Should a new hire be an employee or a contractor?

FILED UNDER: ACCOUNTANT TUMUT, SMALL BUSINESS, BUSINESS ADVICE, ACCOUNTANT CANBERRA, EMPLOYEES, ACCOUNTANT WAGGA, HR


Thinking about hiring new employees for your business, but unsure if they should be temporary or permanent? There are a lot of differences between the two options, and choosing one is dependent on what you need and what the goals of your business are.


Choosing the wrong option can not only affect the operations of your business, but also cause financial difficulties in the future. To help you decide, we listed a few notable reasons for each.

Reasons for hiring permanent employees:


  • Long-term employment - If you’re looking for a long-term employee - especially for a key position in your business - hiring one on a permanent basis is the way to go. Doing so greatly increases the chances of positions in your business being filled for a number of years, which eliminates efforts associated with hiring a new employee.

  • Higher levels of commitment - Because permanent employees are more likely to be in it for the long haul, they are more inclined to learn the values of your business and know your mission and vision by heart than their temporary counterparts. There will also be a desire to build and maintain good relationships with coworkers, which can positively affect how the employee performs.

  • Team-building - Because they are more likely to stay longer and build rapport and familiarity with others, it’s easier for permanent employees to achieve better dynamics with their team members compared to temporary employees. This, in turn, makes it easier for businesses to build and maintain teams.

Why you should hire temporary employees:


  • Short-term employment - If you’re in need of an increased workforce for a fixed time period, it’s best to hire temporary employees instead. Hiring workers on a contract basis is ideal if you want specific skills that are critical to your business operations for the short term, as well as for projects that last only a few months or those that are in their pilot stages.

  • Reduced costs - Hiring temporary employees is much cheaper than permanent employees especially in the long run, because you don’t have to worry about paying for allowances, benefits, insurances and other similar expenses.

  • Minimal training - When hiring contract workers specifically for their skillsets, you don’t have to worry about providing and spending on training time because a lot of them are already experienced in the fields they are in.

  • Strictly professional - Contract workers are likely to immerse themselves less in your company than professional workers. While this may seem like a disadvantage, it also has its perks, such as temporary employees being less likely affected by office politics.

Hiring employees will always have financial and cultural impacts on your business. There are also legal factors to be considered when drafting contracts and position descriptions. If you’re in need of advice for identifying all the financial and legal implications of hiring a new employee in your business, Easdowns is here to help! Our team of experts include business accountants and HR specialists.


We provide expert business and financial advisory services throughout Wagga Wagga, Tumut and Canberra to help you gain better control of your finances, allowing you to reap the benefits and steer your business in the right direction. Learn more about our services by visiting the Easdowns website or get in touch with our experts through our Contact Us page.