View Full Version : Employee vs independent contractor

01-13-2014, 01:29 PM
I have been looking to expand my pool business. It is currently just me and my pool truck and I have been toying with the idea of adding a new route and hire someone to do it, about 90 pools per week figure 18 pools per day. Is there anything I have to do, I would assume there is to report that I have an employee or am I better hiring someone as an independent contractor? Is there not a lot of costs involved with having an employee, other then wages? Would I have to provide healthcare to my employee? This obamacare got me all confuses on whatís needed. Can all this be avoid if I just hire someone as an independent contractor instead and I just pay them in their business name (they could open up a corp for that sole purpose, I would even be willing to pay for that) I donít mean to come off an trying to cheat on taxes just want to keep the business going and possible expand.

01-18-2014, 03:42 PM
As you're the boss, yes, hiring employees is very costly because not only you pay for the wage, but also you have to cover the insurance when someone gets hurt. Plus, I believe you are covering the health insurance somehow, but I'm not sure about this. One thing though, one employee will just cost you a lot, so be prepared and so your budget before you want to hire employees to work for you.

01-19-2014, 04:38 AM
As you're the boss, yes, hiring employees is very costly because not only you pay for the wage, but also you have to cover the insurance when someone gets hurt. Plus, I believe you are covering the health insurance somehow, but I'm not sure about this. One thing though, one employee will just cost you a lot, so be prepared and so your budget before you want to hire employees to work for you.

This is true.
It is a big step from going from a one man business to getting an employee. You should check out some websites I found for you:
This is a small guide with some basic information.

This is a website of the government with detailed information and steps to hire an employee.

01-19-2014, 02:54 PM
That is a very difficult question to answer PoolsRCool. Taking on an employee is a big responsibility, both financially and emotionally. I recommend you discuss this with your accountant or bookkeeper. They will be familiar with the laws in your area and will be able to give you a precise breakdown of the costs involved in hiring an employee.

If you feel that in the future you would need more that 1 person assisting you, then I would be inclined to opt for an employee over a contractor.

01-20-2014, 08:19 AM
Depending on the term of your project or how long you plan to keep up this idea of yours you should calculate the expenses first. If you are planning to do a long-term arrangement and would need extra hands for a long time, hiring employees is much better than hiring an independent contractor. On the other hand, if you are trying to pull of a short-term project and would want to finish it as soon as possible then going with an independent contractor is the better choice. You could just allocate a budget for the contractor to work with and the job will be done easier and faster since you do not have to worry about daily wages, food cost and other expenses.

01-22-2014, 02:10 AM
I would go the employee route, even if the person you hire has there own business the IRS will still treat them as an employee if they don't do a certain percentage of work for other customers.

The cost of making mistakes with this setup are more than just having a payroll. Having said that you should choose a local payroll service and have them handle it, especially in the beginning. After you see how it's done you will be able to make a more informed decision about taking on the payroll tasks yourself.

Here is a great article on choosing a payroll service:

At this point all you have done is create a job for yourself, by hiring your first employee you are taking the first steps to building a business, this is an asset that you can eventually sell in the future. With most service based businesses you can start to step away from doing any of the labor and concentrate solely on administrative/supervisor roles after employing around 3-6 people. That's why it's a good idea to outsource the payroll since you will need all the time you have to train others and get as much work done as possible, it's a tough uphill climb to get to that first plateau.

The alternative is to raise your prices, and add some unique value to your service that makes you stand out and continue to be a one man shop. It's less stressful.

01-26-2014, 03:16 PM
I worked as an independent contractor myself for more than 2 years at a cosmetics business and no, the employer doesn't need to pay insurance for the employee in this case. I suggest you make the step into having an employee as this would expand your business and you would have more time for yourself since other people will be doing what you do right now.

01-26-2014, 07:30 PM
I've done work as an independent contractor and my employers have not paid anything except my wage. If I want certain perks, that's all out of pockets. Not really a great way to make a living, but you do what you have to.

01-28-2014, 07:21 PM
To start, offering employment rather than an 'independent contract' lends you're business far more professional credibility. Although it's clear you have the best intentions at heart, there is a connotation of underhandedness surrounding the 'independent contractor' method in small business. It makes it looks as if you could give a what-now about the people who work for you.

With that out of the way, you should know that taking on an employee does make you liable for the insurance and safety of that person while on the job. Taking necessary precautions to cove your butt can be costly. Obamacare only requires you to provide full health coverage if you employee over a certain number of full-time employees (I think its 49?), so you're in the clear on that front. But don't underestimate the cost of worker's insurance. As a general rule of thumb, you're paying your employee's salary plus slightly over what they'll be paying out in taxes. It definitely adds up, so be sure you have demand for the work before hiring.

Hope that little rant helped a bit. Good luck with your business!

01-28-2014, 09:48 PM
I would recommend a independent contractor if you can find a cheap one. With the Affordable Healthcare Act, you have to provide full health coverage for employees. I'm not sure if this is correct, but I think that you don't have to provide health insurance for independent contractors.

01-29-2014, 08:16 AM
For one-time, non-daily jobs, just hire an independent contractor. They would save you more money in the long run as compared to a regular employee. However, if the tasks that you have in store for them are daily routine tasks, then it's better to hire a regular employee. Though the pay of a regular employee would cost you much more in the long run, you won't have to worry about the job that needs to be done.

01-30-2014, 09:17 PM
Hiring independent contractors are usually more practical, because then again you are not stuck with a huge level of commitment in terms of hiring people. You can use a lot of independent contractors when the demand is high but stop using them when your business demand goes down.

Another option is to outsource particular aspects of your operations to an outsourcing company who will also manage the services for you. This makes management easy for you as well.

01-31-2014, 12:53 AM
Whoever you hire should be bonded and insured. It might be easier to find someone as an independent contractor, because you will be liable for a lot less, but if you don't hire that person as an employee, what is to stop this person from stealing you clients, and what would be the advantage for them to be hired through you and not work for themselves? If you do hire someone, yes, you do have to provide them with healthcare.

01-31-2014, 09:13 PM
I prefer employees to independent contractors. You can rely on employees more than the other.

02-10-2014, 11:55 PM
I would just hire someone so that I can keep an eye on them. Independent contractor might just quit when you really need them. Hiring an employee gives you control over the business rather than an independent contractor.

02-18-2014, 08:56 PM
I think hiring employees will probably prove to be a bigger expense, but it just has to do mostly with what your plans for your business are or what kind of business you would like to build. If you are in it mostly for the short term plans and purely for increasing profit as early as possible, which I don't see much wrong with anyway, then it might be best to just get independent contractors. If, however, you would like to build some sort of culture within your company and thus have it perform as uniformly and to your liking as much as possible despite it being a bit more expensive and therefore less profitable, then having employees might be best. If it's all the same to your clients, then I would personally just go with independent contractors as that seems to hold the least amount of expenses and responsibilities.

03-27-2014, 06:55 PM
I would go with employee even though you have to pay insurance for the employee.

03-11-2019, 09:47 AM
Hi PoolsRCool, we came across your post and think this might be able to help answer some of your questions. https://www.groupmgmt.com/blog/post/2018/11/06/The-Differences-Between-Employees-and-Independent-Contractors.aspx?utm_source=small%20business%20for um&utm_medium=referral