The Differences Between Employees and Independent Contractors

The Differences Between Employees and Independent Contractors

Should Your Business Hire an Employee or an Independent Contractor?

When business owners need help around the office, their main concern is usually finding the best person for the job, but they should also consider whether they want to take on employees or work with an independent contractor. The primary difference between the two comes down to how much control you have over their work as their employer. However, there are other advantages and disadvantages to both that we’ll get into below.

Employees Advantages

The biggest benefit of hiring employees is your ability to direct their work and their conduct. You’ll be in charge of their performance, set their schedule, and can train them for whatever position that you want them to fill. Because Florida is a right to work state, you can terminate the employer-employee relationship for any reason that isn’t explicitly illegal. Another advantage of hiring employees is that you can require them to sign non-competition clauses that prevent them from working for your competitors. They’re best for long-term positions that are essential to your company’s daily operations.

Employee Disadvantages

All the different laws and regulations that apply to employees can be a real headache. To make things worse, you need to make sure that you’re compliant at both state and federal levels. Employment law includes minimum wage requirements, overtime requirements, and other standards that must be met if you want to keep your business from being fined or sued. Employers also must keep up with payroll taxes, which obligates you to pay half of the employee’s social security and Medicare taxes while withholding the other half from their paycheck. You’ll also be responsible for paying Florida reemployment tax and workers’ compensation insurance unless you can obtain an exemption.

Independent Contractor Advantages

While some employers prefer to closely manage their workers, others would rather hire someone who can work without much oversight. This gives the employer more freedom to focus on their own duties as an owner. Independent contractors work well for these situations. They supply their own tools and are responsible for their own licensing requirements. Employers still need to report the independent contractor’s wages to the IRS using Form 1099-MISC. However, the contractor will take care of their own social security and Medicare taxes, significantly reducing your work when it comes time to run payroll.

Independent Contractor Disadvantages

The benefits of working with independent contractors could also be considered drawbacks by some employers. For example, there’s nothing you can do if you don’t like how they get the job done. All you can do is give them an assignment and a deadline and hope for the best. The independent contractor will set their own hours, too, which could become inconvenient depending on your own schedule. They’re best for short-term projects outside of your business’s usual scope. Businesses working with independent contractors also need to be careful to avoid misclassifying employees as contractors.

Regardless of whether your company decides to engage with employees or independent contractors, getting the agreement in writing is essential to protecting your business from liability and limiting potential disputes. Call (727) 279-5037 or visit our flat fee service pages for more on independent contractor agreements and employment contracts.

About Us

FL Patel Law PLLC is a boutique business law firm dedicated to entrepreneurs and companies.

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