There is little doubt that small business owners have to constantly adapt to the changes in the business arena. One area that is making an impact is the upsurge of freelancers and contract workers. A study by intuit reported that by 2020, more than 40% of the American workforce, or 60 million people, will be freelancers, contractors and temp workers. That can make a change in the workforce mix of your business, can’t it?
It’s turning into a Gig Economy
There are differences between temp, freelance, and contract workers, which might seem obvious. But one thing we, as payroll professionals at The Payroll Department, want you to realize is that unless you hire temps as employees (and most people don’t) all of the above noted workers will be 1099 contractors.
For temps, the gig often comes with no established end date. Temps fill the need as long as the need is there.
Freelancers are hired to do a specific job, a project, or a fill a very specific need. Freelancers are often brought in when a business, small business or large corporation, has a need that cannot be met within the organization or that does not require long-term employees.
As noted in the following infographic from LinkedIn ProFinder intuit, there is variety within this group worth understanding.
Contract Workers are often workers that are intended to be long-term, but provide their services basically on their own terms. They are given an outcome and asked to produce it. For example, a small business with a delivery element in their services may hire contractors or sub-contract the entire service to another business or contractor. On the other hand, a contract worker may be hired for a specific term, like an engineer or mechanic on a race team. They are hired for the term of the race season. When it’s over, it’s either over or adjusted to continue on a month-to-month basis.
The Gig Economy is sort of like outsourcing, isn’t it?
In many respects it is like a stepping stone. Once a small business owner gets in the habit of working with contract workers and freelances, it’s easier to outsource things like your payroll processing to professionals like The Payroll Department.
In the truest sense of what’s happening, hiring freelancers, contract workers, and outsourcing to other service providers is the same in that you are letting professionals and experts take care of what they are best at taking care of for you. And, that is best for you …
Hire marketing professionals to create and implement your marketing and advertising plan
Hire lawn and landscaping professionals to care for the exterior of your property
Hire accountants and attorneys to handle financial and legal issues
Hire a payroll provider to process and generate your payroll, payroll tax reporting and deposits
It just makes sense. Someone proficient at their livelihood will accomplish the best results in the least amount of time – and probably at the least cost.
How can you use the Gig Economy in your business?
With that being said, how could hiring freelancers, contract workers, or outsourcing duties change your business? There are several ways that I have heard from other entrepreneurs:
- Cost savings in payroll and benefits
- Availability of professional experience, knowledge and skills
- Sense of security and peace of mind
- Extended professional and services network
- Ability to work ON your small business for growth, instead of IN your business
You hire the best people for the time and projects you need. It’s very similar to streamlining your raw materials and reducing stock on-hand. You get exactly what you need when you need it, without the costs and concerns about maintaining inventory.
Outsourcing, especially for professional services really does provide a simple peace of mind – a security. You aren’t guessing and trying to stay up with the ever-changing rules and regulations. We know we can keep on top of IRS and payroll tax rules for you, as well as taking care of reporting and deposits, here at The Payroll Department. Contact us today at 317-852-2568.
-Elaine of The Payroll Department Blog Team