Grow Your Business by Hiring
Perhaps you have been teaching online for a while. You have a niche. You have some regular students. Your social network is growing. You have more work than you can get done. Perhaps it is time to hire your first employee or to contract out some of your work load.
Do you want an employee or a contractor?
If you want to tell someone what to do and when to do it, you want an employee. Hiring an employee is more complicated than hiring a contractor. You must pay income tax, withhold and pay Social Security and Medicare taxes, and pay unemployment taxes on wages paid for an employee. You need not do this for a contractor.
If you can define an aspect of your business that you can delegate to someone else, it is easier to hire a free-lance contractor. For example, if you want someone else to take on your Social Media, then you can hire a social media consultant. If you want someone to teach some classes, then you can hire a free-lance teacher.
The difference between contracted work and employee work is important, because if you misuse contract labor, you can be held accountable and forced to pay back taxes.
How do you tell the difference between a contractor and an employee?
While it seems that The IRS should have a pat answer to this question, it does not. The IRS states, that “You must examine the relationship between the worker and the business. All evidence of the degree of control and independence in this relationship should be considered.”
The IRS asks you to consider three aspects of the position: Behavioral control, financial control and the relationship between the parties. The IRS includes this worksheet to help employers determine if their workers are employees or contract laborers.
Behavioral Control: Employers of contractors cannot control how and when the work will be done.
Financial Control: Independent contractors are not reimbursed for expenses. They have the opportunity for both financial gain and loss. In other words, if you buy and maintain your own computer, you are probably an independent contractor.
The Relationship Between the Parties: A written “contract” defining the relationship goes far to insure that you have “contractors”, not employees. That said, you cannot abuse that relationship by demanding more than the contract entitles you to.
What can you ask a contractor to do?
These are some aspects of a small online teaching business that could be taken on by a contractor:
-Teach a course with a definite beginning and ending date
What can you NOT ask a contractor to do?
You cannot ask a contractor to:
-Create a specific social media schedule that is integral to your company’s functioning
-Attend training sessions
-Teach a course on a regularly scheduled basis, indefinitely into the future
-Write a certain amount of curriculum on a certain schedule, indefinitely into the future
Some example of the difference between an employee and a contractor
When you are working with a contract employee, you may not “control what will be done and how it will be done.” So, you can tell someone that you want them to take on your social media. You cannot tell them that you want them to post to Facebook every Wednesday at 3PM, Twitter every Tuesday at 2:00 etc. The contractor has to define how they will increase your social media reach.
If you want to hire someone to write curriculum, you cannot expect them to meet with you every day at certain times. You tell them what you want, they create it and you pay them.
A contract employee (or a few of them) can help you expand your business!
In the past several years, I have prepared plenty of curricula, created a strong email list, and figured out how to use WizIQ and various other resources for online teachers. I could set someone up to run a course in about an hour, provided that she was already a trained teacher and knew the material. I could provide her with the curriculum and the tools to grade and correct papers. By contracting someone else to teach, I can cash in on all of the work that I have done and offer someone else reasonable pay.
Further useful resources
The IRS publishes this lovely and user friendly guide to help ensure that your independent contractors are indeed “independent contractors” and not “employees.”
If you want the IRS to determine if someone is a contract worker or an employee, you can fill out this form, and send it to them.
To read what the Small Business Association has to say about the subject, click here.
Your business can grow!
But growth takes a little bit of work. Get going by seeking out your first employee.
Join the ongoing BTB (Build your Teaching Business) Online MOOC, to gain more insights and some hands-on learning.