How to Successfully Hire Your First Contractor, and What You Need to Know
This is such an exciting step in your business development, and one that should be taken seriously to maximize the benefit and productivity of your new trajectory.
There are several things to consider before jumping in, and we want to talk it over with you.
Wait… Is a Contractor the Same as an Employee??
Short answer? No. It’s important to get this straight because this is a confusing point for a lot of small business owners.
An Independent Contractor is someone you hire for a defined term to do a defined job. As the contracting party, you are not allowed to tell an independent contractor how to do the job, when to do the job or where to do the job.
An Employee on the other hand is directly under the control of your business, and you can tell them exactly how you want a job done, when to do the job and where to do the job.
Here is a great example for you: A Plumber is an Independent Contractor because they tell you when they are coming to do the job, they do the job how they want to do it, and they bring all of their own tools. A secretary, on the other hand, is an Employee because you tell them how to do the job, you tell them the hours of operation that they need to work within and you tell them they have to do the job at the desk you provide for them in your office.
Here are a few more “key” differences that apply under Canadian Law:
- Has no entitlement to the ‘Employment Standards Act’ benefits like minimum wage, overtime pay, personal emergency leave, parental leaves, notice of termination, severance pay etc.
- Pays their own taxes
- Can fluctuate in hours worked, based on your Agreement with them
- Provides their own tools they need to complete the job (computer, office space, cell-phone etc)
- Required to receive the above benefits of the ‘Employment Standards Act’
- Paid wages with payroll deductions such as CPP, IE and Income Tax taken out by YOU, the employer.
- Provided for, with the tools they need to complete the job, by the employer.
- Required Employee Handbook and Employment Standards
Remember, contractors are paying their own fees, holiday, sick pay and more, so their package pricing and hourly rates may be higher to account for this.
What sort of contractor do you need?
Take some time to think of all the tasks you want to give your Contractor so you can search for the right fit. Based on your requirements, you might even need multiple people to fulfill the work. That’s the beauty of a contractor, you are paying for the specific work they do, and nothing more!
It is important for you to make a list of what areas of your business you are wanting help with and what goals you want to achieve so you can enter your search with a clear outline of expectations.
You’ve Found Some Candidates, It’s Interview Time!
Interviews/discovery calls or whatever you wish to call them, are our number 1 recommendation for solidifying the right contractor for you. 1:1 calls allow you to get a feel for their overall demeanour and work ethic, giving you a glimpse into how you both might communicate in a work atmosphere.
You will be working closely with this new team member so it’s important to ask the right questions: find out about their rate and package options, outline your expectations and allow the candidate to speak openly and ask questions as well!
We created a Hiring Bundle for you here that can help you through the hiring process!
Start Things off on the Right Legal Foot!
You spent a good amount of time figuring out your expectations, solidifying the right rate or package and discussing the expected deliverables and now what? Who is going to protect both you and your contractor?
The first and most important step is THE CONTRACTING PHASE!
An Independent Contractor Agreement is exactly what you need. With the right contract, you can:
- Outline expectations like meeting requirements and deliverables
- Protect your intellectual property
- Mutually agree on rate expectations and payment schedule
- Enforce a non-compete clause (if necessary)
- Ensure there is no miscommunication that the contractor is not an employee
- And so much more!
There is a way you can get all of this without a hefty attorney price tag! Contracts For Entrepreneurs has this exact contract template for a fraction of what you would pay to get it drafted by a lawyer. Start off on the right legal footing, and secure your business relationship with a steadfast contracting system.
Now go out there and grow that business!
Visit us at Contracts For Entrepreneurs and follow us on Instagram @contractsforentrepreneurs
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