Tips to Finding Out if an Independent Contractor is Right for You

Independent contractors (ICs) fit this standard by providing flexible and transferable skills. ICs are self-employed individuals or groups who contract themselves out to one or more companies on an as-needed basis. They are, in a word, independent of the employer. Comparatively, a contract employee (CE) is a person working under a contract and who is an employee of a company but without all the benefits.

To tell if an independent contactor is right for you, learn the basics with these four tips.

1) Control – Who will have the right to control extra hiring and firing, the type of work, how and when work is completed, and determining wages? If you are hiring an IC he or she will have control over these issues, if you are hiring a CE then you will have control.

2) Tools – Where is the money for investment in and maintenance of tools coming from? An IC will provide their own tools, whereas you will provide tools for an employee.

3) Profit and Risk – Who has the potential to make a profit or risk losses, i.e. because of delays, damage and operating costs? If you are the one to make or lose a profit then you are in an employer-employee relationship.

4) Integration – Are you integrating into their services, in other words are you their client? Or are you integrating the worker into your projects, taking them on as an employee?

It is important to identify whether an IC, CE, full time or part time employee fits better into your business structure, so you can find qualified candidates as well as establish the appropriate relationship with your workforce. These criteria should be taken together, and are by no means concrete in defining the type of employment relationship.