Independent contractors or full-time employees – which one is the right choice for your business as you grow? Naturally, each option has its pros and cons, and the answer may be more nuanced than you think.
Pros of Choosing Full-Time
– Full-timers are typically more productive, motivated members of your team. They are locked into their roles, so they can feel pride about their job.
– When business picks up, you also won’t have to invest more funds in training and hiring, and you can watch your employees grow and contribute to your company over time.
Cons of Choosing Full-Time
– You will need to provide full-time employees benefits, and depending on the size of your small business, including health insurance options (read more about the ACA here).
– Full-time employees need to be on a set payment schedule, regardless of your revenue for that month. This also requires you adhere to specific payroll paperwork and withholding taxes, social security, Medicare, etc.
Pros of Choosing Contractors
– Contractors are essentially freelancers who can come in for a short periods of time and accomplish specific tasks. Although the pay is typically comparable to full-time employees, you won’t be required to pay out benefits or commit to a salary.
– Contractors often bring a detailed knowledge to the table. You can hire a person with the exact skill set you need for each job.
Cons of choosing contractors
– What you gain in flexibility, you sacrifice in loyalty, commitment and dedication that full-timers provide. You also aren’t guaranteed that the same contractor will always be available when you need it.
– The time and money you do invest in contractors is more likely to pay off in the short-term, not the long-term.
Overall, choosing the right type of employee comes down to your personal situation. Consider your finances, your company’s goals, your current situation and the type of job before you make the call for your small business.