AMA: Why Should I Hire Contractors?

June 20, 2014 at 6:00 AM by Kathleen de Lara

AMA: Our company is interested in decreasing hiring costs by bringing in contractors. What are some things my team should be aware of?

With small businesses and startups popping up in a myriad of industries, contractors and freelance workers are finding more sources for part-time, short-term employment. 

Working in and out of the office, and sometimes during unconventional hours, contracted employment allots more flexibility than the 9-5 work day. Contractors can also choose to work for multiple employers given they don't sign a non-compete agreement.  

Hiring contractors is a cost-effective solution to hiring employees for quick projects. These team members are hired for short-term employment and are a good fit for tasks that the company needs extra help with now, but perhaps not in the long-run. 

When hiring an independent contractor, employers should know exactly what they’re hoping to hire for. Before sourcing contractors, sync up with the team to discuss the qualified talent candidates the company’s looking to hire. Hone in on specific skill sets to address the company’s specific needs. Otherwise, the contracted role isn’t used very effectively, and companies lose out on their temporary investment. Hiring contractors may not be the best fit for all departments, however. Sales employees need more training and oversight over a period of time that may be longer than the time frame you actually need contractors.  

Hiring contractors can decrease payroll costs by 20%-30%, taking into account benefits, office space, equipment, taxes, and insurance expenses. 

Remember there are key factors that separate contractors from employees. 

  • Contractors submit invoices for work completed and are compensated hourly, weekly, or monthly. 
  • Employers aren’t required to provide benefits, withhold paycheck, Medicare, or Social Security taxes, or to pay unemployment taxes. 
  • While employers communicate the tasks and projects that need to be completed, contractors have the choice of when, where, and how to work.
  • Keep in mind some contractors operate under a business name and may have their own team of employees.

Want to learn more about hiring contractors for your company? Stay tuned to the Entelo Blog next week as we delve into more on independent contractors and employees, and how to avoid getting into any legal trouble.

In the meantime, here are some resources for information on hiring contractors:

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