Hire an Employee or Contractor?

Independent contractors and employees are not the same. It's important to well understand the difference for successfully operating your business. From the legal perspective it is important to understand the difference to to avoid distasteful legal caveats.

How Employees and Independent Contractors differ?

An Employee:

  • Performs duties given by business owner 
  • Is given work to be done
  • Works solely for single employer
  • Does not have it's own working place and working tools

An Independent Contractor:

  • May bear risks as operates under agreement
  • Works under own business name
  • Controls own employees
  • Has US-based business checking account
  • Invoices for work completed
  • Has portfolio with more than one customer
  • Has own working too  
  • Keeps it's business records

Many successfull businesses rely on independent contractors for their hiring needs. There are many benefits to using contractors over hiring employees:

  • Savings in labor costs
  • Reduced business owner's liability
  • Flexibility in hiring and firing
  • Shifting the risks to contractors

Source: US Small Business Admistration