It's great to be able to hire a new full-time employee. They can lighten the load for the rest of your staff, work on new areas of growth and completely integrate into your business. However, being able to bring in a full-time hire is not always a financial reality.
Independent contractors, though, can offer a number of benefits and provide a solution for your staffing needs.
Time to Save Money
While it is not a guarantee, most companies find that hiring an independent contractor is more cost effective than an employee. This is true despite the fact that most employers end up paying a contractor a higher wage than they would an employee.
When you hire an employee — full or part-time — you are going to be hit with a number of expenses including but not limited to: office space, equipment and benefits. Along with this, you are required to make the following payments:
- Workers' compensation insurance
- State unemployment compensation insurance
- Social security and Medicare taxes based on the employee's compensation
Note: with an independent contractor, you are not responsible for any of this. When you add up these expenses, you may see your payroll cost leaping by as much as 20 percent.
- A contractor does not have to visit company headquarters everyday. This saves gas and cuts down on pollution.
- Less paperwork. When you hire an employee you will have mounds of paperwork staring you in the face. From tax forms to benefit plans and much more, both you and the new employee will be overwhelmed. Unfortunately, most of this paper eventually ends up in the garbage. With an independent contractor, there is not nearly as much need for the use of paper. In fact, you may be able to setup your agreement electronically.
In some cases, you may be better off hiring an employee than an independent contractor. That being said, there are many environmental and financial benefits of opting for an employer-contractor relationship.