Forming Relationships with Independent Contractors

There are rewards to be gained by using independent contractors and consultants. Consider the following advantages:

• You get special expertise
• You use them as needed
• You save on tax contributions
• You save on benefits
• You have flexibility in the relationship

However, employing independent contractors is not all roses and champagne. Consider the following disadvantages:

• You run the risk of tax problems
• You may not have the same continuity in the relationship that you would have with an employee
• You may have to pay high fees to the contractor
• You have limited control over the contractor

Before you hire an independent contractor or consultant, you may want to get background information to determine if he or she is the right person for the job. Click here for a list of questions that you may want to ask an independent contractor. If you want to check out the answers you get, have the consultant or independent contractor sign a background check permission form. Click here for a sample of a comprehensive background check permission form, or here for a simple background check permission form.

If you do hire a contractor, be sure that you follow the laws that distinguish between contractors and employees, as failure to do so can result in heavy fines from the IRS. Read A Test for Determining Contractor Status for more information.