15 Insights for Small Business Owners Looking to Hire Contractors

If you're a small business owner looking to maximize flexibility and minimize costs, consider exploring the option of contract employees. By putting together your own team of temporary contractors, you can add valuable skill sets on an as-needed basis — without taking on traditional full-time employees. This approach could help you move forward with projects quickly and easily while keeping labor costs in check. In this guide, we'll explore why it's beneficial for small businesses to hire contract workers, how to find quality candidates, and how to ensure success when managing them.

the friday fund

What is a Contract Worker?

A contract worker, or contractor, in the context of a business environment, is a professional who provides services to a company under terms specified in a contract rather than as an employee. Contractors are typically specialized in specific fields and are hired for certain projects or tasks, working either onsite or remotely. Unlike employees, contractors are not directly employed by the company, meaning they don't receive the same benefits, such as health insurance or paid leave. Instead, they are paid based on the terms outlined in their contract, which can be on a per-project or a time-limited basis. Hiring contractors offers businesses a flexible workforce solution tailored to their needs.

Related Reading: How to Use a Small Business Loan to Hire Employees

Why Small Businesses Should Consider Hiring Contractors

Small businesses, particularly, can reap significant benefits from hiring contract workers. These advantages range from reduced overhead costs increased flexibility, access to specialized skills, and scalability. Keep reading to learn all the compelling reasons a small business owner should consider hiring contractors.

  • Cost Efficiency: Hiring contract workers can be more cost-effective for small businesses. They are typically paid for the work done, and there are no additional costs such as health benefits, retirement contributions, or paid time off.

  • Flexibility: Contract workers offer flexibility in terms of hours and workload. They can be hired for specific projects or during peak periods, which allows small businesses to adapt to changing demands quickly.

  • Access to Expertise: Contract workers often have specialized skills and experience that might not exist within the business. This allows small businesses to tap into expert knowledge without committing to long-term hire.

  • Reduced Administrative Workload: With contract workers, businesses have fewer administrative duties like payroll processing, tax withholding, and benefits administration, which can save significant time and resources.

  • Risk Mitigation: If the business experiences a downturn, it's easier to end a contract with a contractor than to lay off employees. This can help businesses better manage risk and maintain stability.

  • Reduced Training Expenses: Since contract employees are typically experts in their fields, they require less training compared to new, full-time employees.

  • Potential for Full-Time Employment: If a contract employee performs exceptionally well, there could be potential for full-time employment.

Related Reading: What is UpWork? Hiring Freelance Talent for Your Business

Steps to Take When Hiring a Contractor

Engaging a contract worker requires a clear understanding and careful implementation of several essential steps:

  1. Define the Role Clearly: Before beginning your search for a contractor, clearly outline the role, tasks, and deliverables you expect from the contractor. Be specific about the project scope, deadlines, and key performance indicators (KPIs).
  2. Search for Qualified Candidates: Use various platforms like freelance job boards, networking events, or professional LinkedIn groups to find potential candidates. Personal recommendations can also be a useful source of qualified contractors.
  3. Conduct Interviews: As you would for a full-time position, interview potential contractors to assess their skills, experience, and alignment with your project. This step also helps to gauge their communication skills and cultural fit with your company.
  4. Understand Legal Obligations: It's important to be aware of the legal obligations you have when hiring contractors. Make sure to understand the laws and regulations that pertain to your industry, as well as any applicable tax requirements. Additionally, ensure that both parties sign a contract specifying details such as job duties, payment terms, deadlines, and other expectations.
  5. Review Your Insurance: Before you bring on a contractor, it's important to check your insurance coverage to ensure that it extends to contractors. You may need additional coverage for professional liability or workers' compensation in the event of an accident onsite.

Tips for Managing Contract Employees

  • Check References and Work Samples: Request and review references and work samples to validate their skills and quality of work. It will give you a good indication of what you can expect from the contractor.
  • Negotiate Contract Terms: Once you've selected a contractor, negotiate the terms of the contract, including payment, timelines, and deliverables. Make sure both parties understand their obligations and rights.
  • Intellectual Property Rights: Ensure any contract includes clauses about who owns the work product.
  • Confidentiality and Non-Disclosure Agreements: To protect your business, it may be necessary for contract employees to sign confidentiality and non-disclosure agreements.
  • Onboard the Contractor: Even though contractors are independent entities, onboarding is still crucial. Ensure they have all the information and resources necessary to perform their tasks effectively.

Remember that hiring a contractor is a significant decision that can impact your business. Thus, it's crucial to take the time to make a considered choice.

Hiring Contractors Through Fiverr and Upwork

Contract hiring platforms such as Fiverr and Upwork have revolutionized the way small businesses source contract employees. Here are the steps to hiring contractors through these platforms:


  1. Create an Account: You'll need to register an account before you can start hiring on Fiverr.
  2. Search for Services: Use the search bar to find the type of service you need, or browse through the categories.
  3. Review Profiles: Look at the profiles of potential contractors, including their portfolios and client reviews.
  4. Select a Contractor: Once you've found a contractor you're interested in, click "Contact Seller" to discuss project details.
  5. Place an Order: If you're satisfied with the contractor's competence and skills, place an order to start the project.


  1. Sign Up and Post a Job: After signing up on Upwork, post a job that details your project’s requirements.
  2. Review Proposals: Freelancers will send in their proposals, which you can review to find a potential match.
  3. Interview Candidates: You can interview shortlisted candidates to ensure they're a good fit.
  4. Hire a Contractor: Once you've found the right contractor, make an offer. If accepted, work can commence.
  5. Pay Securely: With Upwork's payment protection, you can pay securely, knowing that you only pay for work you authorize.

Remember, small businesses should always ensure that their contract employees meet the same high standards that would be required of a permanent employee. This promotes a high-quality output and maintains the integrity and reputation of your business.

Create Your Free Upwork Account and Find Your Next Contractor!

Building your team today with Upwork is an efficient and cost-effective solution. This globally recognized platform offers businesses access to a diverse pool of talented freelancers who are experts in their respective fields. Whether you need a graphic designer, content writer, web developer, or digital marketer, Upwork has you covered.

The platform's user-friendly interface makes it easy to post jobs, review proposals, and select the best match for your project. With secure payment protection, you only pay for work you authorize, ensuring transparency and trust in every transaction. So why wait? Start your journey with Upwork today, and empower your business with the skills and expertise it needs to thrive in the competitive market.upwork graphic