In a previous blog, Working Relationship Status: It’s Complicated, I explained the difference between a 1099 Independent Contractor and a W-2 Employee. The problem is, if you are an extremely small business, with NO employees, and you’re getting to the point of needing some help, you currently have 3 options:
- Pay them in cash “under the table”
- Hire them as Independent Contractors
- Become an employer and hire them as W-2 employees.
Since the first option is ILLEGAL and very risky for your small business, you really only have two options. And as we saw in our previous blog, it is not always easy to defend that someone is an independent contractor. So most small businesses are forced into becoming employers before they are really ready for full-time, permanent staff.
But there’s a better way. You can outsource the employment of your help.
In many cases, Outsourced Employment can be a much better option than going through the hassle of becoming an employer. Especially if you’re not sure how many people you need or for how long you need them. Maybe you just need a hand for peak times. Maybe your business is seasonal. By hiring your help through a staffing firm, you get to treat the workers as W-2 Employees because they are W-2 employees. Just not yours. As the employer of record, the staffing firm is required to handle all aspects of employment. Items such as Workers’ Compensation Insurance, Federal & State Unemployment Insurance, FICA, all Tax withholding, W-2 Processing, Payroll Processing, and employee reporting. In addition, if you know who you want as the workers, the staffing firm should be able to provide you with a reduced mark-up because they didn’t have to recruit them.
By outsourcing the employment of your supplemental or seasonal help, you can stay focused on growing your small business. You need only to provide a safe, harassment-free work site. Which, of course, you would do anyway! For further information, or to get a quote for your very own outsourced employees, contact EGW today.