Small Business Resources, Business Advice and Forms from AllBusiness.com

The Benefits and Disadvantages of Hiring Consultants

* From  Date: Monday, December 13 2004

You can reap some rewards by contracting with independent contractors/consultants instead of hiring new employees. The advantages include:

  • You get special expertise
  • You use them as needed
  • You save on tax contributions
  • You save on benefits
  • You have flexibility in the relationship
  • You can terminate them easier than terminating employees

But using contractors/consultants can have its own set of disadvantages:

  • You may not have the same continuity in the relationship as you would have with an employee
  • You may have to pay high fees to the consultant
  • You have limited control over the consultant
  • You run the risk of tax problems if the consultant in fact operates like an employee

An Effective Way to Hire and Fire
Host Hattie Bryant of Small Business School interviews Al Smith of Angell & Phelps, a chocolate manufacturer in Daytona Beach, Florida.