Contractors or permanent staff: How to decide

Staffing concerns are a crucial part of your business plan. The costs of staff can represent a considerable expense for any business, so they must be managed carefully. What type of staffing you need depends on volume, budget, and how fast you want your business to grow.

Contract staffing advantages

More and more companies are turning to contract employees rather than permanent staff. There are a variety of incentives for doing this both for the employee and the contractor.

Try before permanent hire

Perhaps you want some permanent staff but need to be sure that you hire the ideal person for the job. With a contract worker your company can test a variety of people via short-term contracts before making this important decision. For the worker, this can be a way to get a foot in the door in a competitive field or company.

Expense and flexibility

Hiring a full-time employee can be expensive due to added costs such as benefit packages. These expenses are not always easy for an established company to meet; if your company is just starting out, hiring full-time staff can be risky and expensive. With contract workers you can establish a contractor pay rate that is easier to budget for. In addition, there are times when work demand increases and you might need temporary help. Contract workers allow you to easily increase your workforce at critical times without incurring the expense and paperwork required when hiring a full-time employee.

The merits of a full-time employee

While there is no question that contract workers have their advantages, there are some situations where hiring permanent staff can be a better solution.


Those applying for a permanent position are more likely to have a greater degree of experience or education in their background. Naturally, a full-time employee will receive training that is more detailed when your company hires them than would a contract worker.


A full-time employee is more invested in your company. Over time, a successful employee will increase their skills. A contract worker might not be so concerned with the success of your company since they are just there temporarily.

The best of both worlds

In today’s changing business world many firms are finding that combining contract workers with permanent staff gives them the flexibility and experience they need to run a successful business. While some full-time staff is necessary, temporary workers offer relief at times of high demand, such as special projects.

Contractor management options: safe under the umbrella

For independent contractors, operating their business through an umbrella company can offer numerous advantages. Keeping track of tax information and incentives can be time consuming and confusing. An umbrella company can help protect a contractor from tax errors. They can also take care of invoicing and tracking business expenses. This is an ideal solution for those that want the flexibility of being a contract worker but do not want to deal with all the administrative work of running their own limited liability corporation.

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