Skip to main content

Clayton Makepeace, Troy White and Outsourcing

employees outsourcingTroy White has posted at copywriter Clayton Makepeace’s site some good information about outsourcing to grow your business quickly. Let me weigh in on some of the legal issues.

As a preliminary matter, you should be very careful to distinguish between hiring employees and outsourcing to independent contractors. Many business owners who are non-lawyers will refer to “hiring” an independent contractor. That’s a mistake. If you’re going to outsource to an independent contractor, nothing you say or put in writing should suggest that the person doing the work on a freelance basis is actually an employee.

From a taxes and benefits standpoint, employees are a costly pain in the @ss. Unless you want to be responsible for Social Security contributions, workers compensation, and unemployment compensation, don’t hire employees.

In contrast, independent contractors are generally responsible for all of their own taxes (caveat – there may be a gray area in California and other states where some deadbeat independent contractor can file an unemployment comp or workers comp claim against your business).

What’s the down side to independent contractors? Lack of control that you have with employees.

Yet if you carefully pre-screen the contractors you outsource work to, you should be okay. When in doubt, favor outsourcing to an independent contractor instead of hiring a new employee.

Take a look at Troy White’s post at the link above but do so with these legal issues in mind.

Mike Young, Esq.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994 and is an angel investor in startups. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

More posts by Mike Young, Esq.