If you’re a business owner, you have to decide the classification of your new staff. Are you wondering whether you should hire an employee vs. contractor?
It’s imperative that you understand the differences between these two designations. As an employer, you will have many guidelines depending on the type of worker you have. The worker themselves will have certain guidelines depending on the classification.
Let’s have a look between these two classifications:
Employee
An employee is required to work a certain number of hours per week. A full-time employee will work at least 40 hours per week. A part-time employee works less than 40 hours per week — with the employer specifying the expectations beforehand.
Employers exercise greater control of employees. For example, an employer can request their employees to attend meetings, when to work on specific projects, and where they have to work from.
The benefit for the employee is that they have a set schedule and expected wages. An employee has to get paid at least the minimum wage of their jurisdiction.
Independent Contractor
An independent contractor has greater freedom over their work. They get to decide when they will work, as long as they meet expectations and deadlines. As a result, many employers aren’t always keen to hire independent contractors.
Independent contractors who do get hired are skilled experts. They have a proven track record of meeting the expectations of their employers. They are self-motivated and don’t need micromanaging.
The best benefit for an independent contractor is that they keep 100% of their earnings. They are responsible for filing their own taxes and paying for benefits such as healthcare. For employers, if they find a great independent contractor, it’s less of a hassle than dealing with employees.
How to Choose Between an Employee vs. Contractor?
You have to choose what guidelines are easiest for you to follow. You also have to decide what demands you want to put on your worker. For example, an employee would expect you to create pay stubs for them. A Contractor wouldn’t require this, though it helps to provide them with one as well.
If you wish to have a higher level of control, you want an employee. This means that you can choose how many hours they work each week. You can also insist that they work during certain hours and if they have to work from your office.
An independent contractor has greater freedom. They can work whenever they please, as long as they meet your deadlines. Independent contractors also often have the freedom to be location-independent.
Additionally, you might be required to provide benefits such as healthcare to your employees which you cannot give your contractors.
It’s more common to be an employee. You have to give a lot of freedom to classify your worker as an independent contractor. However, guidelines and laws vary by state. You might want to consult your business attorney to help you with the hiring process.
Start Hiring
Now that you know the differences between an employee vs. contractor, you can choose what’s best for your company. Please share this guide with other entrepreneurs.
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