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What is an Independent Contractor?

According to the US IRS, an independent contractor is an individual who maintains control over most of the key aspects of their own work.

This means that if usually an employer enters into an independent contractor agreement, they may only control the result of the contractor’s work and not the time or manner in which it is done. Independent contractors allow businesses an added level of flexibility and skill.

What’s the Difference Between an Independent Contractor and an Employee?

Having a clear understanding of how an independent contractor differs from a full-time or part-time employee is essential in oder to establish compliance. The penalties and fines that arise from misidentifying an independent contractor in terms of taxes or employee benefits can be crippling, so you must be aware of the definitions before setting out to establish an independent contractor agreement.

In simple terms, independent contractors and employees differ in the following ways:

  • Employees

                 

    Independent Contractors

  • Operate at the instruction of a boss or manager

    independent_vs_ico1.png

    Operate independently

  • Work full-time or part-time for a single company

    independent_vs_ico2.png

    May work for multiple companies simultaneously

  • Are part of the company payroll and benefit structure

    independent_vs_ico3.png

    Aren’t part of a company’s payroll or benefit structure

  • Are the responsibility of the company in terms of tax and social security payments

    independent_vs_ico4.png

    Pay their own taxes and social security

  • Work where and when as directed by their company

    independent_vs_ico5.png

    Work as their choose (within the limits of the work agreement)

6 advantages of using an Independent Contractor
  • Lower Overheads
    Lower Overheads
    The main benefit of an independent contractor is that an employer is responsible for none of the same benefits or additional costs that full-time or part-time employment entails. The fee you pay for the services of an independent contractor is the only cost you have to budget for, meaning you save on employee benefits, taxes, and workspace costs.
  • Greater Flexibility and Scalability
    Greater Flexibility and Scalability
    Hiring an independent contractor is a lot simpler than a full-time employee, and their services are only retained for a project or fixed-period period. This means there’s no costly downtime between projects, and you’re free to increase or decrease the level of your relationship or project scope upon forming a new agreement with the contractor.
  • The Opportunity for New Transferable Experience and Expertise
    The Opportunity for New Transferable Experience and Expertise
    Independent contractors are often experts in their fields. During the course of their service, an adept manager can organize schedules to have their other employers absorb the contractors’ knowledge, skills, and experiences by having them work together.
  • Outside the Box Thinking
    Outside the Box Thinking
    Global recruitment means access to new and varied ways of thinking and backgrounds. For a fraction of the time and cost it would take to hire full-time employees overseas, an independent contractor can work alongside your employees and challenge them to consider challenges from new and innovative perspectives as a result of their experience.
  • Greater Efficiency
    Greater Efficiency
    Independent Contractors are just that, independent. They require fewer management hours, can work better by themselves, and typically require no extra training outside of any specific tools or software you may use within your company, thus saving you time.
  • Better Experience with Deadlines
    Better Experience with Deadlines
    Independent contractors are responsible for their own work. They’re proficient at meeting deadlines that may be difficult for your full-time employees. Rather than being dragged away from projects, an independent contractor works on the projects you give them during the hours you agree upon. This way you retain greater control over the way of work.
Why and When Should Your Company Use Contractor Management Services?

You should consider hiring an independent contractor in several different circumstances:

For work that requires little supervision or is outside of the regular skillset that could be supervised by your managers or employees

For work that isn’t central to your business goals but needs to be done, such as cleaning or computer system management

For work on a short-term project or within a defined period

For work that requires specialist skills or expertise

Deciding to hire an independent contractor is not inexpensive. You should consider the necessity before embarking on such an agreement.

Remember, if you later want to have the independent contractor perform work outside of the original agreement, it will require you to amend that agreement or even form an entirely new one. Should you wish to retain the services of an independent contractor over a more extended period of time, it may be helpful or prudent to consider transitioning them into full-time employees to avoid compliance issues.

PEO vs. Independent Contractor

A PEO or global EOR services provider can hire and manage staff on your behalf, giving you the advantages of full-time employees with the flexibility and cost-efficiency of an independent contractor. By outsourcing your employees to INS Global’s PEOs around the world, you can hire and manage staff in your target markets while we take care of the necessary HR and complicated compliance requirements.

Contact our team of consultants today to learn about what INS Global’s PEO services can take care of your employment outsourcing needs.

Get Access to Expertise with INS Global

INS Global can provide a range of services designed to aid you in hiring and managing contractors in new markets around the world.

Our global independent contractor management services can help you find the best in overseas talent and manage every element of their employment, from contract formation to invoicing or salary payments. This way you benefit from the skills but avoid the related hassles.

Jason Simon
Jason Simon

The Wine Group

Director Global Strategy​
Their flexibility and ability to understand the specifications of the market are impressive
Sherry Yoshioka
Sherry Yoshioka

China Mobile

BA Project Director
We were looking for eays to expand our operations in Taiwan and Singapore. Through INS Glibal we avoided complicated aspects of our plans
Andrew Mi
Andrew Mi

Price Water House

Senior Associate Advisory
We needed a cost-effective solution to meet our Asian expansion needs. INS provided a personalized service that helped us to simplify our expansion to South Korea with ideal recruitment candidates.
Miguel Romero
Miguel Romero

Europastry

APAC Director
We really liked the recruitment process. They helped us find the ideal candidate in challenging places for us (South Korea). The experts were quick to help us find wireless engineers in South Korea.
FAQs
  • 我能以我公司的名义在国外雇佣/派遣员工吗?
    不能,每个国家的劳动法都要求您需要国外的实体公司才能这么做。
  • 我是否需要在国外建立实体公司来雇用/派遣员工?
    您可以选择在每个国家设立一个当地的实体公司,也可以使用当地专业雇佣组织(PEO)服务直接在雇佣当地员工。
  • 什么是在册雇主(EOR)?
    在册雇主(EOR)是承担您在特定国家雇用的工作人员责任的法律实体。在实践中,外国公司可以设海外立子公司成为其海外雇员的雇主,也可以使用PEO服务代替。
  • 在册雇主需要承担哪些法律责任?
    法律责任因国家而异,包括但不限于所有员工的管理责任:劳动合同相关问题、工资管理、税务合法性、社会保障管理、费用报销申报、雇用和终止雇佣程序等。
  • 实现海外扩张需要多久?
    一般情况下,需要一个月的时间让一名员工成为 PEO 的在册员工。注册一家新的子公司则需要 4-12 个月不等。
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