Should a Small Business Owner Hire an Independent Contractor or Employee?

Small Business: Hire an employee or contractor? Andersen Law PC

When you own growing small business, you’ll likely hit the point where you need to hire help. Then the question becomes whether to hire an independent contractor or an employee.

When deciding between the two options, there are several factors to consider.

Even though Colorado is an employment “at will” state (meaning that either the employer or the employee may terminate the employment arrangement without notice or cause, absent a contract or other binding agreement to the contrary), hiring an employee burdens a small business owner with a greater level of commitment to the individual, more managerial responsibilities, and higher administrative expenses than paying for a contractor’s services. For example, while the legal obligations vary depending on the employee’s status and title, hours worked, and the nature of their work, you will generally have to provide various benefits to the employees hired, such as health insurance, retirement contribution, vacation time, paid time off, workers’ compensation insurance, and unemployment insurance. Further, hiring employees requires you to withhold state and federal taxes, social security, and Medicare from their employee’s paychecks, in addition to keeping detailed payroll records. A small business owner is also obligated to provide employees with proper training and any professional licensing that may be required.  Continue reading “Should a Small Business Owner Hire an Independent Contractor or Employee?”