Whom Should You Hire: A Contractor or a Full-Time Employee?

Whom should you hire?

When you find yourself overwhelmed with projects for your company, you may begin to consider hiring additional staff members. After all, making sure your team can handle the work is crucial if you are to meet deadlines and please clients with quality results. However, don’t be hasty in hiring a slew of full-time employees when the work may dry up tomorrow. Instead, consider hiring some contractors who can be kept on hand as the work ebbs and flows.

To determine whether full-time employees or temporary contractors would better suit your business needs, ask yourself these questions:

Will the work last?

If you’re working on a project that will involve an impressive workload for the next year or more, then it’s worth it to hire at least one more full-time employee. On the other hand, just because you have some more projects than usual this time of year doesn’t mean the work will last. You may end up going through the hassle of interviewing, training, and collecting paperwork for a new full-time worker, only to run out of work for him to do. To avoid wasting time and money on employees you don’t need, make sure the new work will be long-term.

Can you afford to pay for a full-time employee?

Contractors tend to have higher hourly rates than full-time workers for one reason: They don’t get the same benefits. Consider what you usually have to provide for staff members:
• Paid vacation
• Sick leave
• Health and life insurance
• 401(k) matching
• Workers’ compensation

Plus, you typically have to pay a portion of Medicare, Social Security, and unemployment taxes for each full-time staff member, Rhonda Abrams wrote in her USA Today article, “Should You Hire an Employee or Independent Contractor?”¹
Before you decide whether an employee or contractor would better fit your budget, add the benefit and tax costs to the salary you’d pay an employee, then compare the total to the simple hourly rate you’d pay a contractor.

Do you need help with a specialized project?

You may have no more work than usual, but you realize that your employees cannot handle the projects at hand. If you need some specialized skills for your current workload but do not foresee a long-term need for the specialized knowledge, you may benefit from hiring a contractor. For example, OPEN Forum writer Thursday Bram recommends hiring a contractor when you need a new website, because you’d likely only need a new site design once in the next few years. She sums up the matter by writing, “Contractors are generally one of the best options when you need a specialized skill set on a short-term basis.”²

Add the Overall Costs

Because contractors usually have higher hourly rates than full-time employees, you may benefit more from hiring a full-time employee if you need someone 40 hours per week. On the other hand, if you only need help around 20 hours per week, then a contractor is your best bet. If you end up needing more of the contractor’s time in the future, you can always find out if he is open to the idea of becoming full-time eventually. This can benefit both of you, offering some job stability and health insurance to your new employee, and saving you from paying the high hourly rates of the typical contractor.

For more information, visit:

1. “Should You Hire an Employee or Independent Contractor?
2. “Temps, VAs, Contractors, and Employees: Who Should You Hire?

The Small Business Authority cannot and does not give legal or tax advice and nothing contained in this article should be construed as such. Before taking any actions based on this or any other article published by The Small Business Authority, we strongly advise you to consult with an attorney and/or your tax professional.

3 thoughts on “Whom Should You Hire: A Contractor or a Full-Time Employee?

  1. If you are commissioned only and you are an emypolee, not an independent contractor, then you have to get paid at least minimum wage. Usually the way companies do this is by paying you a draw against your commissions. If your commissions do not cover the draw, you still keep the draw money to satisfy the minimum wage requirement.

  2. This is my first visit to your blog! We are a collection of volunteers and starting a new project in a community in the same niche. Your blog provided us valuable information to work on.

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