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COVID-19 hit in full force in March and as we prepare for what looks like a second round of closures, the small business community continues to be hard hit. At the onset of COVID-19, as the government scrambled to provide support to individuals and small businesses the first round of funding through the CARES ACT was announced and the Payroll Protection Program was created. Though the funding was made available and was slated to bring relief to the millions of small business owners who were struggling to find ways to reopen their doors; when the time came to apply we quickly realized that many micro enterprises and single member LLC’s were left out because we didn’t have any employees. Shedding light on a question that many of us have, when is the right time to hire?
So I sat down to have a chat with my Business Bestie, Kimberly Prescott of Prescott HR, a Human Resources firm that assists businesses with aligning their people strategy with their business strategy. With over 20 years experience in the human resources field, Prescott informed me that before any of us jumps to announce that we are hiring— even if we desperately need the help— we need to be sure that we are able to bear the financial responsibility of having employees. She says the “employee relationship extends past just the employee but to their families as well.” She also says we must have a clear definition of the work that an employee would do, workplace expectations, and business standards to be able to adequately measure their success. Prescott charges us to put ourselves in the shoes of incoming employees and ask ourselves would we want to walk in on our first day of work as an employee in our businesses as they are currently” And, as I thought about that question and my business, I had to answer with a resounding no.
Prescott doesn’t want us to get overwhelmed by the reality that there is work that we need to do prior to posting our new job announcement and as we work to get our business policies, procedures and processes in order we can still get the help we need to grow. She says there is nothing wrong with outsourcing and bringing on 1099 contractors. However, we must understand that there are local, state and federal guidelines that govern all employment relationships, including the Internal Revenue Service (IRS), which has to know who is responsible for paying payroll taxes.
Prescott also wants small business owners to understand the difference between a contractor and employee is the degree of control that we, as the business owner, exercises over when, where, and how the contractor gets the work done. Before bringing on a contractor we need to ask ourselves if potential contractors are free to set their own schedule? Is the contractor free to contract with other businesses? Does your contractor have their own tools and supplies to be able to perform their tasks? If you answered no to any of these questions then you are not looking for a contactor, you are looking to hire an employee