A Business Consultant’s Advice on Hiring Full-Time Employees vs. Contract Workers

Business Consultant

Many small business owners struggle with the decision whether to contract a business consultant or to hire a full-time employee. There are pros and cons of each decision, so let’s review them below:

Pros of hiring contract workers:

  1. Hiring a consultant or contractor avoids the headaches of complex tax and benefits tracking. In addition, if you can find a 1099 employee, you can avoid paying employer payroll taxes such as FICA, Federal Unemployment Insurance as well as State Unemployment Insurance. Be sure to issue these employees 1099’s for the payment of services at year-end.
  2. Outsourced roles are often much more affordable than hiring a full-time team member. If your business needs specific expertise (finance, marketing or legal) but cannot afford a full-time, experienced person, many experts in the later stages of their career are willing to contract out their services at a lower rate.
  3. A business consultant can provide business owners with maximum flexibility for many unique situations. When the workload is unpredictable week to week or you need assistance on a per-project basis, there’s no need to worry about providing a steady flow of work with a contractor.
  4. Part-time help can provide much-needed relief for small business owners, helping them remain focused on the customer. Small business owners are passionate about what they do, but that doesn’t mean that they should be laboring over the books at midnight or trying to answer non-urgent calls that could be handled by someone else.

Potential cons of choosing contract workers:

  1. Keeping part-time, contract-based workers engaged in their work can be difficult. If they are not a connected part of the company culture, they can sometimes become disconnected from your vision for the future.
  2. Finding a capable business consultant can be tricky. Usually, the best employees are seeking permanent employment, so only offering contract work may shrink your talent pool.
  3. Contract workers often lack company-specific knowledge or product knowledge. This can translate into an un-tailored, less impactful work product or under-whelming customer experience.
  4. Business consultant relationships are usually short-term. Given this situation, the owner can be in a position of constantly training someone on their products and spending a significant amount of time searching for the right relationship.

As discussed above, there are benefits and cons to hiring a consultant over an employee. Small business owners should weigh these carefully, remaining conscious of their unique culture, business goals, and even personal needs. Ultimately, your decision will be unique to the situation and should include research and exploration. If you’re ready to start exploring the most cost-centric hiring practices for your business, request a meeting from ChoiceFinance for some powerful business insights.