contract employees

What’s Hot This Season? Contract Employees!

By Catherine Lang-Cline

Paychex recently put out a news release titled “New Paychex Data Shows Independent Contractor Growth Outpaces Employee Hiring in Small Businesses”. The data basically tells us that contractors are being utilized more than hiring employees to do the work. Why is this happening and would it work for your business?

According to the data, small businesses are using the most contractors. This is because it is much easier to hire a person on a temporary basis to complete your project than to hire them as a full-time employee. A business can hire a highly skilled professional to tackle a project to perfection then have them step out and move on. No costs for hiring, firing, or healthcare. Think of it like this, your company will always have plumbing. Do you need to hire a plumber as an employee or just call them when their specialty is needed? More realistically, do you really need an employee that is an IT specialist or web designer 24/7 or can they set you up and go?

Large businesses use contractors a lot as well. They are used for IT, creative, trade work, transportation, and utilities. If you are a large business you report to advisors and possibly a board of directors. Full-time employees are headcount. Contractors are expenses. If things get slow or as projects become complete, it is much more pleasant to report to the board that you are cutting expenses rather than cutting headcount. The cost of hiring comes into play here as well as is trying to hire the perfect individual with the ideal skill set. Most of the time, the perfect person isn’t even looking, they are already working for someone else.

If you choose to add contractors rather than hire a full-time employee there are some rules you will need to follow according to the IRS and they listed in layman’s terms on the Paychex website that was referenced in the news release; payx.me/contractor.

“The level of control an employer has over a worker generally determines whether a worker should be considered an employee or contractor for tax purposes. Here are commonly accepted indicators of control:

Behavioral: Does the employer control how and when the worker does their job?

Financial: Does the employer control when and how the employee is paid and which expenses, if any, are reimbursed by the employer?

Relationship type: Does the worker have a written contract or receive any type of benefits such as sick leave, paid vacation days, or health insurance? Is the relationship ongoing or finite in length?”

There is another option. For example; at Portfolio Creative, a staffing, recruiting, and project company has been finding temporary workers and contractors for their clients for years in marketing and advertising. Portfolio Creative can serve as a bit of a buffer for the IRS and they handle the requirements listed above as well as the additional ones on the Paychex website. This sort of situation makes it even easier to get the best talent at your office on a temporary basis.

After all, all of the cool companies are doing it, don’t get left out.