Help From Beyond: 4 Reasons to Hire an Independent Contractor
Let me ask you a few questions about hiring an Independent Contractor:
Are you a small business owner completely underwater with how much you have to do?
Working late just to keep up?
Suddenly regretting your decision to work for yourself?
It happens to all of us.
Web designers, developers, marketers, writers, salespeople, and entrepreneurs alike, we all experience times when we need extra help.
And if it hasn’t happened yet, at some point, your small business may have more work coming in than you can handle.
An Independent Contractor (IC), or subcontractor, can be the savior you need to pull you up out of the depths.
Below you will learn 4 reasons why you should hire an Independent Contractor (instead of an employee, or worse, no one at all) to help you manage that extra workload.
In a nutshell, here are the reasons. Click the link to jump to that section.
Save thousands annually by hiring an independent contractor.
An employee salary actually costs more in the long run.
Think about it:
You’re paying that person for their time, whether they are working or not.
After all, we’ve all pooped on the company dime when we worked “regular” jobs, haven’t we?
Either full- or part-time, employees need to be paid, whether or not your business is bringing in money. If you experience peaks and valleys in business flow like many of us do, you’ll need to budget for salaries even during lulls.
Salaries must be competitive and it is reasonable of an employee to expect at least a small raise on an annual basis.
In addition to their salaries, full-time employees typically expect benefits such as healthcare, retirement funds, and paid leave time.
In the US, under the Affordable Care Act, businesses may be liable to pay a tax if they choose not to provide healthcare benefits*. Employers are responsible for taxes on gross wages for Social Security, Medicare, and federal unemployment. Depending on your location, you may also be responsible for other taxes, such as state unemployment and Workers’ Compensation.
Because of these myriad taxes and requirements, it is often necessary for a business to utilize a bookkeeper to handle payroll, which is yet another cost.
For more proof on the true cost of employee salaries, check out this calculator from Toptal.
The Independent Contractor Way
In contrast, an Independent Contractor does not get paid a regular salary.
How much you pay and how often is determined between you and the IC. Payment terms can be anything from per-project, to monthly, to weekly. Many ICs charge flat fees per project which they split up over the life of the project. Still others work on monthly retainers for long-term contracts.
As an IC, I create estimates tailored to each project and require 50% down as a deposit and 50% upon completion. For large projects I may change that ratio to 40% down, 25% after an agreed-upon milestone, and 25% after completion.
The point is, it’s flexible and it varies from contractor to contractor and project to project. You work out the details together and come up with an arrangement that suits you both.
The important part is that the fee you agree on is your only cost – there are no benefits or taxes to be paid on top. In the US you may be required to provide a 1099-MISC so that your IC can report her income on her tax return, but the taxes are on her end, not yours.
As long as you haven’t agreed to a regular paid retainer, you don’t have to pay an IC when you don’t have work to send her.
Have the Flexibility to send out work only when needed.
First, a little story about Bob.
Bob the Employee
Imagine this scenario:
The work is flowing in.
You’re super busy.
You’re super happy.
You’re making oodles of money.
In an attempt to keep on top of it all, you hire an employee to shoulder some of the burden. Let’s call him Bob.
Things are running along smoothly for a bit. Bob is helping and the two of you are getting s*it done.
Suddenly, the work dies down.
You don’t have as many projects on the horizon.
You don’t have the income to support Bob’s salary anymore.
You have to let him go.
Bob is sad. You’re sad.
Everyone is sad.
A few months later, you’re under water with work again and the cycle starts over.
This scenario could have been completely avoided by hiring an Independent Contractor rather than an employee.
Now, keep in mind that Bob may have been an excellent employee, but he may not be a good fit as an IC. It is not okay to hire someone looking for full-time employment as an IC just to avoid the costs.
I’ll say it again for those in the back:
IT IS NOT OKAY TO HIRE SOMEONE NEEDING FULL-TIME EMPLOYMENT AS AN INDEPENDENT CONTRACTOR JUST TO AVOID THE COSTS.
An IC seeks contract work for a reason and manages her career and lifestyle as such. You can land yourself in serious legal trouble for trying to classify an employee as an Independent Contractor for tax purposes.
Let’s move on…
Betty The Independent Contractor
So, this time with your new Massive Project at hand, you hire Betty the Independent Contractor.
She’s highly recommended to you by a colleague and is a consummate professional at what she does. You work together on the Massive Project and everything goes great. You pay her however you’ve both agreed and she goes on her merry way.
At this point you are free to contract her again for another project and she is free to seek other engagements with other businesses.
It is a completely flexible arrangement for both of you.
Chances are, she was also working for other businesses while she was working for you, sustaining herself without needing to rely on the successes of your business alone.
Now, when your business experiences some downtime again, you could just keep everything in-house in order to keep your costs as low as possible.
No firings. No sad.
FREE UP TIME TO FOCUS ON WHAT’S IMPORTANT.
You can hire an IC to handle the design of your website project, allowing you to focus on the development. Or you can hire a Virtual Assistant to handle the day-to-day management and marketing of your business, allowing you to concentrate on taking care of your customers. For a very large project, you could assemble an entire team of ICs to assist you, while you manage the project direction and the customer relationships.
The possibilities are as endless as the number of ICs out there who could help you better manage your time.
Why waste time performing tasks that you aren’t good at, have no patience for, or just don’t know how to do?
Why waste time learning something that may be unrelated to your field?
With an IC, you can just get the job done, oversee the project, and get back to your more important work.
An independent contractor is an expert.
At this point you might be saying, “But, Sarah, if I hire a contractor, how will I keep control over my project?”
Let me stop you right there.
Many companies, both large and small, express concern over using an Independent Contractor because of the fear of relinquishing control over an aspect of the project.
They would prefer learn to do the task themselves, train a current employee to perform the task, or even hire someone new to do it.
It is of paramount importance to hire an IC with a proven reputation of reliability and professionalism, experienced in the task at hand, and with whom you feel confident in working.
Worthwhile ICs are experts in their field.
When you work with one, you’re not working with someone who will just robotically perform the job; you’re working with someone who will bring their expertise and experience to the table. She may even educate you on better ways to solve problems and help your customers. Even after the project is over, you’ll probably remain in touch with the IC for future work, and having an expert at hand for bouncing ideas around is invaluable.
The knowledge of a trusted IC may improve how you do business, which helps you offer better solutions to your customers and ensures future business.
These are a few of the top reasons you should hire an Independent Contractor to help you with your workload.
Of course, an IC may not be for everyone. If you’re finding that you’re keeping your IC very, very busy, you can always extend an offer of employment to her. Or if you determine that you’ve got a steady number of hours of work per week (30+ for full-time) to offer, an employee may be a better choice off the bat.
But, if cost-efficient, time-saving, flexible, expert help is what your business needs, an Independent Contractor is definitely the smart choice.
So, are you ready to get the help you need and hire an IC?
Leave me a comment below and let me know what you think.
Alternatively, if you so happen to be in need of web design, logos, branding, or WordPress themes, shoot me a message here to get started on your next Superpowered project.
*As of this writing, small businesses with fewer than 50 employees are exempt from the tax under the ACA. For now.