Independent contractors are self-employed workers engaged by a principal to perform specific task. According to the general rule “an individual is an independent contractor if his or her employer has the right to control the results of the work but not the means and methods of accomplishing it”. (Megerdomian, n.d.) Consultants, freelancers, entrepreneurs and business owners are other terms that could be used to describe an independent contractor.
Independent contractors and employees are two different employment approaches used by businesses. Just because a person is hired to perform a task does not mean that he/she is an employee for that business. Both workers and employers are required to know the distinction between the two terms. Being …show more content…
Although hiring independent contractors require higher pay per hour for a job, overall the employers are more likely to save money by doing so. Because when businesses hire them, they may not be eligible for benefits such as health insurance or paid for taking time off work, they are not provided coverage by worker’s compensation insurance, and they will be responsible for submitting their own income taxes. In addition it also lowers costs for the employers such as the administrative costs since payroll taxes, Canada Pension Plan and Employment Insurance do not have to be withheld or remitted. Whereas, when employers hire an employee, there are various expenses that come along with hiring an employee including the cost of employer contributed benefits, office space and equipment. You will also have to make required payments and contributions on behalf of your employees. These payments can lead to an increase your payroll costs by 20% to 30% or more in comparison. Another important advantage that employers would have is flexibility in the hiring process with independent contractors. For instance, when an employer hires an independent contractor and his work isn’t a good match to what you expected, you can simply not work with them again. Whereas, if a similar case occurs with an employee it would not be an easy task for the employers to fire them for such reason. You can hire the right person for the task needed, contracting someone with a specialized service. They often have many years of experience, so you don’t need to train them. They are responsible for their own permits and professional
Independent contractors and employees are two different employment approaches used by businesses. Just because a person is hired to perform a task does not mean that he/she is an employee for that business. Both workers and employers are required to know the distinction between the two terms. Being …show more content…
Although hiring independent contractors require higher pay per hour for a job, overall the employers are more likely to save money by doing so. Because when businesses hire them, they may not be eligible for benefits such as health insurance or paid for taking time off work, they are not provided coverage by worker’s compensation insurance, and they will be responsible for submitting their own income taxes. In addition it also lowers costs for the employers such as the administrative costs since payroll taxes, Canada Pension Plan and Employment Insurance do not have to be withheld or remitted. Whereas, when employers hire an employee, there are various expenses that come along with hiring an employee including the cost of employer contributed benefits, office space and equipment. You will also have to make required payments and contributions on behalf of your employees. These payments can lead to an increase your payroll costs by 20% to 30% or more in comparison. Another important advantage that employers would have is flexibility in the hiring process with independent contractors. For instance, when an employer hires an independent contractor and his work isn’t a good match to what you expected, you can simply not work with them again. Whereas, if a similar case occurs with an employee it would not be an easy task for the employers to fire them for such reason. You can hire the right person for the task needed, contracting someone with a specialized service. They often have many years of experience, so you don’t need to train them. They are responsible for their own permits and professional