For small businesses, working with independent contractors can be a lifesaver.
You can hand over tasks you don’t have time for – at a fraction of the cost of an employee. Unlike staff, you won’t owe a contractor payroll taxes, unemployment insurance, health insurance, or other employee benefits.
Because independent contractors aren’t employees, however, they do need to be managed differently. They’re accustomed to being their own bosses, for one thing. And because they may work for a number of companies at one time, they may have divided loyalties.
These tips will help you get more for your money (and minimize undue stress) when hiring an independent contractor.
Hire qualified and professional independent contractors
From the outset, you’ll minimize the need to manage a contractor by carefully screening anyone you consider for the job.
Interview contractors with as much diligence as you would a potential employee – and be sure to follow up with references. Before you sign any contract you want to make sure a potential hire is
- both qualified and a good fit for the job
- responsible and easy to work with, and
- will most likely want to continue working for you.
Keep in mind that high turnover is a costly problem for small business owners. If you find out in an interview that a contractor is working for several companies, you might want to consider hiring someone else.
When you do find someone you hope to work with long term, pay them well and take care to make them feel they’re a part of the team so they’ll stay motivated – and stick with you.
Be clear about the scope of work
Employees have job descriptions to define their roles and responsibilities. Independent contracts, by comparison, follow a scope of work agreement that outlines their project guidelines, timeline, and payment terms.
Defining the scope of work upfront in writing – as well as how any changes will be managed – saves time, confusion, and ultimately protects both of you.
You’ll simplify the process for working together by laying out your expectations for how the work will be delivered upfront. Your contractor will avoid the dreaded “scope creep” that can happen when a project changes without additional compensation built into the contract.
Stay on track
The best way to keep your contractor on task – without micro-managing the project – is to set milestones together and regularly communicate on progress.
For instance, you might agree that project targets and deliverables will be met by specific dates, which you’ll both track via a collaborative cloud-based document sharing system, like Google Drive, or project management tool, like Basecamp.
In order to ensure those milestones will be met, agree to a weekly progress report by email or phone. If an issue arises, you’ll be able to address it before it gets out of hand and puts the success of the project at risk.
The best independent contractors are professionals, and shouldn’t need much managing from the companies that hire them. Ideally, they’ll just need a bit of guidance to perform the work to your standards and expectations.
By and large, the tips offered in this article are proactive measures, so you don’t have to spend a lot of time managing a contractor. Rather, you’ll spend the bulk of your time following up on progress to make sure the job gets done, rather than managing each step of the process.
Communicate clearly, upfront and in writing, to create clear expectations on both sides – and avoid excessive backtracking to ensure the work you’ve outsourced is completed up to par.
Consult with your bookkeeper or CPA to make sure you comply with the Federal regulations regarding reporting payments made to your independent contractors.
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