Many West Michigan small businesses are considered boutique or not full-service. There are many businesses that have less than 5 employees that focus on a very specific area of the market. Think of a marketing firm. While a larger business could offer every service under the sun, small marketing businesses often focus on branding, social media or other specific areas of marketing. It is because of this reason and others that it is becoming more and more common to hire an independent contractor to assist your business in providing the necessary services that your customers require.
Hiring an independent contractor is an efficient way to get your customers what they want or need but not having to hiring additional employees and over extend your small business. You have to be careful when working with independent contractors because you want to ensure that you do not blend the independent contractor into your business as a partner or an employee.
If that independent status is lost, your small business can be liable for the independent contractor’s actions or negligence. It can also mean that you have to provide certain benefits to the independent contractor because once that status is lost they are considered an employee of your business.
There is no one factor that is looked at to determine if an individual is an employee or an independent contractor but rather a multitude of factors. Some of the factors considered are the belief of the parties as to the nature of their relationship; the amount of control over how work that is done; the nature of the work and whether or not it consists of activities usually done by an independent contractor; if insurance or other benefits are provided; the permanency of the relation; the skill required in the operation; and the opportunity for profit or loss from the work done.
So how can you make sure that your independent contractors remain independent? First make sure there is a contract in place that specifically calls for the separation of your small business and the independent contractor. This independent contractor agreement can also lay out the job the contractor is working on, what is expected of them, and what is expected of you. Your small business should have these agreements in place to protect itself in other regards too.
In addition to a solid independent contractor agreement, you need to think of the relationship like you would if you hired someone to redo your kitchen. Obviously you can instruct what work you want done but you are not going to control how they get that work done. Also, it’s the contractor’s responsibility to have insurance and other benefits as well as pricing his services in a way that he sees a profit or loss. While the work you are contracting to have done might be different that redoing your kitchen, the relationship your small business should have with the independent contractor has to be of the same nature.
Contacting a small business attorney that can not only help you draft a contract that defines your relationship with your independent contractors but also advise you on specific interactions and whether or not they might be crossing a line. In the end, you don’t want your small business to flounder because of someone else’s actions so why risk it.