At some point, growing businesses need more hands on-deck. But that doesn’t necessarily mean you have to invest the money to hire full-time employees—yet. Before you hire full-time employees, there are other staffing options you can explore.
Bring on Extra Help With Our Six Flexible Staffing Options
1. Family and Friends
Starting a business requires long hours and time away from family and friends. You can avoid the separation issue (and create new bonds) by hiring family and friends to help run your business. Family businesses account for 64 percent of the U.S. gross domestic product and create 78 percent of all new jobs in the U.S. School-aged children need supervision, but the benefits for them are as great as they are for you.
There are also financial advantages to hiring your family members, such as reducing the net income of the business by paying wages to a family member and therefore reducing the amount the owner pays in self-employment taxes. However, because the IRS allows tax advantages to family businesses, your small business is likely to be under scrutiny when it comes time to file taxes. Be sure you keep careful records and follow the IRS rules for family businesses.
If you hire a child and the child’s income is less than $800 a year, the child may be exempt from taxes. In the case of hiring a spouse, the spouse’s wages are subject to income tax withholding and Social Security and Medicare taxes, but not to FUTA tax. If your business is an S corporation or a C corporation, FUTA taxes must also be paid. In general, the same tax withholdings apply if you hire one of your parents to work in your business.
Another way you can conserve cash and still get the help you need is through bartering. Don’t worry if you don’t have a product to barter—services such as web design, marketing and accounting all count when it comes to bartering. You might need to barter things like expertise: You know a certain industry and the other person knows logo design. Now is the time to think out of the box.
You might already know other small businesses in your community you’d like to exchange services with. If not, join local networking groups and make valuable connections. Even if the kinds of services or products you need are not represented, you never know when a member knows someone who does have them. You may also want to check out barter exchanges such as American Barter and IMS Barter. The exchanges act as the middleman in return for a fee.
However you make the connection, any bartering exchange is taxable in the year the transaction takes place, according to the IRS. The barter must be reported on your tax return at the fair market value of the products or services received. Depending on what product or service was bartered, you might also be responsible for paying income tax, excise tax or self-employment taxes associated with the barter activity.
3. Freelancers and Independent Contractors
With a whopping 35 percent of the U.S. workforce freelancing, finding and hiring freelancers to help you in your business is easier than ever. To start an online business, for example, you need website designers and content providers, to name a few—all projects perfect for temporary freelancers. Again, networking in your own community or asking for referrals from colleagues is a great way to find a freelancer, but there are also many online marketplaces to check out. If you contract through a marketplace, you do pay a fee to find your freelancer, but you also have a middleman to handle the payments and work agreements.
Here are a few popular marketplaces for freelancers:
- Upwork (formerly Elance): Post the work you need done, and Upwork sorts through thousands of freelancers to find the best matches for your needs. Once you choose a freelancer, you can also use Upwork for project management, storing and sharing files. Plus, since payment is handled through Upwork, you don’t need to worry about creating and sending 1099 forms.
- Fiverr: Fiverr works similarly to Upwork; however, most of its freelancers work in the creative services industry such as web design and brand building.
- Freelancer: On this site, you post your job and receive bids from freelancers directly. You can also browse previous samples of freelancers’ work.
When first starting a small business, few entrepreneurs need to hire professionals such as attorneys and accountants on a full-time basis. Most startup tasks, such as getting a business license, deciding on business structure (S corporation vs LLC) or figuring out how to register a trademark can be accomplished through an online incorporation service such as CorpNet, saving you substantial cash.
If you need more help, you can also retain an attorney or accountant on a project-by-project basis or retainer fee. The key is to find professionals who understand your business and your industry. Be sure to know exactly what services you’re looking for, such as tax planning, bookkeeping or management consulting. Here’s what to ask:
- What other clients have you worked with in my industry? The more familiarity and experience the professional has with your industry, the better for the success of your business.
- How do you bill for services? Most professionals charge by the hour and can estimate how long certain projects will take.
- How quickly will you respond when I have a question? Also, find out the person’s preferred method of communication (phone, text or email).
- Who will handle my account? Sometimes, you may be dealing with a lower-level staff person from the professional company. In any case, it’s important to meet and talk to the person who will actually be handling your account.
Before meeting with the professional, ask for references and check online reviews on sites, such as Yelp.
Colleges are full of students wanting real-world experience, and many programs now include internship experience as a graduation requirement. This means your small business can benefit from eager interns without having to commit to a full-time employee. You can definitely find help with specific tasks such as marketing and technology, and because hundreds of colleges now offer degrees in entrepreneurship and small business, you may even find management help. Start by seeing if a college nearby has an established internship program. Ask what disciplines have internships available and what the criteria are for a small business to be accepted into the internship program.
You may need to pay the intern a wage. The Department of Labor’s Wage and Hour Division has a six-factor test to determine whether interns at private-sector employers must be paid minimum wage. An unpaid internship must meet the following criteria:
- The internship is similar to training that would be given in an educational environment.
- The internship is for the benefit of the intern.
- The intern doesn’t displace any paid employees.
- The employer doesn’t benefit from work the intern is doing; in fact, “on occasion its operations may actually be impeded.”
- The intern isn’t promised a job at the end (that is, unpaid “tryouts” aren’t allowed).
- Both the intern and their boss understand it’s an unpaid position.
6. Part-time Employees
Finally, you have the option of hiring part-time employees. Most states define part-time workers as those who work less than 35 hours per week. Typically, part-time workers are paid an hourly wage; since they are actual employees, they are protected under the Fair Labor Standards Act and OSHA’s safety and health policies related to work-related injuries, illnesses, and occupational fatalities.
Part-time employees generally receive limited or no company benefits, such as health benefits, vacation and sick time, paid holidays and unemployment compensation unless required by state labor laws and/or company policies. Part-time employees who work 1,000 hours or more during a calendar year may be eligible for retirement benefits. Before hiring part-timers, be sure you understand both state and federal employment regulations that affect them.
The Right Choice
Carefully consider which of the staffing options above best fits your needs, both now and in the future. With so many options for getting help with your business, even those who are just starting a business can find workers at a cost that won’t break the bank.