Sometimes when it comes to having a project completed for your business you may need a little extra help. For example, maybe you want to create a video about what your business does but none of your employees have video editing experience. What do you do?
Do you hire an in-house cinematographer to have someone available for video editing purposes at all times? Or do you look for an independent contractor to edit this video, even though you may need more videos edited in the future?
This can be a tough call, but you have to choose the right fit for your business based on what suits your needs. We’ve made a list of the pros and cons of hiring independent contractors to help you make this difficult decision!
Independent Contractors Vs Traditional Employees
Time is Managed Differently
When it comes to independent contractors you may save some time in the beginning because you won’t have to train them. Independent contractors are generally hired for a specific skill that they have pretty much already mastered. However, you will have to spend time looking for a qualified person.
The time-consuming interview process is pretty much eliminated because you can hire someone online based on their skills and portfolio. Also, you don’t have to go through the entire process of officially hiring them as an employee.
However, the turnover rate among independent contractors is high. Instead of having someone in the office to instantly go to for a project you have have to frequently find new independent contractors.
You May Save With Independent Contractors
With an independent contractor, you set your own terms within a single contract. You may agree to pay your worker a flat rate per project or an hourly wage. Whereas with a traditional employee you would pay them a salary or for all of the hours they spend in the office, not just for working on a particular project.
You also don’t have to offer independent contractors the same amenities as a traditional employee. You don’t have to pay for their equipment or office space and you don’t have to offer them benefits, unemployment, or worker’s comp.
Although, you may not get what you pay for. The project completed by an independent contractor may be considered their work and it won’t be owned by your company. With a traditional employee, everything they do for you can belong to your business.
The Taxes Are Different
For traditional employees, you need to file Form 941 on a quarterly basis. The Employer’s Quarterly Tax Return is used to disclose employment taxes because you’re responsible for withholding Medicare, social security, and income taxes from your employees. The 941 return is also used to pay the amount of social security and Medicare tax owed by the employer to the IRS.
You also need to file W-2 forms for your traditional employees to report their salaries, withholdings, and other compensations during the year.
If you pay an independent contractor $600 or more during the year then you have to report that amount. You can do this by sending them a copy of IRS Form 1099-MISC. It’s used to report payments for services rendered for a business by people not treated as it’s employees.
Employee Taxes Are Easy
No matter if you hire independent contractors or traditional employees, reporting their taxes is easy with ExpressTaxFilings, the market-leading tax e-filing solution. All you have to do is select which form you need to file and follow the step-by-step instructions to complete it in a matter of minutes.
Plus, there are tons of innovative feature to streamline the e-filing process even more. For example, you can use the bulk upload feature to import all of your employee’s information at once or the print center to have us print and mail copies of your client’s returns to them. Don’t let tax season sneak up on you, get started with ExpressTaxFilings today!