Small Business Guide: Hiring Contractors and Avoiding Trouble

The government has been cracking down on companies that treat workers as contractors for wage, tax and benefit purposes but as employees when it comes to their work duties.

Blue-BodiesJeff Ready, chief executive of Scale Computing, would like nothing more than to double his sales staff to meet projected demand for the information technology infrastructure that his Indianapolis-based company develops and manufactures. But in an uncertain economy, Mr. Ready is reluctant to commit to significant hiring.

“It’s been difficult to predict the future in terms of the strength of the economy,” Mr. Ready said. “You have to be very prudent in how you hire. What I’m doing is trying to keep a smaller in-house contingent and supplement it with contractors based on the ebbs and flows of how much business we have.”

Business owners interviewed for this small-business guide say that independent contractors can be helpful when companies try to increase operations while retaining the flexibility to cut back if necessary. But if not used effectively, they can increase costs without producing the desired results.

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Source: Katherine Reynolds Lewis | The New York Times