According to the US IRS, an independent contractor is an individual who maintains control over most of the key aspects of their own work. Independent contractors are highly flexible, scalable and skilled, but managing them and ensuring compliance around their classification can be both confusing and challenging. Businesses that are aware of the implications of hiring them will be better positioned to hire them both legally and effectively. On the other hand, employees come with a boat-load of laws and regulations attached to them. Both the federal government and your state regulate the payment of wages or salaries, overtime, and other work rules.
- This greatly reduces onboarding time, which is helpful for managers and gets projects started faster.
- You will also likely be responsible for fringe benefits like health insurance, dental and vision plans, retirement contributions, and paid time off.
- HR Streamline hiring, onboarding, and employee documentation into your workflow.
- If you’re hiring an independent contractor, make sure your agreement matches the key factors that differentiate an independent contractor from an employee.
They’re proficient at meeting deadlines that may be difficult for your full-time employees. Rather than being dragged away from projects, an independent contractor works on the projects you give Hiring Independent Contractors For Your Work Force Needs them during the hours you agree upon. Constantly evaluate your processes and engagements with independent contractors to ensure that this hiring style suits your workforce and project style.
How Technology Will Evolve Alongside the Gig Economy
By the end of 2020, there were an estimated 65 million independent contractors in the U.S, and that number is expected to reach more than 90 million. Many companies are continuously hiring these workers under both short- and long-term contracts. This might be on a temporary basis, for a specific project, or for certain duties on an ad hoc basis. If you’re considering hiring external staff, then it’s important that you understand the difference between independent contractor and employee status. With that in mind, today we are sharing an independent contractor vs employee checklist to help you understand what the different types of worker classification are. We will look at an independent contractor vs. employee chart to highlight the biggest things you need to be aware of and discuss the implications of the misclassification of employees. The IRS also offers a review process where you can submit information about the situation, and they will offer advice as to whether the person would be considered an employee or an independent contractor.
If you interfere too much in an IC’s work, you risk making the IC look like an employee, for whom the law says you should be paying payroll taxes, workers’ compensation insurance premiums, and more. If you want to exercise significant control over what your workers are doing and how they’re doing it, classify them as employees. In today’s recruitment landscape, it’s not uncommon to hear of business owners hiring independent contractors. Business owners can get the specialized help they need to complete a project without having to expend efforts on training and shell out money for employee benefits and taxes. But before you get started read on for the five things you need to know before hiring an independent contractor. The internet era has caused potential increase to the remote workforce and remote hiring process which paved way to hiring employees as contractors. This contributes to a potential decrease in the labour costs, supply or office space costs and liability reduction.
Should I Hire an Independent Contractor or an Employee?
Workers may prefer the stability of a full-time job, or find benefits like health insurance and a retirement fund desirable or necessary. They require fewer management hours, can work better by themselves, and typically require no extra training outside of any specific tools or software you may use within your company, thus saving you time.
Employers experience financial savings with independent contractors, and lower their risk. Workers use freelancing to tide them over between jobs, to add to income, and some are in it for the flexibility. It’s hard to underestimate the power of perks like the ability to work around family and schedules, travel, and of course, not having to wear shoes to work. Contingent recruiting and workforce management is a people-based business. As you make the shift to an on-demand workforce model, a talent agency with a fresh perspective can be your most valuable partner. The experience an agency brings also helps you avoid pitfalls that other organizations have encountered. Plus, agencies typically have a ready-to-go network of independent workers who will meet your immediate needs.
Compliance Solution Overview
Here are the tips you’ll need to get adoption of the OKR methodology by your employees and managers. Access collaboration tools and resources that help champion equality and promote DE&I best practices in the workplace. Franchisor Opportunities Paycor’s partnership program with franchisors is designed to reduce costs and mitigate risks for your franchise owners. Retirement Services 360-degree integrations with top 401k record keepers provide the access and automation your clients need. The ability of each contractor varies based on their work history so, it is imperative to ensue that their capabilities match your job roles and responsibilities.
Jennifer Post is a professional writer with published works focusing on small business topics including marketing, financing, and how-to guides. She has also published articles https://wave-accounting.net/ on business formation, business software, public relations and human resources. Schneiderman said the hiring goals for employees and contractors are also different.