Businesses sometime fail to differentiate between employees and contractors that work independently. There is a vast difference and your business could really be missing out if you can’t tell these two apart and if you end up making the wrong decision. Also, you can easily avoid a lot of trouble later on such as legal difficulties or tax issues if you know who to hire and why from the start. In order to understand the difference between the two and why your business should hire contractors instead of employees, you need to first know what a contractor does.
A contractor often has a brand or name of a business associated with him that can say a lot about his credibility. This contractor will further have employees of his own that he will delegate work to. A checking band account is going to be present in most cases. The services that this particular enterprise provides are going to be closely watched over by the contractor in question.
Invoices may also be carefully maintained for the sort of work the contractor does for people over time. This sort of organization is also why your business should hire contractors instead of employees. Contractors can also have any number of clients at any point in time. When you are working with contractors you will also realize that they have access to more tools than the rest. Detailed business records are also present in all your dealings with an established contractor.
With employees however there is a different story. They often have much less room for creativity and originality as they follow orders to the dot and they are given strict instructions regarding their projects by their employers. You cannot really expect anything new or virtually unexpected if you have simply hired an employee to do the job for you.
Employees also need to be trained adequately so that they can perform the tasks that are required of them. Training incurs unwanted expenses for the company or business and can affect output if the workforce is being trained because they won’t be working in the interim period. Also there is always a chance that the employee upon completing training will seek work elsewhere. This results in a waste of money for the company and these sorts of costs cannot be reclaimed. Employees also have limited versatility as they work for a single employer at any one time which seriously limits their scope.
It is important to be sure of the difference because if you are not and if you confuse the two, you could end up being subjected to some legal issues that relate to labor and workforce laws. If your contractor is actually an employee you will have to pay a certain amount of money to cover hired labor over a long period of time. Any overtime wages and extra charges will also be due on you in this situation.
There is a certain Act of the law that applies here and you will need to go through that to make sure you are not getting yourself into a mess. Taxes will need to be paid on the hire you carried out and your company may also owe relevant authorities a multitude of taxes. State and federal taxes are very important.
You will need to provide social security and other basic employment benefits which include free medical care. Compensation money in varying circumstances may also be required. Health insurance and indication of retirement benefits may also need to be provided to the person or people you have hired.
crystal is a tech blogger who loves to write on technology and gadgets. She occasionally contributes resourceful article on behalf of Continental Message, a company that provides a virtual office solution to few prestigious clients that also acts as an affordable support center.