3 Reasons an Independent Contractor May Be the Answer


This post is in: Business
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threeBuilding your business? An independent contractor may be your answer.

As you’re building a business (or just starting one), there is going to be a point where you need to hire some help. Your initial idea might be to hire an employee, because after all, isn’t that what businesses do? Hire employees?

Before you make that first move to hire an employee in a traditional setting, though, consider whether it makes more sense to hire an independent contractor instead.

Here are 3 ways an independent contractor can save your business money:

1. You are hiring someone who has more experience. They can hit the ground running without a lot of start-up time needed.

2. A good independent contractor agreement will make sure that you can stop the arrangement when you need to – no questions asked and no unemployment claims to deal with. This is perfect for a business undergoing change.

3. You don’t need to provide support for the independent contractor. Part of the difference between an independent contractor (IC) and the employee is that the IC must provide his own tools and training. We recently added up the additional cost of having an employee. By the time you figure in a computer and all the support – you can easily spend another $5,000 or more per year with an employee! An independent contractor will be much cheaper.

The Independent Contractor gives you a lot more flexibility during the critical growth times of your business. Make sure you’re covered with a solid Independent Contractor Agreement.



3 Comments

  1. Brad says:

    Employee says “The computer you supplied to me is broken. Fix it.”
    Ind Contractor says “My laptop was running slow so I bought myself a new one over the weekend.”

    Employee says “Oh, it’s 5:00! Gotta go!”
    Ind Contractor says “I put in 16 hours over the weekend and finished the whole project.”

  2. Hi Randy – Scroll back a few blogs (there is a schedule on the right hand side when you click through to read this whole blog) and look at Independent Contractor vs Employee.

    I absolutely agree, this will be a big audit item in the future with the IRS. It’s important to make sure you pass the tests and have an Independent Contractor Agreement in place. Plus, I advise my clients to require their IC’s to have a business structure.

  3. Randy Miller says:

    I prefer independent contractors, but you didn’t talk about the problem of the IRS deciding they are employees and not independent contractors. There are a lot of benefits, but there are some risks.

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