Episode 365 – Hiring Contractors vs. Employees
Today we’re talking with Ashley and Rob from Oh So Busy Cleaning!
Ashley and Rob are ready to expand their cleaning company and bring on help. Their question is, should they hire contractors or hire employees?
Let me start with a disclaimer. There are two ways to answer this question and I have seen it done successfully both ways.
I personally, prefer employees and I like a 60% employee to 40% contractor ratio. With that said, let me outline the differing benefits of contractors and employees.
The first benefit of hiring a contractor is in price. Generally, contractors cost less than employees. Since contractors pay their own taxes, you won’t have payroll cutting into your revenue each month. The second benefit of contractors is in being able to hire them on a contract by contract basis. This means you know exactly what your numbers are going to look like each month. Unlike contractors, employees can work extra hours, potentially work overtime, etc. Lastly, you have less responsibility with a contractor. For example, it is much harder for a contractor to sue you over a dispute. This isn’t to say they can’t sue you, but there is less liability.
The first benefit of hiring an employee is in knowing you won’t get audited. There is a fine line between employee and contractor and if you pass this line and get audited, you can end up paying a lot of money to the government and the employee. If you have employees, you don’t have to worry about the contractor passing the line of becoming an employee. Second, contractors are required to have their own insurance. This may seem like a benefit towards hiring contractors, but it’s not. Most contractors don’t have insurance, which means the liability will come back to you if there is an accident. As an employee, you’ll have the proper insurance that covers any accidents. Lastly, you have more control when you have an employee. You’re able to train them, tell them what products to use, etc. This can be massively beneficial to running a fast paced, efficient cleaning company.
Let me reiterate, there is no right answer, but there is an answer I prefer. I’ve run my cleaning companies with employees and have found it to be a much better decision in the long run. Yet, the decision comes down to the cleaning company owner.
Best advice you’ve received either personally or professionally?
You don’t need every client.
What’s the biggest mistake you’ve made in the cleaning business we can all learn from?
Not performing the appropriate market research to know how much you should be charging.
What is your favorite book?
You Are A Badass: How To Stop Doubting Your Greatness and Start Living An Awesome Life by Jen Sincero