Staffing - a Small Business Headache, or Small Business Opportunity

A Home Business Article Contributed by Sharon Hill

Hiring Help - the Opportunity to Grow Your Small Business

At some point after your start-up you're going to come to the realization that you can't do it all - that the opportunity to grow your small business is going to pass you by unless you find others to join your firm.

Now comes the hard part - staffing. There are many decisions to be made about adding folks to your firm. Do you want employees or independent contractors? Should they be full time or part time, permanent or temporary? What tasks do you want to retain, and which should you delegate? And how do you find good employees anyway?

A Small Business Employee - Opportunity or Expense?

If you and your start-up firm still need to watch the bottom line you'll generally find an independent contractor the least costly way to go. You won't need to offer benefits, spend costly time and money training, and the equipment and supply expense will generally be borne by the contractor - unlike an employee. You can avoid issues like discriminatory recruitment advertising or dismissal.

A contractor, can, however, quite often demand an hourly rate far in excess of what you would pay an employee to do the same work. If the bottom line is your ultimate decision-maker, take the opportunity to look at all the pros and cons and hidden costs of each before you make this small business decision.

Employee or Contractor - Which Small Business Hiring Opportunity Should Be Yours?

Once you've determined which you prefer - employee or independent or contractor - you'll need to prove which you have. If, for instance, you've decided the best staffing opportunity for your small business is an independent contractor, you'll need to convince the IRS that that is indeed what you have.

There are several key ways to do that. First, if you do not provide benefits, or pay taxes, for the staff member, she or he is not an employee. Especially true if you have other employees on staff for whom you pay these benefits. If the staff member is not full time permanent, does not work from the office, and is not immediately supervised by you during the performance of his or her work assignments it is again an indication of a contractor status.

In today's telework society, however, that is not necessarily the deciding factor.) If the worker is engaged by you for a specific project, sets her or his own hours and workdays and provides his or her own supplies and materials, she or he is probably an independent contractor.

To protect yourself from Internal Revenue Service employee tax problems, you will want to be very explicit with your independent contractor at the beginning of the arrangement. There should be a written contract, spelling out the specifics of the assignments and the expected date of conclusion. The contractor should be required to invoice you.

You should make it clear that the contractor will supply all materials to complete the assigned job, and is being given this opportunity because she or he is fully capable of performing the job functions without additional training by you or anyone in your small business.

If you don't offer benefits, don't pay their taxes, don't train them, provide supplies or look over their shoulder, you're going to have little trouble convincing anyone that you have engaged the services of an independent contractor - not an employee.