The risk of Employees

It would appear, judging by current unemployment rates, that business owners have finally wised up to the risk in employees. If you’re curious about employee risks I don’t cover in this post, this Wall Street Journal Editorial by Michael P. Fleischer, President of Bogen Communications in Ramsey, NJ identifies all you need to know involving the risk of employees. However if you’d just like a brief overview, here is a quick list of risks:

  • If the new hire is only a sub-par performer on the job, you’re left risking all this money when the productivity isn’t even there. You interviewed this employee multiple times and even had your current employees at the time interview them, and they are just not working out like the interviews made it seem like they would. Now you have no choice but to add to your unemployment insurance contributions, because you HAVE to lay off this useless lump.
  • Small business entrepreneurs and business leaders alike share the uncertainty of the latest healthcare plan and rising healthcare costs.
  • Can you really afford to have any subpar performers? Take a look at your existing employees. Are they all optimum performers?
  • Having to layoff or fire an employee is just another burden. You never know what kind of legal action could follow no matter how justified you were in firing them. The best case scenario is if you win a legal case, but even then you lose what you had to spend to defend.

    With these and other risks in the forefront of business owners’ minds, subcontracting work and responsibilities have become a more valuable option than ever before. The modern business owner needs to consider this option. Subcontractors are real businesses that can work for you and other customers to get things done within your company. They are interchanging, movable parts—when they don’t work out, it’s easy to let them go. There is virtually no risk of legal action when letting go of a subcontractor, especially compared to the risk of letting an employee go. Subcontractors don’t even require health costs or benefits. Remember though, I am talking about subcontractors, not independent contractors (who in the eyes of the taxing authorities are the same as employees). Independent contractors are individuals looking for work, they are not a business, and they come and go as an employee would. Hiring independent contractors could actually get you into a lot of trouble if what you think you’re getting is a subcontractor. For IRS distinction between the two, click here.

    Assessing the risks associated with current employees or people you’re thinking of hiring can be made easier with the help of a reputable Part Time CFO who is a subcontractor (not an employee or independent contractor). A good CFO will not stop there, and help you identify, assess and mitigate other risks in your business as well.

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