Small Business Hiring Tips: Employee, Contractor, or VA?

How do I know when I'm ready to hire for my business? Small business hiring tips. Image of post-its .When you start to think about hiring help for your small business, you may ask ‘What is the difference between an employee, independent contractor and a virtual assistant (VA)?’. There are websites that give you a legal and IRS definition, but I want to give you a different perspective: What would help you the most?

First, let’s define the terms.

An employee takes direction from you. You tell them what hours to work , and may even train them. You pay them either hourly or a salary, and are also responsible for payroll taxes and worker’s compensation insurance. If you require them to work from your office, they are most likely an employee.

An independent contractor does work you request, but set their own hours, and use their own tools. You can give them a deadline and work specs, but they decide how to get the work done. They set their own rates and bill you.

A Virtual Assistant (VA) is an independent contractor who does their work for you remotely. I differentiate VA’s because I think of independent contractors as often being hired per project, whereas a VA is usually hired to work on an ongoing basis, typically  in increments of 5 hours a month.

Many solopreneurs start by hiring independent contractors on a project basis, like an accountant or graphic designer. As the business owner’s workload grows, they often hire a VA to take care of repetitive tasks.

Hiring a VA can be more cost-effective than hiring an employee. I remember considering hiring a part-time employee for office help, then finding out that, even though I only wanted someone 2-4 hours/week, the worker’s comp insurance had a hefty minimum and it was non-refundable; even if my one employee quit, I had to pay a year’s premium. It would have been fine if I needed someone for 20 hours a week or more, and knew I would replace that person if they left, but I was ‘testing the waters’, so a VA was a much better choice for me.

The downside is that I had to let go of some tasks I would like done by someone else. I would love for someone else to enter and update my contacts. Easy to direct an onsite employee to do this, but not worth the time it would take for me to scan cards or put them in an envelope and mail them to a VA, with directions. At that point, it is the same effort as me just doing it myself. Luckily social media & automation tools (see my post Keep Your Contacts Up-to-Date Without Ever Entering a Business Card Again) make keeping track of contacts much easier now. And sharing information and files already on your computer is a breeze.

What frustrations have you faced in outsourcing work? I’m working on an e-book to help solopreneurs hire smart, and would love your comments.

Comments

  1. Amanda Kendlesays

    Great comparison. I have used a VA a few times but never hired one on a consistent basis, but would like to in the future. I’m definitely not interested in an employee based in my office though – while it would be nice to have the contact I think there are too many extra hurdles (like your example with the workers comp) to make it worthwhile, at least at the moment.

  2. I like the sound of a VA. If I considered hiring somebody, that’s the way I’d choose.

  3. Sophie Bownssays

    Thank you for the tips!

  4. Yeah, I think that’s one of the challenges of figuring out which way to go, is deciding whether the person needs to be physically available to you. Managing biz cards and contacts after events is challenging, and working with a VA to do that doesn’t necessarily make as much sense as having someone in the office do it. I thinking that one needs to be very clear about which activities you REALLY don’t want to do yourself, and which ones you REALLY aren’t good at, and find the right person–and set up the system with him or her that makes it easiest for both of you.

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