Intern, Subcontractor or Employee?
When your small business starts to grow and you want it to stay on that path, it’s time to get some help. Fortunately, help can come with a lot of different titles: intern, subcontractor and employee. This post will help you choose.
Intern: I recommend going through your local university to find a good intern. The process of going through a university will help you put some important things in place like writing a job description and thinking about how to train and provide feedback to someone else…especially if you’ve been a one-person show until now.
- It’s possible to get an “unpaid intern.” This doesn’t mean that you can abuse them but if what you can offer is real world work experience for a portfolio, you’re doing them and our future economy a favor.
- Often times, the university’s internship coordinator can help you figure out how to provide constructive and useful feedback so that they learn the proper way to complete work in a professional environment *if* any issues arise.
- The nature of an internship is to provide someone with skills that they just can’t get in a classroom. Don’t expect them to hit the ground running and be experts at anything.
- Having interns takes a fair amount of your time and energy. You will need to write job descriptions/task lists, train them to complete the work you have for them and review their work/provide feedback on a nearly daily basis.
Subcontractor: These workers are “independent.” They typically own their own companies and they specialize in a particular area of expertise. I recommend word of mouth to find the best subs (workers and sandwiches).
- These people should, in theory, be great at what they do.
- It’s generally a fairly quick process to find a qualified sub, get a reference or two and set them to work.
- They are typically self guided, self sufficient and don’t require a lot of maintenance.
- There are no long term commitments to one person/service.
- Subcontractors have higher hourly rates because they are covering their own taxes, retirement plans, health insurance and equipment/software costs. You can sometimes get a lower rate by putting them on retainer for a set number of hours/month.
- You can’t require a sub to be on-site during specific hours of the day or require them to use your office or equipment. The second you do that, you should hire an employee! IRS guidelines.
Employee: These workers are what many associate with ‘traditional employment’. They might be part time or full time and they may work in your office or remotely from their home office or a coworking space. It’s time to hire an employee when you are paying more for their hourly service than if you hired them (including insurance, equipment, taxes, unemployment insurance etc). Another indicator might be that you need more than one sub doing the same job to keep up with your clients.
- The employee/employer relationship is what most people are familiar with and there a million resources to help you find, hire, manage and replace employees.
- You can require employees to work at certain hours, in certain places and you can change their priorities at a whim.
- Having legit employees might inspire you to set up shop in an office or coworking space where you can host your clients and look professional.
- Adding your first employee is the hardest. I recommend finding a qualified HR/payroll service to help you meet all of the tax, insurance and payroll requirements…and there are many!
- When you hire an employee, you become somewhat responsible for them. Basic rights for an employee include giving them clear job directions, regular feedback and being clear about what circumstances warrant a bonus or raise. There are also many regulations to follow if you need to sever the employee/employer relationship.
- Make sure you keep an eye on your financials when you hire an employee. If business starts to go south, do them a favor and lay them off right away. Not being able to cover your payroll is a crime!
- You might have to lay people off or fire them.
Weigh in! What type of worker(s) are you using right now in your business?