Employee vs. Independent Contractor: The Pros and Cons

BenefitMall Employee vs. Contractor

You are taking on new business and you are ready for some changes. You set aside time to properly evaluate past projects and new opportunities. After looking it all over you quickly determine you need extra hands on deck to get the job done. Do you hire new team-player employees or do you look for a talented contractor? Let’s see what is best suited for you.

Simply put… 

An employee is technically controlled by the employer – managing what they do, how they do it, when they do it.

An independent contractor may be told what project is needed and when it’s due, but generally he or she is in control of the way they go about it.

Distinguishing amongst the two is simple enough, but what exactly are the pros and cons of hiring an employee or finding an independent contractor?


When You Hire Employees:



Hourly wage is usually less

If you need extra help, employees are routinely available 30+ hours per week

Projects are assigned permanently

Less training is involved since they are fixed rather than fleeting

Benefits are usually offered

Payment is scheduled consistently

Increase in payroll paperwork for different pay schedules and tax responsibilities  

Employers cover employee licensing 


When You Hire Independent Contractors:



Overall cost can be less

More flexibility – if the final product is not ideal, hire a new contractor

You have options- match the assignment with the contractor’s talents

They handle their own licensing and permits

You have less control

Their time is their own, so they can say “no” to a project

No sense of loyalty, not a part of the team

Copyrights are owned by the contractor 


Whether you hire a new employee or an independent contractor, make sure you weigh the pros and cons heavily before you take action. In addition, be sure to report the individuals correctly, since penalties come at a hefty price when the lines get crossed.


 One System to House It All


With BenefitMall, our online payroll software makes it easy to include your contractors in processing your payroll and keeping you compliant at the same time. Instead of having two systems or issues with housing your employees and contractors, you get one system that efficiently keeps your employees and contractors information easily accessible. 

Whether you are hiring individuals or outsourcing to contractors, we have the payroll technology to offer the correct reporting whether for 1099’s or W-2s, so that when you come to tax season you are fully prepared. 

If you are looking to streamline your administrative and payroll tasks, we are well versed in everything related to full-time employee reporting, contractor reporting, payroll streamlining, compliance and more. 

Learn more about our online payroll solution today.