Should I Hire Someone as a Contractor or Employee?

When you realize you need help and need to bring more people on board, here’s how to decide whether you should hire a contractor or employee.

Why Hire Employees?

When you hire an employee, there’s a contract in place that outlines how much you’ll be paying them, and roughly what the scope of their work will be. If the scope of work changes in the future and the employee does not agree to the new scope, they can choose to quit. Of course, this new scope change usually means a pay increase if there is additional work required from the employee.

The great thing about employees is that you can train them to grow with the company. As you hire more and more employees, you start to build a work culture and people start to grow close and become part of a team. This is why a majority of companies have team building exercises every now and then, it’s to raise workplace morale and keep everyone on the same page.

Having employees also comes with a lot of requirements. You’ll most likely have to outsource or hire a company to take care of your companies HR department to make sure that all employee needs are met. These requirements include things like vacation time, unemployment insurance, medical and dental benefits, collecting tax from employees, and any additional items that you want to provide.

Why Hire Contractors?

When you hire a contractor, you’re also entering a contract but this time it’s usually a much shorter time duration. Most companies hire contractors for a specific project or task, whether it be building a new room for a house, or filing your taxes for you at the end of the year. Contractors are given a list of tasks and milestones, as well as a deadline, and then the contractor does the work. You don’t need to worry about training the contractor because they already know what they are doing.

When it comes to requirements, there’s very little to do on your end. Before you start to work with the contractor, you request a filled W-9 from the contractor, and then fill out a Form 1099 at the end of the tax year to report the wages you paid them (here’s what could happen if the contractor won’t send you a filled W-9). Everything else is the duty of the contractor, including their benefits, vacation, etc.

Should I Hire a Contractor or Employee?

Although the answer will most definitely vary, there are a few ways to help find the best answer.

If the position is one that you know you’ll need to be filled at all times for the foreseeable future, it would be better to hire an employee. This includes positions such as sales staff, maintenance staff, secretary, an HR person or team depending on your business size, etc.

If the position is one that has either very little work or only requires work during specific times of the year, it would be better to hire a contractor. This includes positions such as bookkeeping, construction crew, etc.

If you already have an interior design business or are planning to start an interior design business in the near future, feel free to contact us and we can help you in whatever way we can. If you need a company to help with your bookkeeping and/or taxes, we can do that as well.

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