | 10/6/2010 - 2:54 am
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