HINTS ON HIRING

Now we'll look at more about hiring the "Right" person.

When the business expands and you need the help of other workers, there is the choice of hiring people to work directly for you or going to an independent contractor. Know the difference between the two before hiring. Read Temps and contract labor swelling in the work force as insight into the difference.

The IRS gives guidelines to classify workers that must be followed when hiring. The guidelines spell out the difference between an employee and an independent contractor. How do you tell the difference in the two? An employee of a business is told how to do the work; the business controls procedure. An independent contractor controls only the results of the work; the business does not control procedure.

A simplistic example - the office needs to be painted:
 

The employee will use supplies purchased by the business. He will be told when to paint. He will be told what kind of paint to use and what to paint first.

The independent contractor will tell the business owner what hour to expect him in the morning. He will buy the supplies needed as part of the bid for the job. He will probably use the type of paint he can buy at wholesale and will hire workers to help expedite the job.

When hiring an employee, the business owner pay Social Security taxes, reports and deposit taxes withheld and keeps track of all in a set of records. An independent contractor keeps track of all of this. You usually pay the contractor an agreed upon lump sum. This means less bookkeeping and paperwork for you. Another determinination is whether you need part-time or full-time help. Read "Part-time work: solution or trap?" to get one side of the story.

A disadvantage of using an independent contractor is the construction of your product is completely out of your hands.

There is other risk involved. When an IRS audit determines that the classification was not made correctly, your business could be liable for unpaid taxes, interest and penalties. The bottom line is to read or get advice about the classification issue.

Practice having employees by hiring part-timers initially. This might sound ridiculous, but working with employees does take an expertise that not everyone has. A part-time position is also easier to pay as they don't expect as many benefits and your costs will be lower.
 

 Employer, interviewing prospective secretary:
 "How's your spelling? Let me hear you spell Mississippi."
 Secretary: "The river or the state?"
 

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