Your New Jersey business has taken off, and you need help. Before you place an ad for an employee, you may want to consider whether an independent contractor may meet your needs better.
The answers to the following questions may impact your hiring decision.
How much control do you want?
FitSmallBusiness.com notes that if you hire an employee, you have significantly more control. You get to set the schedule, and you can dictate how he or she does the job. Independent contractors typically have the freedom to do the job how and when they want, although you may set deadlines or parameters.
How often do you need someone?
If you need someone to come in several days a week, and you anticipate that this person will work for you for several weeks or months, it may make more sense to hire an employee. On the other hand, if the hours will be inconsistent, or you need a worker who can fulfill specific duties certain times of the year, an independent contractor may fill the role better.
How do you want to pay?
You may negotiate with an employee over salary, but ultimately, that amount is up to you, and you must pay it according to wage and hour laws set by the federal and state governments. An independent contractor works by the job rather than the time clock, and when the contract work is complete, you will receive an invoice for payment.
Keep in mind that the independent contractor is probably an expert in the field, and may cost more than the hourly rate you would pay an employee.
How do you want to pay taxes?
You must withhold taxes out of an employee’s salary, as well as paying Medicare, Social Security, workers’ compensation insurance and unemployment taxes. Because the independent contractor is self-employed, he or she must pay self-employment taxes. The difference in taxes may be significant, so the IRS takes the classification of workers very seriously.
This general information is provided for educational purposes only. It is not intended to take the place of legal advice.