Being a business owner comes with many important decisions. If you are an experienced manager or a growing small business owner, you are likely going to need to hire some extra help at some point in your career. However, the person you hire doesn’t always have to be an employee. Sometimes there are benefits for choosing to work with an independent contractor instead of an employee.
How can you be sure which type of help would best suit you and your company? Here are just a few distinctions between an employee and an independent contractor. If you aren’t quite sure which direction you should go, or if you need help putting together contracts or new hire documents, the experienced team at Gandhi Selim Law is ready to guide you through the decision making process.
Hiring an employee, whether full time or part time, means you are hiring on a person to your company. Employee and labor laws apply to all of your employees, and your business is responsible for withholding the employee’s taxes, Social Security and Medicare from any wages paid.
An employee will go through a Human Resources hiring process that typically includes an official application and interviews. Further, an employee is paid a set wage or salary, determined upon hire. Employees are paid on a set payday schedule, through the payroll of the business.
Independent contractors also work for your business, however employee and labor laws do not apply. Most independent contractors are hired for a specific short or long term project, and instead of completing an application, contractors may submit a proposal for the scope of work. There may not be a specific hourly wage or salary, depending upon the agreement; some independent contractors are paid a flat fee per project. Independent contractors usually submit an invoice for services to the business, and receive payment at that time.
Independent contractors are responsible for claiming and paying their own taxes, Social Security and Medicare fees for their income. The business is only responsible for sending a 1099 tax form for services from the independent contractor that exceeds $600 per year.
Businesses can benefit from working with both employees and independent contractors. Making the best decision for your situation means weighing your options carefully and consulting with an attorney at Gandhi Selim Law as needed. We are here to offer you a free consultation and give you the confidence to make the best decision for your business goals.