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Independent Contractor vs. Employee

Guest post by: Anne Barr

Article Overview: Many business owners have used independent contractors when appropriate and especially when the needs are part time and/or irregular hours. Using independent contractors can save the business owner on payroll taxes and can be a plus if the need is occasional.

Independent Contractor vs. Employee

Many business owners have used independent contractors when appropriate and especially when the needs are part time and/or irregular hours. Using independent contractors can save the business owner on payroll taxes and can be a plus if the need is occasional.

In this economy, many states are required to implement balanced budgets and carry no deficits forward at the end of each fiscal year. Often state officials believe that businesses routinely misclassify their workers as independent contractors as a way to avoid the financial responsibilities of being their employer.

In the last 12-18 months, many state legislatures have introduced bills seeking reform to the laws concerning wage, workers compensation and/or unemployment insurance to broaden the definition of who is classified as an “employee” under such laws.

Most of these bills seek to make anyone who performs services under the “direction and control” of another person that person’s employee. The only exception would be when the employer can show that the person providing services is completely free from such direction and control.

This aggressive enforcement of independent contractor laws in the last few years has created much attention for the franchise business model. The franchise model is all about “being your own boss”. Each franchisee is responsible for their own employees. Under federal law, a franchisor must maintain certain control over the use of its marks….the brand or system. (which is the value component to one who becomes a franchisee and invests in the business opportunity)

Typically, when the franchisee signs the Franchise Agreement, they must agree to protect the marks or brand. However, according to some state laws and/or proposed amendments to state laws, the franchisee may be classified as the franchisor’s employee.

Because becoming a franchisee is an entrepreneurial choice, franchisees expect to be their own boss and the boss of their own employees…….NOT employees of the franchisor. These state laws will punish the entrepreneur and consequently negatively effect positive economic growth.

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Article Tags: business owners, franchises, independent contractors



Related Forum Posts
Post subject: It's Not Personal, just business - I so agree! Actually, the business world as we know it IS in trouble. I heard some stats last week that they expect by the time 2050 that 70% of workers will be freelancers. Employee/Executive Bullying won't be able to stand it when it could be easier for someone to simply contract with the nicer guy (or gal). I, for one, will be choosing the nicer ones!
2 Forums Updates - Many of you have been writing in suggesting that on my website and in my newsletter we include the link to the actual forum post and not just the name of the post and a link to the Forums home page. Well, after looking into it I'm pleased to announce that this feature is now available. Thank you everyone for the suggestions! We've also added names for members based on how much they post. Level one is Newbie, Level 2 is Intern, Level 3 is Employee and so on... There are 10 levels in total. I'm looking forward to seeing how everyone does! Keep the suggestions coming - they are great!
Re: Finding AND Keeping Good People - Employee retention or as you mention “Keeping the Good People” is one of the biggest challenges for any growing business. It takes a huge effort from the entrepreneur’s end. I can come up with the following when it comes to KEEPing the good people- 1. Motivation of the employees 2. Recognition of the needs of the employees 3. Activities to make the employees feel valuable towards the organization 4. Make benefits more accessible 5. Offer profit sharing incentives 6. Create clear career paths at the company 7. Consider telecommuting, job sharing and other flexible working arrangements 8. Incentives are essential and they don't have to be huge 9. Have other managers praise an employee's work 10. Be sensitive to the balance between work and private life
Re: Are you Self Employed or a Business Woman? - I had a chuckle over that comment. My husband and I built a house together a few years ago and I think it's a huge testament that we are still married! I was the official General Contractor. We're both leaders so it was QUITE interesting at times. We had to REALLY consider whether we'd do this project, but we've both grown a lot and we are very excited about our prospects. Stacey is a teacher so he won't be around during much during the week and we plan on hiring staff to do most of the work once we are set up. The idea is working smarter instead of harder. :0) We plan on this being a true business that can eventually run itself when we are out of town. I don't need another job! We are in a smaller tourist town that is very big on sports. My husband is an active sports fanatic and since I really enjoy being creative around business, we decided to pursue opening a sports store together. We actually decided on a sports consignment store so that we could fill in a gap and give back to the community. It's not a huge money maker in itself, but has a lot of potential for revenue related to it. It's in a high traffic location and we want to make it like a community information center for the adventurous residents and visitors. We're even looking at including a takeout cappuccino bar to really draw people in. It's in a new corner building and the space is at the drywall stage. Right now is the huge task of setting it all up, but I'm really enjoying it. It's actually like a game for me! Thanks for asking, Tami
Chain store hurdles - [quote:3v8nzz4s]Everyone I'm targeting are independent stores which helps me overcome one hurdle. [/quote:3v8nzz4s] What hurdle is that? I know the major stores like B&N, etc. like to deal with buyers and distributors, but I think they all cut some slack to "Local" authors, don't they? Every store I go into has its "Local Section," featuring local authors, as well as books about the locality. I wouldn't bypass them altogether. If you drive past one, why not go in and visit, talk to the manager, see what they say? [quote:3v8nzz4s]Bookstores want to order through Bowkers and I have their info and the ISBN (identification) numbers for my books. [/quote:3v8nzz4s] You mean the major chain ones do, right? Independent stores I think have no problem dealing directly with the publisher/author. But you want to get your money up front if possible in case they go out of business....as too many independents do these days.


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