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As a small business develops it may become necessary to hire some help in the form of either an employee or a contractor. There are a number of benefits when you hire a contractor or an employee, but how do you decide which one will be most suitable for your business?

Hiring an employee will possibly entail registering with HM Revenue & Customs for a PAYE scheme. This will result in additional administration to remain compliant with HMRC. There are rules which have to be adhered to when employing someone, like the minimum wage rules and employment laws. As a manager you will have less time to spend on the actual running of your business and have additional responsibilities for employees. However, permanent employees will often have a loyalty towards your business and be willing to take responsibility in more roles within the company.

A contractor offers flexibility which helps manage the peaks and troughs of demand. Hiring a contractor doesn’t require the operation of a PAYE scheme, leaving you free to concentrate on other tasks. However, a contractor can choose the hours and rate of pay, which may not be suitable for your company.

When hiring an employee or contractor it is necessary to consider the employment status, whether employed or self employed. An employee will usually work set hours and have to do the work themselves. The employee will be told when to do the work and where and how to carry out duties. A contractor is self employed, deciding which jobs they take on and provide their own tools and equipment.

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