The new US tax law signed into effect in December means that sole proprietors will now be able to deduct 20% of their revenue from their taxable income. As a result, a growing number of professionals are making the move to contract work rather than permanent employment. That’s great news for companies, which can now access some of the best and brightest– all for a fraction of the cost typically associated with a permanent hire.
If you haven’t worked with contractors before, this year could be the year to try it out. Here are three ways that working with contract talent can benefit your bottom line:
Quickly and easily scale your workforce
Need specialized talent for a short-term project or additional manpower for busy season? When you opt for contractors rather than permanent employees, you can quickly scale your workforce up or down to meet your evolving needs. There’s no waiting period, either. Contract professionals are able to start immediately, unlike permanent employees who may need to give a minimum two weeks notice at their current jobs.
Even better, you won’t have to pay the hiring costs typically associated with permanent employees, including background checks, signing bonuses and benefits, as well as time spent on search and recruitment and contract negotiation. Similarly, parting with talent you no longer need requires severance pay, unemployment insurance payments, and can be emotionally draining for everyone involved. With contract professionals, you don’t have to worry about this. You can grow or shrink your workforce quickly and easily to suit the needs of your business at any given time.
Reduce benefits expenses, including costly health insurance
Permanent employees come with many costs, including health insurance, retirement savings contributions, paid sick leave, and paid vacation time. With contractors, you only pay a flat rate for the project or an hourly rate for their time. Some of my clients have been hesitant to hire contract workers because they worry they’ll leave if they are offered a job with health insurance. But when you work with an agency like Lucas Group, our contractors have the option to participate in our group healthcare insurance plan. It’s a win-win for companies and contractors.
Test out a prospective hire before committing
We’ve all been in a situation where a new hire looked great on paper but just didn’t work out in the end. It’s very difficult to evaluate an employee’s potential based on interviews alone. With contract-to-hire positions, you can see firsthand how a new employee fits in with the rest of your team and how they respond to different challenges and assignments. You then have the option to turn a star performer into a permanent member of your team at the end of their contract. Even better, there’s no risk you’ll get stuck with someone who isn’t the right fit.