Hire independent contractors, not employees

Feb. 16 Wisconsin Worker's Rights protest Hiring employees is, so (shall we say) 20th Century.  Employees need health care, social security taxes, state unemployment, sick days, pension plan, life insurance, disability, occupational safety, and more.  A well-trained and loyal workforce also creates huge fixed costs which you will have to meet every month before you can post a profit.

Therefore, structure your operations to hire independent contractors instead of employees.  What’s the difference?  Independent contractors have the right to decide for themselves how to do a job.  They control the business aspects of their own work, for example, purchasing their own supplies.  They also receive few employee benefits (such as a pension plan).  For example, an independent contractor might choose their own hours, working at home, rather than in your offices.  They work on their own computers.   They decide for themselves when to take lunch or dinner.
Taxes and benefits can often increase the cost of paying an employee by 50% or more above base salary. Share these savings with your independent-contractor-workers.  Pay them more money than you would have paid them as employees, so that they can buy their own health insurance and fund their own retirement plans.
[Image: Feb. 16 Wisconsin Worker’s Rights protest by Lost Albatross, on Flickr]

About Mark P. Holtzman

Chair of Accounting Department at Seton Hall University. PhD from The University of Texas at Austin. Worked at Deloitte's New York Office. BSBA from Hofstra University.

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