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Key Takeaways

Contractors can reduce overhead and provide flexibility, but higher rates, turnover and compliance risks can offset the savings.

Use contractors for specialized, project-based work and employees when your business needs continuity, accountability and long-term commitment.

After more than two decades of working with independent contractors, I still believe they’re one of the best ways to run a flexible small business . But I’ve also learned that they’re not nearly as cheap, simple or risk-free as many business owners assume.

There are plenty of advantages. I can hire contractors for specific projects without making a long-term employment commitment. I don’t have to provide employee benefits, paid vacation or other traditional employment perks. I can negotiate project rates, define deliverables and avoid worrying about keeping someone busy when the work dries up.…