Contract Employees Vs Regular Employees

So it is contract employees vs regular employees. What is the best option? There always is plenty of debate on the subject. The best way is to compare the benefits of hiring contract employees Vs regular employees.

There is this theory that contract employees are not loyal or considerate of organizational goals but reality contract employees work far more professionally and deliver quality work because it is their work and their reputation related with it that enables them get more work. Regular - on board - employees can be a bit laid back because they know for sure that there check would be ready for them at the month end.

Contract workers receive no benefits where as regular employees have plenty. Contract workers gets no workman's compensation, no unemployment insurance, no medical /dental/life insurance, no paid vacation, no sick time, no 401 matching. In the benefits department in the race between contract workers Vs regular employees, contract employees lose big time.

If one hires contract labour, he or she needs to issue a 1099. For contract employee one doesn't need to pay employment taxes and for on board employees one needs to pay them. Contract workers cannot sue the employers but regular can sue the employers for unfair labor practices or discrimination.

The contract employees vs regular employees debate continues with the theory that contract workers are not loyal or considerate of organizational goals but in reality contract workers are far more professionally and deliver quality work because it is their work and their reputation related with it that enables them get more work. Regular - on board - employees can be a bit laid back because they know for sure that there check would be ready for them at the month end.

In tax department too when it is contract vs regular worker, contract employee shells out more on taxes. As a labour on contract one needs to pay both the employee and employer portion of the Medicare taxes and social security. As a regular employee one needs to pay just the employee portion of the Medicare taxes and social security.

The rate of hiring an employee via contract esp. in the IT sector is too high compared to the regular employees. Using outside resource and manpower for a short term project by hiring on contract sometimes makes more sense than adding more staff and investing in resources which may not be used regularly after the concerned project is over.

There is greater flexibility in hiring via contract. With one phone call you can have a team of skilled employees working for you on a project and if not satisfied you can send them home with another phone call, and have another team on your doorstep with third phone call. Instead if you add additional staff as regular employees and if the work is unsatisfactory you will have difficulty in sending them home. So for employers this flexibility factor in the debate of contract employee vs regular employee makes more sense. It ultimately depends on the need and specific requirement and both contract employees and regular employees have their own pluses and minuses, that need to be considered before opting for one

Ryan Fyfe is the CEO of http://www.shiftplanning.com/ - An intuitive and free online employee scheduling tool for businesses of all sizes in all industries.

Paying an Employee or Contract Laborer: Understanding the Differences

As a business owner with a growing business, you quickly realize that you can't possibly do everything that needs to be done. As a result you may want to hire some help. There are two ways to compensate someone who does work for you: either as an employee or as an independent contractor.

So what is the difference between the two? First, if you choose to higher someone as an employee, you have to pay half of their Social Security and Medicare tax, pay unemployment insurance on them, file quarterlies, and send them a W-2 at the end of the year. This can be costly and time consuming for a business owner who is striving to build a business.

As a result, a lot of business owners choose to pay people as independent contractors. This eliminates having to pay half of the Social Security and Medicare tax, the unemployment insurance, and filing quarterly taxes. The business owner still needs to generate a 1099 form at the end of the year and give that to the independent contractor, but the costs are considerably less.

The IRS watches very closely how you choose to compensate people for the work they do for you. The IRS has come up with specific criteria for determining whether a person is an employee or independent contractor. If you don't follow the specific criteria then a worker can be considered an employee and you could find yourself paying back Social Security and Medicare tax and unemployment insurance. With that can bring large penalties and interest.

So how do you decide which is the best way to compensate your workers? That is entirely up to you, but the most important thing to do is to make sure you are following the rules for paying employees and independent contractors correctly. Click the links below for an instructional CD set that will teach you everything you need to know to make sure you are following these rules.

Matthew P. Anderson is the Web Administrator for Soulence Tax and Accounting.

Go to http://www.avoidbeingaudited.com to make sure you are paying your employees and independent contractors correctly. And to learn more about how to save thousands on your taxes without worrying about being audited.

To learn how to find financial peace of mind using the services Soulence Tax and Accounting provides, visit their website: http://soulence.com/