Hiring Workers

Your business is growing fast and you have more work than you can handle. It’s a good problem to have, but you need some help. When is the right time to hire help and how should you do it? For many business owners in the U.S., there are two main options:

  • Subcontract / work with independent contractors – Independent contractors are relatively easy to work with in that they are not employees so you don’t need to provide many of the things that employees are entitled to under the law. You don’t need to put them on payroll in order to pay them, you don’t need to pay them minimum wage, and you don’t need to provide them with health benefits. Independent contractors generally operate their own businesses and work with many different clients. They can be individuals or larger-scale businesses (like web development firms, for example) and they are typically brought in to work on a project-by-project basis rather than an open-ended long-term engagement. The big risk is misclassification–when the business owner treats the worker as an independent contractor but the facts of the business engagement require that the worker be treated as an employee by law. If you are careful not to establish an employment relationship and you have the time and ability to outsource your work, subcontracting can be a great way to grow your business at any stage.
  • Hire employees – In the U.S., employers are required to comply with both state and federal employment laws. This means that employers must withhold and pay taxes, provide certain insurance coverages, pay minimum wage, comply with overtime eligibility laws, develop workplace policies, and comply with many other laws and regulations. It can take considerable time and resources to properly hire and manage employees, so you will generally want to make sure that your business is stable enough to support employees over the long term. Many business owners will start by subcontracting work out to independent contractors before building an internal staff of employees.