When it comes to running a business, there are a few options when it comes to hiring individuals to work for you. The two most common types of workers are employees and subcontractors, but what exactly is the difference between the two?
Employee
An employee is a person who is hired to work within the business under the direction of their employer. They are usually given set hours, duties, and expectations that they must meet. Employees are subject to business policies, procedures, and guidelines, and they are paid for their services in the form of salary or hourly wages. The employer will also withhold taxes from an employee`s paycheck and provide benefits such as health insurance, paid time off, and retirement plans.
Subcontractor
A subcontractor, on the other hand, is an independent contractor who is hired to complete a specific task or project for a business. They are not considered an employee of the company and are responsible for their own taxes and benefits. Subcontractors are free to work on other projects and have more control over how they complete their work. They are not subject to the same policies and guidelines as employees, and they are paid for their services in the form of a contract price or set fee.
So, what is the main difference?
The main difference between an employee and a subcontractor is the level of control and responsibility that the business has over them. An employee works under the direct supervision of the employer and is required to follow company policies, procedures, and guidelines. They are paid a set wage or salary and receive benefits, and the employer withholds taxes from their paychecks.
A subcontractor, on the other hand, is an independent contractor who is hired to complete a specific task or project for a business. They have more control over their work and are responsible for their own taxes and benefits. They are not subject to the same policies and guidelines as employees, and they are paid a contract price or set fee for their services.
In conclusion, knowing the difference between a subcontractor and an employee is important for business owners. Understanding the levels of control and responsibility that come with hiring each type of worker is essential to ensure that your business is operating efficiently and in compliance with all legal requirements.