Every business owner goes into business with the goal of making money and growing their company.Along the way of the growth comes a decision they must make, and that decision is hiring help.Whether that help is in the form of temporary seasonal help, or permanent help, every business owner must still decide if they want to hire an employee or an independent contractor.Below are 3 differences to consider before making that decision.
1. Health Insurance:
Health insurance is already high for business owners only, not to mention for employees.According to Forbes, the annual healthcare cost for a family of four in 2015 was $24,671.That is equivalent to $2,056 per month.On average employers pay about 83% of health insure for their employees, meaning that would add up to $20,477 per year.As a small business owner, hopefully the value the employee is bringing to the company is worth a lot more.If not an option would be an independent contractor.With an independent contractor, business owners only pay them a gross amount, and let them worry about their health cost.
2. Reduced Overhead:
Other than health insurance, there are other overhead cost associated with cost of employees such as payroll, expenses, and in some cases equipment.As an employer, you are required to withhold a total of 7.65% of an employee’s salary for Social Security and Medicare.In some cases, where the employer has busy and slow seasons, during the busy season the employee can be working at a discounted rate.However, in the slow season the employee will cost more because of the slower revenue. As an independent contractor, business owner can hire them on an as needed basis in the busy season.
3. Loyalty:
Most of the time with independent contractors, their focus when they are on an assignment is to perform their job and move on to their next job when it is completed. There’s usually no long-term commitment to any employer.Later, if the business owner needs the services of the contractor, but the contractor is busy on another assignment, the business owner has to find another contractor.In the case of an employee, when the employer finds the right person, they can be dedicated to helping the company grow.