Employee Versus Contractor

With all the clear pros to hiring an employee instead of a contractor, it should be apparent when faced with such a decision – except that there are also clear and distinct pros to hiring a contractor instead of an employee.

This is to say that there is no clear answer to which is better. Both have their pros and cons, and ultimately the decision depends on the needs of your small business at the time. That said, below are a few of the more essential pros to hiring either or.

Pros of Hiring a Contractor

The first advantage to hiring an independent contractor instead of an employee is that it lowers your overhead. That is, your annual payroll, expenses, and other ancillary costs can be significantly lower as you are hiring on an as-needed basis instead of inefficiently keeping someone on even if the work is intermittent.

Second, you will see a dramatic reduction in employee benefit’s costs. Yes, this is part of the first advantage but is such an important one that it earns its own mention. Employee health benefits are a considerable expense to small business, one that is often a factor in that business being successful. Again, by paying only for what you need, you are streamlining your business.

A final benefit is a flexibility. As stated, a small business often has several non-recurring responsibilities that don’t necessitate a full-time employee. Also, it allows a small business owner to see the value of having a staff member whose sole purpose is the one job. It’s like test driving a position: you learn if it the position requires a permanent employee.

Pros of Hiring an Employee

Possibly the biggest pro to hiring a permanent employee is loyalty. Now, many employers believe that loyalty has gone the way of the do-do. However, many employees reflect how they are being treated. If you manage an employee well, they may go above and beyond their responsibilities because they have a personal connection to the job.

A second pro is that you could maximize their time. Instead of using them for only one job, you could cross-train them to maximize your limited resources. That is, instead of hiring a contractor who has agreed to only specific tasks, a small business owner can have a permanent employee who can be used (and compensated) to be a jack-of-all-trades.

Finally, having an employee can make the workplace function in a far more efficient manner as they have already learned the nuances of how the company functions.

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