January 31st – Annual Required Reporting ~ W2’s due to employees & 1099’s to Contractors
By Andrea Feinberg
Contractor vs. Employee: Choosing the Right Workforce
W-2 forms need to be given to your employees and 1099s to your contractors by the end of January. This might be a great time to consider all the ways you can build a team that works best for your business, whether your considerations are budget, short- or long-term need, level of expertise, considering an expansion or new service/product division, etc.
There is a variety of contemporary ways of getting help for your small business: virtual assistance, sharing employees, engaging short term help whether professionals or consultants, rotating employees or team members, etc. It seems there’s a whole new way of getting the help your small business needs. The contemporary business landscape offers a variety of innovative solutions to optimize workforce management. Here are some recommendations you might want to express.
- Virtual Assistance Platforms: Explore online platforms that connect businesses with virtual assistants. These platforms often allow you to find professionals for specific tasks, providing a flexible and cost-effective solution. www.upwork.com is one that’s been operating consistently for well over a decade and attracts a broad range of professionals worldwide.
- Gig Economy Platforms: Utilize gig economy platforms to hire freelancers or independent contractors for short-term projects. This approach can be beneficial for tasks that require specialized skills on a project-by-project basis. This can be a great, low risk way to evaluate someone for a longer-term engagement or give you a new resource to put in your pocket for fast, future use. However, be aware that some you find on these platforms are trying new work environments and might not have availability for your ‘next time’ need. One you may know is www.fivver.com.
- Coworking and Shared Employment: Consider shared employment models where businesses collaborate to share employees based on expertise and workload. This can lead to cost-sharing and increased efficiency. Of course, you want to have strong systems in place to protect sensitive information.
- Short-Term Consultants: Engage short-term consultants for strategic advice or project-specific expertise. Many professionals offer consultancy services, allowing you to tap into their knowledge without a long-term commitment. Additionally, the specificity of their expertise can mean they have access to other resources you may want to implement the recommendations they make for you.
- Employee Rotation Programs: Implement employee rotation programs within your team to cross-train members and enhance flexibility. This approach fosters skill diversification and adaptability among your workforce. This benefit will show up quickly for you when a team member is on vacation or otherwise absent.
- Remote Collaboration Tools: Leverage modern collaboration tools that facilitate remote work. Cloud-based platforms, project management tools, and communication apps enable seamless coordination among team members, regardless of their physical location. This technique has become more useful as so many employers – perhaps you – embark on a hybrid workspace.
- Freelance Marketplaces: Explore freelance marketplaces that host a diverse pool of talent. These platforms allow you to find professionals across various domains, providing flexibility and scalability for your business needs.
- Outsourcing for Specific Functions: Consider outsourcing specific functions, such as IT support, customer service, or marketing, to specialized external providers. This can streamline operations and allow your core team to focus on key business activities. You may have heard of ‘fractional’ CFO’s who make their considerable expertise available to you on an ‘as needed’ basis. We’re your fractional HR company and you can learn more about us here.
- College Students: Your local college is filled with students who are learning about your industry or the specific job function for which you’re searching. They’ll be on their best behavior and get credit for their work with you. You need to be aware of the degree to which your operations may appear in their summarizing report for the teacher.
Evaluate these options based on your business requirements, budget constraints, and the nature of the tasks at hand and remember to consult with a tax professional for specific advice tailored to your business circumstances.
And, by the way:
Advantages of Hiring Contractors:
- Flexibility: contractors offer flexibility in terms of project-based work, allowing your business to scale up or down as needed.
- Cost Savings: hiring contractors can be more cost-effective as it eliminates expenses like benefits, taxes, and overhead associated with full-time employees.
- Specialized Skills: contractors often bring specialized skills and expertise for specific projects, providing value to the business.
Advantages of Hiring Employees:
- Long-Term Commitment: evaluate the benefits of having a dedicated team for long-term projects, growth, reputation and the stability it brings to your business.
- Team Integration: employees become an integral part of company culture, fostering teamwork and collaboration.
- Control and Training: there are control and training opportunities that come with having employees, allowing for a more hands-on approach in shaping the workforce.