Discover if a 1099-Contractor or Employee is the Right Choice for Your Growing Business
American businessman Farrah Gray once said, “Build your own dreams, or someone else will hire you to build theirs.” Any small business owner can relate to that quote, right? But along with that comes a ton of responsibility...and work! If you are growing your small business, the time may be drawing to a close when you do all of the work...the behind-the-scenes operations work along with the work you actually enjoy to serve your clients and customers. But are you and your business ready for a traditional employee, or should you hire out the work to an independent contractor instead?
Take into account the following considerations and then decide what direction you should take next.
Remember to Follow the Law
First and foremost, consult legal counsel to understand both federal and state wage and labor laws related to independent contractors and traditional employees as you make your decision. Some states follow the ABC Test for independent contractors, while other states follow the Common Law Test for independent contractors. An attorney familiar with your state’s employment law can advise on which test your state follows and how you should best proceed.
Identify Where You Need the Most Support
Once that step is completed, identify all of the tasks you complete that support your business operations versus the actual products or services that your business provides. I bet that is a pretty long list overall! It most likely contains support activities like bookkeeping, website maintenance, technical support, marketing, email and calendar management, to name a few. Highlight those tasks that will remain your responsibility. Is this list reasonable for you to handle within the hours you have available each week? If not, consider what else you would be willing to delegate to a team member.
Review what’s left on the list. Most likely, these are the things you don’t enjoy or are not especially skilled at doing. For example, when I started my business, I maintained my website, which included edits and all the back-end tech tasks associated with WordPress. Every month I had to relearn how to do those things - because I was not naturally good at it. And it also meant that more of my free time (i.e. nights and weekends) were spent on website maintenance versus brushing up on the latest recruiting trends - or simply spending it with my family and friends! Website maintenance was one of the first support tasks that I contracted out to someone who specialized in it.
How Much Time Will This Save You?
Now that you have a clear picture of the work that could be done by someone else, determine how many hours each of those jobs take. It may take someone skilled in bookkeeping and QuickBooks less time to reconcile your accounts than it would for you to do it - so a range of three to five hours for bookkeeping each week, for example, may be a good place to start. Estimating time for each task by week or by month will give you an idea if you should hire help on a full, part-time, or even contract basis.
Would it make sense for these tasks to be rolled into one job that someone could feasibly complete? Some tasks may be specialized, and you would need someone skilled in that area (like website maintenance) to complete it.
While it is an added expense for someone else to do the work, you could spend that time on growing your business by offering additional services or finding more customers.
Do You Need Remote Support or In-Office Help?
Would it make a difference if the work is done at the office or remotely? For example, some administrative assistants can manage answering phones, resolving customer service issues, general administrative work, and some bookkeeping. If you need help in those areas, and if you need help dealing with customers in person, it might make sense to hire someone who works in your office regularly. However, other operations work could be handled by contractors who work remotely.
Several operations areas like human resources, bookkeeping, social media marketing, graphic design, tech support, lead generation, and content writing are some examples of work that could be done remotely. Simply put, any job that does not require face-to-face interaction can be done virtually.
Compare the Cost-Effectiveness of In-House vs Contract Labor
This is where you may be surprised by the difference between an employee and a contractor.
When you bring on an employee, full or part-time, there is a considerable cost associated with hiring and onboarding them. You need to supply equipment, training, as well as their salary, payroll taxes, and benefits. All of which adds up to the overall cost of your in-house employee.
When you opt to go with a contract employee, such as a Virtual Assistant, you will have a higher hourly rate, however, you can contract with them for hours worked rather than scheduled hours, saving you money. It could be anything from five hours a month to full-time, based on your needs. The contractor is a self-employed, 1099 team member responsible for their own taxes, equipment, and place to work, with few exceptions.
The idea of expanding your business and building a team is overwhelming at times - but it’s exciting, too! Take time to strategize about your short-term and long-term business goals and decide accordingly. The good news is that you have options - maybe more options than you initially thought, especially if you are new to the virtual assistant world. Tell us what you think works best for your business in the comments!
Let’s Build Talent and Achieve VA May Be Able to Help!
If you are a business owner and want to see if working with virtual assistants makes sense, schedule a free discovery call today! In the meantime, join our mailing list to learn the latest about both Let’s Build Talent and Achieve VA.