Independent Contractor vs Employee: Everything You Need to Know - The Abundance Group

Independent Contractor vs Employee: Everything You Need to Know

You’ve built an amazing business and you’re ready to hire! But…who do you hire? Do you hire an independent contractor or an employee of your company? What’s the difference? Is an independent contractor better than an employee or vis versa? Does it matter? Oh the questions how they just keep coming!! Let’s dive in to discuss everything you need to know about hiring an independent contractor and an employee so that you can make the best decision for your business without the feeling of overwhelm. 

Schedules and Working Availability of Independent Contractors and Employees

A huge difference when determining the best fit for you is schedules. Independent contractors have their own business, so you aren’t able to have the same control with them in the way that you could as an employee. They set their own schedule which means they determine when and where they are working which means they might be working different hours than you and that their hours may vary drastically from day to day. Most of the time, this is a non-issue but it can be challenging if you have time specific tasks that don’t fit their schedule in the same way you’d prefer or if you’d like them to be available when you plan to work. 

Employees on the other hand have set office hours. This makes for a predictable schedule that is easy to reach them at. Some employees may even report to work in person or work in a hybrid format whereas many independent contractors can and do work remotely. 

Outsourcing vs. Insourcing When Hiring

This is where things can get a bit messy (or not) with contractors. Independent contractors are able to hire or outsource their own assistants/subcontractors for work at their own discretion. In many cases this can work quite well as independent contractors can outsource individuals with an expertise in a specific area but you are not always aware of who may be completing the tasks you have assigned. As long as you have great faith in your hire and you are verifying the work being completed, this can be a great asset to your team. Not everyone feels the same, however, so it is important to lean into what is best for your workflow. 

Employees are responsible solely for the work that you assign. This makes it easy to provide feedback and allows for smooth communication when completing that particular task. However, if the task is not in their wheelhouse, it may not be completed to the caliber of a contractor who has a speciality in that specific area. This may be cause for additional training to occur– again, not a bad thing but certainly something to consider! 

Contractual Obligations of Contractors vs. At Will of Employees

We hate to think about firing someone but we know it can happen. Employees can be hired and fired at will. With contractors, there are contractual obligations that must be upheld, usually being at least a 30 day notice before parting ways. These are agreed upon at the start of a working relationship. If you are running a strong team and keeping in constant communication, this shouldn’t be an issue but definitely worth noting! 

The Onboarding Process for Independent Contractors and Employees

Employees are usually trained by you through onboarding which can cost you time and money. You are often working with them to expand their skill set. This is an investment you have to be willing to make but one that you will greatly benefit from as your employee grows within your business. Independent contractors have already completed their own education and grown their skill set. Unless you’re wanting to teach them a specific SOP within your business, 9 times out of 10, they already know how to do it. This saves you time and money while allowing them to begin diving into your work right away. 

Start Up Costs for Materials for Employees

When it comes to employees, you’re providing the equipment, software, or materials needed to complete the necessary work. This will cost you money at the start and potentially be cause for additional training. Independent contractors will have their own equipment and own all of the necessary tools/software to begin working right away. 

Independent Contractor vs Employee: A Recap

Ok, so let’s recap a bit here, shall we? There is SO much to consider so let’s break it down to the basics. A recap if you will that allows us to review the many differences between independent contractors and employees.

  • Employees have set office hours that they work. Independent contractors don’t or may not, and they can work on their own schedule.
  • Employees can work remotely, but they’re usually local and work in person. Independent contractors can (and usually do) work remotely.
  • Independent contractors are able to hire or outsource their own assistants/subcontractors for work at their discretion.
  • Employees can be hired and fired at will. There are contractual obligations that must be upheld with independent contractors, usually being at least a 30 day notice before parting ways.
  • Employees are usually trained and you’re working with them to expand their skill set. Independent contractors have already done their own education and grown their skill set. Unless you’re wanting to teach them how you specifically like something done in your business, 9 times out of 10, they already know how to do it.
  • You’re providing the equipment, software, or materials for the employee. Independent contractors will have their own. (For example, when outsourcing a contractor for graphic design, they already have the design software. Or when working a wedding, independent contractors will likely bring their own stuff.)

What is the best fit for you and your business?

There truly isn’t a correct answer or a “one size fits all” approach here! Every business is different and what works really well for one may not work as well for another. You have to make a decision based upon your needs and goals. It isn’t required to go all one way either! You are in charge of your business which means you could have some employees AND some independent contractors. The choice is truly yours so go with what works best for you as you build your team! 

Bonus Training to Support Your Independent Contractors and Employees

Here at The Abundance Group, we lead a 12 week intensive that is done with you that focuses on helping you build your team. We have live coaching and a community of others walking through the same things as you so that you never feel alone as you take this next step for your business. Within the course, we offer bonus training content that can really help you with your hiring process. This includes access to The Complete Guide to Hiring, legal advice from our very own legal representative, and templates for hiring both independent contractors and employees. Gain everything you need from how to post a job, to vetting candidates, to writing offer letters (and rejections), to hiring and officially onboarding. We’ve got you covered!! Learn more about our intensive here! We can’t wait to support your team growth! 

Still on the fence with Hiring a Team?

See if building a team is the right fit for you! Check out our blog post to feel confident in your next steps! You can always DM us– we genuinely love talking about your goals and helping you out– for free! Seriously, it’s what we do! 

STILL HAVE QUESTIONS?

We know that there is a lot to sift through when determining what is best as you are building your team! If you are finding yourself with more questions than answers, please reach out to The Abundance Group! You can find us on Instagram @theabundancegroup

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