Should I Hire an Employee or an Independent Contractor?

Part of the many responsibilities a business owner takes is scouting for and choosing the best people to help them achieve company goals. However, with the rise of different worker types, it can sometimes be perplexing which one to get for your business – an employee or an independent contractor. Regardless, business owners must follow independent contractor compliance should they decide to hire one for the company.  

worker applying for independent contractor compliance

How Do You Decide Which One to Hire? 

The difference between working with an employee and an independent contractor is the level of interference you’re allowed to make with these workers. While you do your best to keep your business afloat and meeting standards, you have to remember how much control you have over your employees and independent contractors. 

Thus, anybody can’t argue that hiring one over the other poses more advantages because both can greatly contribute to your company’s success. The setup only changes a bit when you start working with contractors after years of managing your employees. 

Hiring an Employee 

Business owners usually go with hiring an employee because of the control they have over that person. When you hire an employee, you can assign specific tasks to that person at any time. You can supervise the work done by this worker and demand the way you want the job done.  

In addition to this, you have the opportunity to provide targeted training, with more assurance that this person will exclusively work for you.  

However, you must be compliant with federal and state-mandated laws when working with an employee. It includes complying with payroll tax requirements and paying half of Social Security and Medicare while the employee pays the other half of it.  

Additionally, you are obliged to provide working insurance policies to your team. Failure to do so can get you in trouble with the IRS or the EDD.  

Hiring an Independent Contractor 

When you decide to get an independent contractor to perform work for you, you expect the opposite setup with having an employee. Independent contractors don’t appreciate being controlled by the way they do their job, or even the work hours they spend for it.  

However, a contractor can come in handy if there is an unavailability of employees or staff who can handle specific tasks requiring special skills. Additionally, hiring an independent contractor is better when the demand for a specific work is uncertain – like you don’t know how long you need their service.  

Independent contractors are also skilled in their respective fields; thus, they can work on tasks that require specialized skills without the need for training and supervision. Therefore, hiring an independent contractor can reduce training expenses and overhead costs – including benefits, office space, and utilities.   

business leaders working on independent contractor compliance

Need Help with Independent Contractor Compliance? 

If your team is new to working with independent contractors and you haven’t studied the ins and outs of it yet, you can tap on us at ClearPath to make things easier for you. We can handle your payroll and make sure you comply with state and federal tax laws while you manage the bigger movements of your business.  

With our years of experience, you can rest assured that you won’t face issues like the misclassification of employees as independent contractors. Talk to us today to discuss how we can be a great addition to your team!