Hiring in Charleston, SC: Permanent vs. Contract Employees

It’s relatively common these days for small businesses to have a combination of full-time and contract workers on their rosters. It’s a choice based on your business needs and the specific role or project you’re hiring for. The most significant differences are the employer-employee relationship and tax liabilities. 

In a recent Gusto survey, 90% of small businesses said they intend to increase or maintain their current use of contract employees. Another 33% said their company’s success depends on having access to independent contractors. 

The question we often hear is, “Who’s in control?” Consider these facts.

  • It’s up to you to oversee the work of your full-time staff, provide company benefits, health insurance, paid time off, and report their taxes to the IRS. It’s also up to you to provide your employees with regular reviews and performance feedback. 
  • Many contract employees perform their services separately from your business and are responsible for paying self-employment tax. However, a good relationship with a contract worker can result in positive and reliable outcomes, making it feel like they’re as much a part of your team as a full-time employee.
  • Depending on job fit and company culture, a permanent employee and an independent contractor can be equally loyal or disloyal. 
  • Contract employees save you money, but you may offer benefits and claim tax deductions if the working relationship is mutually beneficial. Since providing contractor benefits isn’t common, it may help attract more talent. 

Permanent and contract employees can be win-win or lose-lose situations. Two critical considerations to keep in mind are determining the business need and securing the best talent. Continue reading below to learn more.

What are the Benefits of Hiring a Contract Employee vs. a Full-Time Employee?

When expanding your workforce in Charleston, SC, one crucial decision is whether to hire a full-time employee or engage a contract employee. Each option has its advantages and considerations, and at Allora Business Solutions, we understand the importance of making the right choice for your specific needs.

Here’s a breakdown of the key benefits when deciding between a full-time employee and a contract employee.

  1. Flexibility: Hiring a contract employee offers flexibility regarding the duration and scope of their engagement. Contract employees are typically engaged for specific projects or time-bound assignments, allowing you to scale your workforce up or down as needed. This flexibility is beneficial when you have short-term or specialized projects requiring additional resources, enabling you to adapt quickly to changing business needs.
  2. Cost Considerations: Budgetary considerations play a significant role in the decision-making process. Contract employees are usually paid on an hourly or project basis, which can provide cost savings compared to the salary, benefits, and overhead costs associated with hiring a full-time employee. Additionally, contract employees are not entitled to benefits like health insurance, paid time off, or retirement plans, which further contribute to cost savings.
  3. Expertise and Specialization: Contract employees often bring specialized skills and expertise. They can offer specific knowledge or experience in niche areas, allowing you to access talent that may be difficult to find or afford full-time. Engaging contract employees can be advantageous when you need immediate access to specialized skills for short-term projects or a fresh perspective from an outside expert.
  4. Company Culture and Long-Term Commitment: Hiring a full-time employee fosters a stronger sense of loyalty, commitment, and alignment with your company culture. Full-time employees can grow with the organization, build relationships, and contribute to long-term goals. They can be valuable assets in maintaining institutional knowledge and continuity within the company.
  5. Administrative and Legal Considerations: Hiring an exempt employee involves administrative responsibilities such as payroll, overtime pay, benefits administration, tax withholdings, and compliance with labor laws. Contract employees are often responsible for managing their taxes and benefits, reducing administrative burdens for your organization. However, it is essential to ensure compliance with applicable laws and regulations when engaging contract employees to avoid potential legal issues.

For more information about adequately classifying employees in Charleston, SC, whether exempt or non-exempt employees, here are the IRS guidelines and a checklist to help you determine the difference. 



If we can help with your Human Resources needs, email us at info@allorasg.com to schedule a call.

Check out our services page to discover what else we can do to benefit your business in Charleston, SC.

— Kat & Ashleigh
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