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Should I Hire US Employees or Independent Contractors?

Posted by Anna Mastrandrea

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May 1, 2019 9:00:00 AM

Should I Hire US Employees or Independent ContractorsYou know you need talented workers to staff your new US expansion. The question for many international business owners is whether they should hire employees or work with independent contractors.

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There are pros and cons to both options. You’ll need to carefully weigh your options in order to make the right decision for your business. Keep these key factors in mind when you approach this vital assessment.

The Costs of Hiring

The first factor almost any hiring manager or business owner looks at is the cost. You likely weigh the costs of hiring and outsourcing at headquarters as well.

In some ways, hiring an independent contractor looks less expensive on paper. You don’t need to pay taxes for them, and you don’t need to pay them benefits. You don’t need to pay them for vacation days or holidays. You also won’t be responsible for supplying material or a workspace.

The contractor handles all of those costs. If you crunch the numbers, though, the picture becomes a little bit muddier.

Contractors may charge higher per hour rates in order to offset their higher operational costs. They may need to carry their own insurance or pay for equipment, and they’ll often pass those costs along to you.

They might also have control over what materials they purchase, and they might not go with the lowest cost item.

Often, hiring an employee is more affordable.

Quality Control

Another risk of hiring independent contractors is the issue of quality. Some contractors do excellent work and are efficient.

However, you could receive subpar work. The contractor may still charge big bucks for a less-than-quality job. They could also try to cut corners by using less expensive materials.

As an employer, you have more say over the equipment, materials, process, and end result from employees. When you work with contractors, you could be at their mercy.

Control of Schedules and Priorities

When you work with an employee, you can ensure your deadlines are met and your priorities are worked on as you request. You can adjust employees’ schedules to make sure jobs are finished on time or you have enough staff on the floor.

When you work with a contractor, you give up most of this control. Contractors usually have more than one client, and they might not prioritize your project.

That could translate into short-staffing on the floor or missed deadlines for your business.

Keeping Consistency in the Business

As you expand into the US market, you’re hoping to build a brand that Americans identify with. If you work with contractors, this can be harder to do.

One of these issues is that independent contractors might not deliver the consistency you need. They also aren’t as invested in your business’s success, so they may not see delivering great customer service or using the best equipment as a top priority.

By hiring and training your own employees, you can ensure a higher level of consistency. Employees are more likely to be invested in your business, and they may stay with your business longer. This allows you to provide continuity to your customers.

Make Employing People Easier

One reason international employers hesitate to employ true employees is because of concerns around employment law and payroll. They don’t understand the ins and outs of the law, and they might be worried they’ll face fines and penalties. By working with a PEO, you can simplify this situation. The PEO takes over all these tasks and the responsibility and liability of employing workers.

On the other hand, international employers hiring independent contractors often misclassify them, and this misclassification can lead to hefty fines and penalties.

Before you bring on an independent contractor, talk to a PEO. Hiring an employee could be the right choice.

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Topics: Business Expansion

Anna Mastrandrea

Anna Mastrandrea is the team lead of the payroll department at The Staffing Edge. For over 10 years, Anna has been providing the highest level of customer service to our members. Anna is an important part of our back office operations, running payroll for all of our members assignment employees, ensuring all proper payroll deductions have been set up, billing clients, and processing record of employment and filings to Service Canada. Her goal is to make sure all of our members assignment employees are paid properly, and most importantly, on time. Anna’s passion for challenges, learning, and problem solving makes her a great asset for our members, as no one member’s situation is ever the same. When Anna is not on the job, she enjoys spending time with her family, indulging her love for great wines, and playing volleyball.
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