If you have started your own business or you already run a small business by yourself and you want to bring on help, you may think hiring independent contractors are the way to go. You may have heard that independent contractors are better for small businesses than hiring full- or part-time employees, but before making any final decisions, you should contact an experienced North Carolina employment attorney. They will be able to help you evaluate your business’s needs, goals, and liabilities, as well as make the best decision that sets your small business up for long-term success.
An independent contractor is just that, independent. They are self-employed and control their own employment circumstances. They must pay their own Social Security and Medicare taxes. To be classified as an independent contractor, the worker must perform services not directly controlled by the employer.
An oversimplified example is hiring a neighbor to mow your lawn. The job you want done is clear, “mow my lawn,” but the way it gets mowed, the exact time he does it, and the mower he uses are usually up to him. He only gets paid if he shows up and does the job. You aren’t obligated to pay him anything after that, and he can mow someone else’s lawn tomorrow without asking your permission. Your attorney can explain the specific legal classifications that are important to your business, but the lawn-mowing neighbor gives you a general idea.
Small business owners often choose to work with independent contractors rather than hiring full-time employees to save money. If you only need help on one specific project or in one limited area, hiring an independent contractor can eliminate concerns about overtime, health benefits, sick leave, worker’s compensation, unemployment insurance, and employment taxes. However, you could still be found liable for injury under general tort law.
Independent contractors aren’t always the right choice for your business. Some small business owners need more control over how and when their work gets done. Some small businesses want to train and invest in employees who can build relationships with clients. If you choose to work only with independent contractors, you increase your risk of an IRS audit. If you classify an employee as an independent contractor but they end up working for you like an employee, you may face serious financial liability for “misclassification.”
Your qualified North Carolina small business attorney can help you decide whether independent contractors are the right choice for your business, and can help you put policies in place that protect you from the liability of misclassification.