Do you have a short-term project that requires a specific skill set, but you don’t have the budget to employ a full-time employee just for that task?
Or perhaps you run a small business and could occasionally use the assistance of an expert in certain areas of your business?
If either of these sounds like you, then hiring an independent contractor is the perfect solution.
Hiring an independent contractor or freelancer allows you to source the perfect person for the role while saving on overheads and time spent hiring a full-time employee for a short-term position.
This guide goes through all the important parts of hiring and working with an independent contractor, so you know exactly what you’re in for and how they can help your business thrive.
What is an Independent Contractor?
An independent contractor is someone with a specific skill set who works for themselves, not an employer. They are running their own business.
Independent contractors provide work services under a specific contract and are self-employed. They set their own rates for the work they do for your business. They work with your company, but you do not have to pay for additional benefits like insurance or 401(k) for them. They also pay their own taxes. Independent contractors are also known as freelancers and consultants.
If you choose to work with an independent contractor, they do not become an employee of your organization, and you aren’t liable for them in any way. Instead, you’ll enter into a contract with them for a specific project or task that usually has a set duration.
The Basics of Hiring Independent Contractors
If you’re a fast-moving organization, agile startup, or small business, hiring an independent contractor can offer increased flexibility and a range of benefits to your business.
Contractors aren’t suitable for every role. Here are some crucial points to consider before deciding whether hiring an independent contractor is the right move for you.
Find the Best Person for the Job
Becoming a contractor is an important life decision. Independent contractors have to give away the security of full-time employment to get their business off the ground. With this in mind, people who take up contract work are likely confident in their skills, with experience to match. They are experts in their field.
Therefore, when the short-term need for a specific skillset arises, you don’t have to go on the hunt for another full-time employee that can meet these skills. Instead, you can hire the best person for the job, for only the project’s duration.
Not only does this save your business on overhead costs, but it also means that you’re not employing full-time individuals for situations that only arise occasionally.
Save Time on the Hiring Process
Hiring full-time employees is a longer process. You have to post the ad, source candidates, screen resumes, interview candidates, and wait while successful candidates serve their notice. This time-consuming and costly process is not ideal when you have a project that needs attention right away.
In contrast, you can hire an independent contractor within days, especially if you’ve worked with them previously.
Quick and convenient access to a skilled contractor means your problem can be solved promptly, allowing business to carry on quickly without losing time and money.
Independent contractors are extremely beneficial to industries that face significant peaks and troughs in business volume.
When you hire independent contractors, you can scale your workforce according to your workload. For example, instead of having full-time employees twiddling their thumbs during slow periods, you can decrease the number of workers on hand altogether.
You’ll also be able to quickly adapt to changing demands for skills without the cost of adding another full-time employee.
In a nutshell, hiring independent contractors can allow you to positively adapt both physically and financially to ever-changing market demands.
Independent contractors may cost you more on wages in the short term, but there are plenty of areas in which you’ll save in the long run.
When you hire an independent contractor, they’re not an employee. You don’t have to pay them holiday pay, sick pay, or superannuation. You also don’t have to provide them benefits such as health or dental insurance.
Independent contractors should also provide their own equipment, meaning you can save on items such as laptops, business software, and office facilities.
So although an independent contractor will demand a higher rate per hour than a full-time employee, you won’t be working with them for an extended period of time. You have the opportunity to lower your overheads in the long run by choosing to work with a contractor instead of hiring a full-time employee.
Ease of Termination
Organizations that operate in volatile industries need to consider their staffing requirements very carefully. When a slow period hits unexpectedly, they are stuck paying too many full-time employees due to contractual obligations.
However, when you work with independent contractors, getting out of your contract when an unexpected slow period strikes is much easier. You can use a get-out clause to end the contract with short notice and even without reason. Most independent contractors may even expect this sort of clause to exist within the contract.
Although this is undoubtedly a benefit of working with independent contractors, terminating a contract early and unexpectedly won’t earn you goodwill with the contractor should you want to work with them in the future.
On the other hand, if you only bring on the contractor for a specific project, you may not need to deal with getting out of the contract. The contractor simply ends working with you when the project is complete.
So it’s easy to see that there are many positive things to consider when hiring an independent contractor. However, there are times when using a contractor to fulfill your business needs is not ideal.
Some of these occasions include:
- When you’re building a team of full-time employees
- When you need long-term support
- When you want to invest in the future of your business
- When you want to develop key HR assets
If you are steering your business in any of the above directions, spending time working with independent contractors may take your attention away from these goals. Unless, of course, you manage to convince an independent contractor to sign on as a full-time employee, but that is a lesson for another day.
3 Tools to Assist You in Working with Independent Contractors
To help you successfully manage your full-time employees and independent contractors all in one place, you need robust software on your side. Here are a few of our top recommendations.
Zenefits is an all-in-one human resources powerhouse. It provides features for compensation packages, employee onboarding, PTO management and requests, and employee management.
Where it comes in handy for organizations working with independent contractors is its scheduling and time-keeping features. Zenefits allows you to track time and attendance for contractors, freelancers, and full-time employees side-by-side, so you always know where your team is and when.
Zenefits is also a great platform for collaborating with both employees and contractors. With Zenefits on your side, you can establish clear communication with your contractors, no matter where they are working from.
Deputy is a savvy HR software with a primary focus on scheduling. It makes scheduling and time tracking a walk in the park for businesses in almost any industry.
You can even easily manage individuals that work remotely, including contractors. You can also share work schedules instantly with the entire team and capture work hours within Deputy’s mobile app.
Deputy also helps to maintain clear lines of communication across multiple teams at different locations. You can share important documents and post recorded announcements directly to Deputy’s newsfeed.
If you’re working on a large project with multiple independent contractors, a robust project management software like Zoho Projects is the tool for you.
Zoho Projects is a cloud-based project management software that helps you plan your projects, track work efficiently, and collaborate with your team from anywhere. You can use Gantt charts to build your project plan and track your task schedule, allocating tasks to contractors as you need.
Where Zoho Projects stands out the most is that you’ll have the capability to share all kinds of files, collaborate over documents and spreadsheets, and build beautiful presentations together. A software like this will make your life working with independent contractors a dream.
3 Tricks for Hiring an Independent Contractor
Getting started with an independent contractor is relatively straightforward. But when you are ready to find the right contractor, here are a few things you can keep in mind to help you along the way.
Enlist an Integrated HR Software
Enlisting an integrated HR or project management software is vital in ensuring you and your independent contractors are on the same page. Which one you choose will depend entirely on the nature of your business.
If you already utilize HR or project management software, look into ways it can assist you in building a relationship with an independent contractor. Key features you’ll need include scheduling tools, documentation and file-sharing capabilities, and performance management tools.
The objective of enlisting an integrated software is to make your relationship easy by keeping lines of communication open, regardless of project size.
Just because you need to hire an independent contractor quickly doesn’t mean you should rush the hiring process. At the end of the day, independent contractors are self-employed, which means there is not always an existing reputation to support their skillset.
Take the time to source the best contractor for the job by interviewing them, checking or testimonials, and looking over previous work. You could even contact previous companies they’ve worked with to ensure they live up to their reputation. Ensure all your boxes are ticked regarding skills, experience, attitude, and ability before proceeding.
Doing your due diligence here will ensure that you avoid hiring the wrong person for the job. The wrong contractor could result in a waste of all the money you’ve saved on overheads when you need to hire another contractor to fix the previous person’s work.
Get Everything in Writing
Just as you have a contract with all your full-time employees, it’s vital to have a contract in place with each of your independent contractors.
It doesn’t have to be as all-encompassing as an employment contract. But it should outline the key elements of your relationship, such as:
- The expected duration of the contract/project/work
- The schedule to which the contractor should adhere to
- The compensation provided and when it is expected (i.e., after the job is done, weekly, monthly, at specific milestones/intervals, etc.)
- The nature of the role and expected tasks to be performed
You could also include a get-out clause in case the contractor is not performing to the expected standard, but this is not always necessary.
In a nutshell, getting everything in writing aims to demonstrate the validity of your relationship and protect both parties in the case of any legal disputes surrounding the work.
What to Do Next
Working with independent contractors allows you to find the best person for the job, save time on the hiring process, lower company overheads, and provides greater organizational flexibility. And once you connect with one great contractor, you’ll find the door to a myriad of other experts will open to you.
In the process of working with your first contractor, it’s important to hire carefully and put your agreement in writing. You can even take it a step further by initiating a background check on the independent contractor before doing business with them. If you’re interested in enlisting this type of process, check out our list of best background check companies to get you started in the right direction.
If you’re hiring multiple independent contractors to work on large projects, it’s vital to have the right collaboration and communication software in place to help you manage your team. One of the best software out there for this is Zoho Projects. But if you’d like to explore alternative options, we put together a list of our top recommendations of best project management software to assist your research.