How Hiring an Independent Contractor Saves You Money

Whether you’re a startup business just getting your feet wet with low resources and capital or an established business that is 10 years deep into your journey, hiring an independent contractor could be the best move for your business.

Everyone seems to be so quick to hire someone to fill a position, but that can come with a whole host of problems and headaches — not to mention added strain on your finances since you’ll need to pay for an actual employee.

A common saying when it comes to hiring employees is that you should be slow to hire and quick to fire. The same can be said for hiring an independent contractor, the only difference is that they don’t directly work for the business, which provides a bunch of benefits.

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In this article, we will look at some of the many benefits associated with hiring an independent contractor. As a placeholder, we are going to use the example that you’re in need of someone who can write copy for your business to help convert sales as well as create content to build your SEO and website traffic.

What is an Independent Contractor?

To kick things off, let’s get a better understanding of what an independent contractor is and how your business can utilize them.

By definition (according to the IRS), an independent contractor is:

“People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. If you are an independent contractor, then you are self-employed. The earnings of a person who is working as an independent contractor are subject to self-employment tax.”

If you were to break that down into simpler terms, an independent contractor is more easily defined by Wikipedia as:

“An independent contractor is a person, business, or corporation that provides goods or services under a written contract or a verbal agreement. Unlike employees, independent contractors do not work regularly for an employer but work as required.”

The Benefits of Hiring an Independent Contractor

As mentioned above, there are several reasons you may want to consider hiring an independent contractor.

Below, we will take a deeper dive into the benefits to provide you with some examples as to why this may be the best move for your business as well as how it can help you save money in the long run.

1. Independent contractors are highly skilled at what they do

One thing that many businesses dread is hiring someone and then finding out they just aren’t going to cut it and then having to make the tough decision to let them go as quickly as they were hired. When hiring an independent contractor, they possess the skills already and therefore can jump directly into a project without needing to be trained on how to do their “job.”

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The main reason someone becomes an independent contractor is because they are one of the best at what they do. For instance, you can hire a marketing team but not have a single employee who knows how to write copy or content. Therefore, it would be wise to look to hire an independent contractor who can do the job as projects arise.

2. Overall cost tends to be lower when hiring an independent contractor

Piggybacking off of the copywriting and content writing example from above is the overall cost and the ability to save money. Hiring an independent contractor allows you to only pay for what you need. With employees, you pay them regardless of if you have work and projects for them or not. Additionally, do you think your employee is productive all day long? How about those bathroom breaks, watercooler conversations, and aimless internet searches while the boss isn’t around?

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One study found that the average employee actually “works” less than three hours during their eight-hour workday.

When hiring an independent contractor, you only pay for the completed project, whether it takes the contractor a day, a week, or a month to complete the task. A business can also save money by not needing to pay all the employee taxes, benefits, etc., which will be touched on shortly.

3. Access to independent contractors around the world

How many times have you been recommended an employee, but they live out of state or even in another country, and they’ll only come work for you if you pay for their moving expenses as well as a higher salary than they currently have? Not exactly feasible, right?

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If you go the route of hiring an independent contractor, you can hire anyone (hopefully the highest qualified) from around the world to work with you and complete projects. This allows you to vet the best candidate that you need and work with them even if they are thousands of miles away.

4. You don’t need to pay the independent contractor’s taxes, unemployment, etc.

While a salary of an employee or multiple employees can add up quickly, one thing to take into consideration is all the additional taxes that you need to pay for employees. FICA taxes, federal income tax, and more. That’s not even taking into account any additional costs for benefits that you’re providing employees with (more on this in the next section).

Hiring an independent contractor eliminates all these costs. The independent contractor is responsible for paying their own taxes and is not the responsibility of the business, which can save your business money.

5. You don’t need to provide benefits, paid time off, 401K, etc., to independent contractors

One of the biggest selling points of having someone come work for your business are the benefits. How much paid time off are you giving your employees? Are you offering a 401K program where you do any sort of matching? Do you provide healthcare, dental, and/or vision care? If so, those are all additional costs that you incur with each employee.

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A benefit of hiring an independent contractor is that you don’t need to pay any of those things to the independent contractor since they are not an employee of your business. Any benefits, 401K, etc., is the responsibility of the independent contractor and not of your business.

6. You don’t need to pay for work-related expenses (unless you want to)

With employees, you need to supply them with a workspace, computer/laptop/tablet, pens, paper, access to a printer, a desk and chair, and the list goes on and on. It may not seem like a lot but keep adding up all those costs over time. Not only that, but if you have 10 employees, multiply those expenses by 10, and you may be shocked at the number shown on your calculator.

Unless (for whatever reason) you decide to pay for work-related expenses when hiring an independent contractor, there is no need to do so. Those expenses are part of the costs and expenses incurred by the actual independent contractor and not your business. This can save you money in the long haul.

7. There’s no need to train an independent contractor

Independent contractors are highly skilled and do not need any sort of training. When hiring employees, some businesses will train the new hire, which can cost a considerable amount of money as well as taking up valuable time that the employee could already be using to work and complete tasks and projects.

Hiring an independent contractor takes the training aspect completely out of the equation. You can send a project to an independent contractor (such as a copywriter), give them the details of the project and the requirements, and let them go do what they do best. When complete, they’ll send you the deliverables, and everyone is happy, and there’s less stress wondering if your new hire can complete the job according to how they were trained.

8. Ending the working relationship is much easier

One of the hardest things to do is to fire an employee and let them go. When you work with an independent contractor, you’re only hiring them for projects based on your needs. That can mean going months between projects if you don’t have anything to outsource to the independent contractor (think about how much money you’re losing if you don’t have projects for employees to work on and they’re sitting there collecting a paycheck for nothing every week).

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While it’s difficult to let anyone go, you can either have a call with the independent contractor and explain why you need to part ways, or you can simply not send over new projects, and eventually, they will get the hint that their services are no longer needed, and the split is much easier.

Now What?

The only thing left to do is decide if the above sounds like something you’re willing to take on when hiring independent contractors. When you weigh everything out, the advantages are vast, and it’s for that reason that so many businesses are now hiring independent contractors rather than filling their offices with employees.

Even better, those businesses with remote employees run the risk of performance issues from their staff due to the flexibility of not needing to work in an office environment and having someone look over their shoulders all day long. When hiring an independent contractor, your remote business model will work just fine as the independent contractor gets paid per project, which means you may find you can get more things done than you would having remote employees.

So, what are you going to do? Thinking about hiring an independent contractor? It may be the best thing for you and your business. And if you’re looking for someone to handle your content and copywriting needs, keep us in mind — we’d love to work with you!

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