WEDNESDAY, FEBRUARY 26, 2020
There are plenty of successful businesses without a single full-time employee. These are businesses that rely entirely on the contributions of freelancers and contract work. Overhead for these businesses is considerably lower than it is for companies with fulltime staff on-hand.
One of the expenses where a freelance-oriented business saves is on workers compensation insurance. If you only use contract work, you don't need to provide your workers with insurance. However, there are some things to consider when using this approach:
You Can't Treat A Freelancer Or Contractor As An Employee
The difference essentially comes down to this: You can tell a freelancer what you want and give them a deadline, but you can't tell them when and where to work. If you insist that your graphic designer come down to your office at 8 AM to start on the new design, you're treating them like an employee. No matter what it says on the contract, the law, your insurance provider, and (most importantly) their lawyer, are going to see them as an employee. With a contractor, all you can really ask is that they fulfill the contract.
An employer essentially buys the employee's time and effort. A client buys results. As a client, you can tell your workers what to do, but not how to go about getting it done.
Insurance Matters, Even With Freelancers And Contractors
You don't need to provide your contractors with insurance, but it's for the best if they're insured. If you're relying on contractors, it's a good idea to make this part of your vetting process. It's less important when you're working online with a programmer or consultant, but if they're on your business property and they're uninsured, you have that much less of a buffer between yourself and anything that can happen either to your contractors or your customers.
With full-time employees, you get a staff of dedicated professionals whose sole goal when they come to work is helping you in your business. But a staff is expensive, so you want to make sure that you're ready for the next step before hiring on fulltime employees.
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