How to Decide Whether to Hire Employees or Use Outsourced Services

Many small business owners are all too familiar with the moment when their business grows past their ability to manage it alone. Yes, it is possible to operate as a sole trader and earn enough to support your business and your household, but as your business develops, you have a choice to make.

You can either hire help and give it the scope to grow more and potentially earn more profits or not. If you want your business to continue to grow, you will need to take on help eventually.

This leads to another question.

Should you hire an employee or use outsourced services? What’s the difference?

What are Freelancers and Contractors?

When you outsource a service, you aren’t hiring an employee. Instead, you either hire a freelancer or use another company to handle a task.

Freelancers and contractors are essentially synonyms for someone who isn’t an employee but who still performs a task for you and your business. If you hire someone to do some work around your house, they’re often referred to as a contractor. They aren’t your employee, you’re their client.

Often, the term “freelancer” is used to describe someone who works alone. Freelancers often perform technical or creative work, like graphic design or content creation. A contractor might work alone or as part of a team in another business.

There are some other differences as well. For example, contractors are more likely to work for long periods of time and may work full-time as part of their team on a project. Freelancers, on the other hand, often work on multiple projects at a time for different businesses.

Employees and Outsourcing

What about an employee?

The primary difference between employees and freelancers or contractors is that the employer is responsible for the employee’s taxes, hours, insurance, and depending on where your company is based, benefits like holiday pay, sick leave, and maternity or paternity leave.

While a contractor or freelancer is a separate entity that provides a service to your company, an employee is a part of the company. Employees have far less autonomy, but employers have more of a responsibility for employees.

Why It Matters

Hiring an employee is much more of a commitment than hiring a freelancer or contractor to tackle a project or task.

If you need someone for a long-term, full-time role, it’s often better to hire an employee. Choose someone who is qualified and willing to work and progress in your company. Work out a fair wage for them and ensure that you provide a clearly defined role.

This is, unsurprisingly, expensive. You have to ensure that your business is robust enough to support an employee and benefit from it.

On the other hand, if you have a smaller, but skilled role or task in mind, a freelancer or another business might be a better option. For example, the Beyond Law Group can provide you with legal advice and services. Very few companies require a lawyer or attorney full-time, but it’s good to be in contact with professionals.

This is a partnered post.