independent contractor vs employee pros and cons

Instead of restricting your candidate search to your city or region, you can find and onboard the right person for the role anywhere in the world. All together, these expenses can easily increase your payroll costs by 20% to 30% — or more. Click here for a demo call of Factorial to find out how HR Software can speed up your HR processes. Set limits, turn tracked time into automated timesheets, and send invoices with Hubstaff.

Tax & Accounting

QuickBooks Payroll calculates, files and pays all federal and state payroll taxes for your employees and contractors, and there’s free tax filing for one state. You’ll need to pay $12 for each additional state, except on the QuickBooks Payroll Elite plan, which includes free multitax state and federal tax filing. Note that while you aren’t required to offer benefits to contractors, a growing number of companies independent contractor vs employee pros and cons are doing so. Many contractors now expect certain benefits, such as paid time off and health insurance, as standard. However, it’s essential to remain compliant when offering benefits to contractors and ensure you avoid a misclassification risk. As previously mentioned, independent contractors generally enjoy a higher level of freedom in terms of working hours, work methods, and many other aspects of work.

Pros of Hiring Independent Contractors vs. Employees

Companies must identify which workers are employees and independent contractors for the IRS, primarily for tax reasons. Consider the following differences before working as—or hiring—independent contractors and employees. On the other hand, you have few reporting or tax responsibilities for independent contractors.

independent contractor vs employee pros and cons

QuickBooks integrates nicely with other QuickBooks products, automating all necessary processes for payroll. QuickBooks Payroll is also easy to use, with its live expert guidance, expert review and support, 24/7 chat service and robust knowledge database, making it easy to navigate, even for first-time users. Furthermore, contractors have less loyalty toward the companies they work for because they’re always on the lookout for the most lucrative projects.

Working for a large company vs small company: pros and cons

Usually, hiring a local employee is relatively straightforward from a tax and legal perspective. Allowing contractors to use their own equipment is safer from a legal standpoint but poses other threats, such as security and data protection. Also, some countries might assign intellectual property (IP) ownership of the produced work to the device owner. While some companies require contractors to use company equipment (usually for security purposes), this can create a significant misclassification risk. Independent contractors are free to set their own rates, based usually on their location and the industry.

Agregar un comentario

Tu dirección de correo electrónico no será publicada. Los campos requeridos están marcados *