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Advantages and Disadvantages of Independent Contractors

Date: 11/06/2006 | Category: Business | Author: Diana Heeb Bivona

From time to time, every business must consider the costs of outsourcing a particular project with those of hiring additional staff. As with all things, there are advantages and disadvantages to consider in utilizing an independent contractor (IC).

Typically, you will save money in hiring an IC. Even though on an hourly basis, you may end of paying an IC a higher rate than an employee, it is usually less after you factor in an employee’s fringe benefits and other expenses.

You maintain more flexibility and enjoy more efficiency.  ICs allow employers greater wiggle room in hiring and letting go workers. This can be particularly important if you have a fluctuating work load. Additionally, ICs can bring specialized skills to a project that an employee may not have.

On the flip side, you have less control over the IC. You define the job and what you want, but the IC will determine how it gets done. Interfere too much with that process and you run the risk of having the IRS define the relationship as one of employee instead of IC.

You do not have the ability to terminate at will. How and when you can terminate an IC usually will be determined by a written contract. If you fire an IC in violation of the agreement, you could be liable for damages.

There are several other advantages and disadvantages that should be considered. Forbes.com provides food for thought on this subject in their article, Pros And Cons Of Hiring Independent Contractors. You can access the article by clicking here.

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