How To Hire an Independent Contractor

Updated October 19, 2023

11 min read

Introduction

Why Hire an Independent Contractor?

Understanding the Hiring Process

Employees vs. Independent Contractors

Finding the Right Contractor

The Hiring Decision

Onboarding the Independent Contractor

Conclusion

Introduction

Hiring independent contractors can be an uncharted territory for those newly stepping into the world of business. But with access to the right resources, the process can become significantly more manageable. This article will support you in navigating the complexities of hiring independent contractors.

This article guide will walk you through the essential steps to help you understand the elements involved in hiring independent contractors. This includes differentiating between employees and contractors, making informed hiring decisions, understanding legal compliance, and effectively onboarding. So, journey ahead with us and conquer the process of hiring with confidence.

Why Hire an Independent Contractor?

The benefits of hiring an independent contractor may not seem decidedly evident at first. However, these external professionals can provide specialized expertise and adaptability in their services.

They often represent a more cost-effective solution as they operate without the requirement of benefits and consistent overhead expenses. Hiring an independent contractor is an effective solution for fulfilling temporary business needs or exploring the value of a potential position without significant commitment.

Understanding the Hiring Process

Independent contractor hiring differs from hiring regular employees, which can sometimes lead to confusion. Here's a breakdown of the steps to simplify your journey:

Identify your needs: Knowing what you need is the cornerstone when you're an independent contractor hiring. Pin down the specifics of the project, the skills needed, and the experience level you're looking for.
Find potential contractors: The search for hiring independent contractors can be as broad or as focused as your needs dictate. You can look within your local community or extend your search globally.
Vetting and interviews: Thorough vetting is crucial in hiring independent contractors. Look beyond the impressive portfolios; check references, verify previous work, and consider conducting interviews to evaluate their communication skills.
Legal compliance and contracts: Hiring independent contractors involves navigating a separate set of legal obligations compared to hiring regular employees. Using formal agreements, such as an independent contractor agreement, ensures the rights of both parties are protected.
Onboarding: While onboarding processes may seem more valid in a traditional employee scenario, they're just as crucial when hiring independent contractors. Clear communication of the project's scope, deadlines, and feedback mechanisms will set the stage for a successful relationship.

Remember, even though hiring independent contractors might look complicated, breaking it down into these steps can make the process much easier and more effective.

Employees vs. Independent Contractors

Categorizing a new hire as an employee or an independent contractor is an important distinction to make. Getting it right matters — such classification carries notable legal implications. When building a team, especially hiring independent contractors, understanding the differences is crucial. Here's a closer look at each:

Employees:

Control over work: An employee typically operates under the direct control of the employer. Tasks, schedules, and the methods of performing the job are usually dictated by the employer.
Continuous relationship: An employee commonly maintains an ongoing relationship with the business, regardless of the duration or hours worked per week.
Benefits: Employees often receive an array of benefits, including healthcare, retirement plans, and paid time off, which aren't typically offered when hiring independent contractors.
Legal considerations: Employers must adhere to specific labor laws and tax obligations for employees, such as withholding taxes, paying social security, and unemployment tax.

Independent contractors:

Control over work: When hiring independent contractors, businesses usually have control over the outcome of the work but not how the tasks are performed. The contractors themselves decide how best to complete the work assigned.
Temporary relationship: Independent contractors are generally hired for a specific project or for a set period. The relationship lasts as long as the contract specifies.
Benefits: Independent contractors don't typically receive benefits like healthcare, retirement plans, or paid time off from the businesses hiring them.
Legal considerations: The process of hiring independent contractors carries distinct legal implications.

Whether you decide to bring on an employee or an independent contractor largely depends on your business needs. Detailed comprehension of each category and the right sets of templates and legal resources from platforms like Lawrina, can make the process of hiring independent contractors smoother and more effective.

Finding the Right Contractor

Hiring independent contractors is a process that starts with your business’s needs. Finding a suitable contractor becomes a less daunting task once you have a clear understanding of the project's requirements and the skills and experience needed to fulfill these. Recognizing what you need will help in shortlisting the right candidate and ensure a successful hire.

The Hiring Decision

Making the right hiring decision is of paramount importance when it comes to hiring independent contractors. While a portfolio brimming with impressive work could initially seem compelling, it's critical not to get swayed solely by the surface.

When you're in the process of hiring independent contractors, running a comprehensive check on their references is an essential step. Their past clients' experiences can provide valuable insights into their work ethic, reliability, and overall performance.

Apart from their references, make a point to review samples of their prior work meticulously. This gives you a clear picture of their skill level, style, and ability to deliver what you require in your project. Hiring independent contractors successfully often hinges on how well their expertise aligns with your project expectations.

Onboarding the Independent Contractor

After you’ve decided to move forward with the question “how to hire contractors for your business,” the onboarding phase begins. This phase is instrumental in laying the foundation for a successful working relationship with the contractor. Initial communication should be explicit, setting forth the project's scope, anticipated timelines, and defined milestones. Properly communicating your expectations at this stage can preempt potential issues and misunderstandings, enhancing the project's overall efficiency.

One of the most pivotal aspects of onboarding when hiring independent contractors involves legal compliance, something an experienced business lawyer can guide you through. This includes the independent contractor agreement, a legal document delineating the work parameters, payment terms, confidentiality, and other contractor obligations. For instance, U.S. law dictates that the Internal Revenue Service (IRS) Form W-9 must be completed by the independent contractor for tax purposes.

Conclusion

The addition of independent contractors to your business can provide innovative solutions to your company’s needs. They can introduce a variety of skills and expertise that might not be readily available within the confines of your traditional employment structure. Hiring independent contractors offers an opportunity to bring in a wellspring of fresh perspectives and adaptable solutions tailored to your project's unique demands.

It’s essential, however, to practice due diligence throughout the process of hiring independent contractors. Each step, from identifying your project's needs to the final stages of onboarding, demands careful attention. By adhering to the guidance provided, you can smoothly navigate the process, ensuring that the independent contractors you hire will truly benefit your business.

Article by

Ilona Riznyk

Lawrina

Ilona Riznyk is a Content Specialist at Lawrina. In her role, she creates and manages various types of content across the website, ranging from blog articles to user guides. Ilona's expertise lies in meticulous fact-checking, ensuring all the published content is accurate and reliable.

With a keen eye for detail and a deep-seated commitment to providing readers with well-researched information on legal topics, Ilona plays a pivotal role in upholding Lawrina's standard of content quality and integrity.

Frequently Asked Questions

How can I legally hire independent contractors for my business?

The process of legally hiring independent contractors begins with correctly identifying your business needs and finding suitable contractors who can meet those requirements. Comprehending the difference between independent contractors and employees is vital, as each classification carries different legal and tax obligations. In the U.S., misclassification can lead to potential legal complications or fines.

When you're hiring independent contractors, ensure that an agreed-upon contractual setup is in place. The contract should outline details such as the nature of work, payment terms, and any confidentiality obligations. Remember to have the contractor fill out the necessary tax forms, like the IRS Form W-9 in the U.S., to meet the legal requirements of hiring independent contractors.

How should I pay independent contractors?

Payment of independent contractors is less regulated compared to employees, offering a degree of flexibility. However, the agreed payment format and schedule should be clearly defined when hiring independent contractors. This could be on an hourly, daily, or project basis, depending on the nature of the work.

In the U.S., independent contractors are typically responsible for their own taxes. Therefore, unlike employees, taxes are not withheld from their payments. It's essential to provide them with IRS Form 1099-NEC if you pay them more than $600 in a tax year. This form reports income from self-employment and is part of fulfilling the legal obligations in the process of hiring independent contractors.

Can an independent contractor work full-time?

Independent contractors can engage in full-time work, but the definition of "full-time" may differ from the traditional 40-hour work week for employees. When hiring independent contractors, you are primarily concerned with the result of their work rather than dictating their work schedule.

However, it’s important to remember that if a contractor is working full time for your business over a long period, they could be classified as an employee under U.S law. This would change your commitments as an employer. Therefore, it's crucial to be mindful of the working relationship's nature when hiring independent contractors, ensuring it aligns with the legal definition of an independent contractor.