Everything You Need to Know About Hiring Independent Contractors
The rise of the gig economy has changed how job-seekers look for new roles. Many prefer the ease and flexibility of being self-employed as an independent contractor. At the other end, there are benefits for companies hiring contractors. You may want to widen your talent pool, search for specialized skills, or outsource non-central tasks.
Whatever your reason, we’ll help you navigate through hiring contractors. We’ll go over what an independent contractor is, the benefits, and key differences from an employee.
What are Independent Contractors?
“Someone that performs services for another person or business as a non-employee.”
As the name implies, an independent contractor contracts out to you or your business. They are self-employed, so your company doesn’t technically employ them.
Why Hire Independent Contractors?
Hiring independent contractors can be beneficial for businesses for many reasons. Whether you only need an employee for a project or are looking for a specialized skillset. Here are some of the reasons to consider hiring contractors:
More flexibility in your staffing
You can hire an independent contractor instead of a permanent, full-time employee. Once a contract is complete, you can hire them for another or make no further offers. If it wasn’t a good fit or there are no more tasks for them to do, you have no commitments to re-hire them.
Outsource non-central tasks
You can hire independent contractors for tasks that aren’t central to your business. This is great if you want staff to focus on other areas of their job. For example, if you’re a small tech company that needs a cleaner, you might want to hire an independent contractor.
Access to specific skillsets
Independent contractors often have dedicated skillsets to a certain job or industry. If you need someone with specific expertise that your staff doesn’t have, you may find those skills in a contractor. An example could be bookkeeping for an afternoon every quarter.
Widen your talent pool
Some professionals are only interested in independent contracting. You will gain access to a wider talent pool by opening up your candidate search to them. This will increase your chances of finding the right fit for your job.
Save costs
There are certain costs that you can save when hiring independent contractors. The wages for contract jobs are often higher, but you cut down on other overhead costs. Since you aren’t responsible for employment taxes or benefits, you save money (more on this below).
Differences Between Independent Contractors and Employees
The key differences when hiring independent contractors are onboarding, managing, and paying them.
Onboarding Independent Contractors
Independent contractors generally focus on a specific task, whereas employees are more versatile. So, contractors only need training related to their job functions. Whereas employees may get more extensive training in all business areas and processes.
When onboarding independent contractors, don’t put them in the same training group as everyone else. Instead, provide them with specific knowledge that they need to complete their role and let them get started quicker. Before they start, list everything they need to know, so you are prepared when they arrive.
Managing Independent Contractors
Contracts for independent contractors usually center around the tasks and not how they complete them. This will depend on your specific agreement. When contracting someone for a project, they may be able to do it on their time, however they want. But, if you schedule them with a start or end time at your location, they must come in during those times.
For example, if you need an Order Picker to assist customers and pull orders, you can schedule them during your open hours. They couldn’t come earlier or later, since you’re not operating and there’d be nothing for them to do.
Paying Independent Contractors
One of the largest differences with hiring contractors is how you pay them. Independent contractors are not on your company’s regular payroll. They are responsible for their taxes and deductions. You do not have to make CPP and EI contributions on their behalf.
Independent contractors will not receive benefits from your company either. This includes health and dental insurance, vacation time, etc. This will save your business money, with fewer overhead costs.
How to Hire Independent Contractors
Make sure whether you hire someone as an independent contractor or employee, that their status is clear. It’s important that they understand their contract and what it means. The CRA needs to be clear about the nature of employment since there are differences in taxes. This will prevent your company from being liable for unpaid taxes or other issues.
You can easily hire contractors through AmbiMi’s on-demand staffing app. All professionals through our app are currently independent contractors. Just post a job, and you can hire them through our mobile app! We will be adding a payroll option in the near future, giving you the most choice and flexibility!