Interns, Employees and Independent Contractors

As your small business grows, you may begin to seek help with administrative tasks, marketing execution and even financial management.   There are many routes that you can take to find help and each comes with a set of pros and cons.  Listed below are the three most common and a few advantages and disadvantages to consider.  Remember, every business is different and you have to make the best decision for your business type while keeping your budget in mind.

Interns

Many business owners want to hire interns because they assume that they will work for free.  This is not always the case.  Despite the decline in the job market, many interns are still not willing to work for free.  Some employers have become crafty and devised a means to make the relationship mutually beneficial (as if job experience isn’t enough).  When seeking an intern, you must realize that many times, these individuals are interning because they have little to no experience in their field and are using you and your organization as a test drive.  It will be very difficult to find someone with experience that will also be willing to work for little or no pay.

Pros

  • fresh ideas
  • will generally work at no cost or for a small salary
  • usually eager to learn about industry

Cons

  • may not have very much experience
  • may not leave for a better offer
  • may have a limited availability

Employees

Taking on an employee is a huge responsibility.  Not only are you responsible for training them and making sure they are doing their job, you are also financially responsible for ensuring their payroll expenses are paid on a regular basis.  Take a close look at your budget and assess how much you are willing and able to pay before creating your job description.  Most people expect to be compensated based on the amount of work and responsibility that is required for the position.  Don’t create a long list of tasks and attempt to pay the minimum salary because it will be unlikely that you will fill the position with a qualified individual.

Pros

  • can be full-time or part-time
  • will typically be dedicated to your company during their work hours
  • should require minimal training, dependent on the position

Cons

  • required to pay taxes and other payroll expenses
  • can be difficult to terminate depending on employment laws in your state
  • must be able to consistently pay their payroll expenses (salary, taxes, benefits, etc)

Independent Contractors

Outsourcing projects can be extremely advantageous for small businesses because an independent contractor is usually knowledgable in their industry, able to work independently and will complete your project in a timely manner.  However, you must be careful about the employees that you hire as “independent contractors”.  The IRS has specific guidelines about what constitutes an IC versus an employee.  You can not hire someone as an IC if it is a position that would generally be filled by an employee.  What does that mean?  You can’t call someone an IC just to avoid paying their payroll expense.

Pros

  • usually professionals in their field, should not require any training
  • not responsible for taxes or expenses
  • project oriented

Cons

  • will also be working on other projects so you may not be their priority
  • generally will have a contractual obligation to work on a specific issue or project
  • rate may be higher than you would pay an employee

Please share your experiences with hiring these types of professionals or working in one of these capacities.

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