Advantages and disadvantages of hiring employees or using independent contractors

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Many small-business owners believe that bringing family members and close friends into their company will create an especially harmonious group of employees. Doing so offers specific advantages, but also smooth operations of the company may be compromised. Some small business owners use both employees and contractors depending on the nature of the work and preference. Hiring independent contractors, helps avoid high cost of providing employee benefits and paying workers’ compensation, unemployment premiums, and federal payroll taxes. Contractors usually provide all equipment necessary to perform their work, work only occasionally for a client, work for many clients at a time, and have a separate place of business. Contractors are usually hired on a project-to-project basis and only have to pay them for hours worked. There are no overhead expenses as they work for as-needed basis (NC Journal for Women, 2003). Loyalty, dependability and quality of work from contractors can are debatable issues. The major disadvantage for hiring contractor is that they might be buys working on another client’s project when you need them. The contractors are flexible and that could be an advantage or disadvantage to the client. The advantages of working with employees are numerous. Having a dependable, capable and knowledgeable person in your office on a daily basis can be an asset. For some, just the benefit of knowing the phones will not go without being answered is worth having a full-time employee. Full-time employees also are able to respond to projects that require same-day turnaround (NC Journal of Women, 2003). The disadvantage of hiring employees is with having a constant cash flow for payroll on a timely basis. For a company that is a service oriented, employees are the biggest cost. Payroll has to be processed whether there is business or not, the company is busy

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