Many small businesses start out as a sole proprietorship or partnership. Then, as business picks up, owners may begin to feel overwhelmed. What was once manageable has suddenly become stressful, and the inevitable question emerges of whether it’s time to hire employees.

The answer is not a simple yes or no, unfortunately. Today’s small business owners have a wide range of options when it comes to fi nding resources to help them gain effi ciencies to serve growing demands. Here are the primary considerationson how to hire employees.

TechnologyToday’s small businesses can increasingly benefi t from technology that can augment, or even take the place of, what might formerly have been part- or full-time staff members. There are products that offer bookkeeping and accounting activities in an automated way and, through cloud applications, can be readily accessible from anywhere. Scheduling tools can keep calendar items organized and generate reminders. And software like TimeTrade allows people to share calendars and schedule their own appointments. Voice over Internet Protocol (VoIP) telephone solutions let single-person organizations present a bigger business presence with answering, call forwarding and conference call solutions available at very low cost.

But even given the wide range of tools that small businesses now have access to, there comes a time when you need to fi nd real people to help manage your workload.

Key takeaways

How to hire: A guide for small business owners 1 of 2

How to hire: A guide for small business owners

Freelance and contract workers represent an opportunity to attract talent that might

otherwise be cost prohibitive.

Technological advances can augment or even take the place of staff members.

Small business owners have a wide range of options when it comes to fi nding resources

to help them gain effi ciencies.

Look to agencies or other consulting organizations to offset work.

2 of 2

Volunteers and internsVolunteers and interns represent a very low-cost labor option for some small businesses. Local area schools—from high school to college level—are often a good source of assistance through their programs. While the low cost of hiring interns can be appealing, there are downfalls. First, volunteers and interns generally have limited knowledge and experience and likely require more supervision and direction than a typical employee. Additionally, for-profit organizations need to be sure that those they hire truly fit the definition of interns, or they risk running afoul of federal wage and hour laws. The U.S. Department of Labor’s Fair Labor Standards Act (FLSA) has guidelines that address when and how businesses must compensate interns.

The gig economyToday’s gig economy allows businesses of all sizes to seek expertise across a wide range of jobs. The gig economy refers to workers who work small, time-discrete “gigs” for a variety of employers rather than working for a single employer. Recode.com reports that the number of workers in this category is expected to reach approximately 9.2 million people by 2021 (up from 3.8 million last year). Ride-sharing apps Uber and Lyft are examples of companies whose staffing models rely on gig—or freelance and contract—workers. Other industries such as IT, sales and marketing are also seeing the number of gig workers grow.

For employers, particularly small businesses, freelance and contract workers represent an opportunity to attract talent that might otherwise be cost prohibitive, or not

readily available within a specific geographic region. Today’s technology means that companies can, for instance, hire programmers from locations literally around the globe. A

variety of online job sites are cropping up to make it easy for contractors and companies to connect. For instance, Freelancer.com, Upwork.com, VirtualVocations.com and HourlyNerd.com.

As with interns, though, the FLSA regulates who may be classified as a contractor and who must be classified as

an employee for the purpose of withholding taxes. The definitions aren’t always straightforward, and this can be a murky area for businesses—seeking advice from legal counsel is recommended.

Agencies and consulting organizationsA final option for small businesses to explore when looking for assistance to handle a growing workload or to address areas of need is the use of agencies or other consulting organizations. For instance, companies may choose to work with an agency to handle their website, their traditional or their digital advertising and marketing, or to take care of staffing and HR needs or accounting needs.

The benefits of working with agencies, similar to the benefits of working with freelancers and contractors, include the ability to access expertise that an organization may not have, as well as the ability to terminate the relationship easily when the services are no longer needed. Downfalls, however, can include the high costs the best firms charge and the fact that their time and efforts will not be entirely dedicated to your business.

Part-time and full-time staff membersThe final option for employers to consider is hiring part- or full-time staff members. The benefit of this option is the ability to directly control the work the employees are doing. The potential downfall is the long-term liability that is taken on in terms of pay and benefit obligations. While many states are employment-at-will, and employers are able to terminate these employee relationships, this is not always as easy as it sounds.

When it comes to how to hire employees, what is the right choice for your small business? It depends on your needs, your preferences in terms of how much control you wish to exercise over those who provide services to you and whether you’re comfortable managing people or organizations remotely—and your budget.

How to hire: A guide for small business owners

This article is designed to provide general information only. Information and recommendations contained here have been compiled from sources believed to be reliable and represent the best current opinion on the subject. KeyBank does not make any warranties, express or implied, from the use of the information contained. We recommend that you seek the counsel of an attorney, accountant, or other qualified professional regarding these matters and their applicability to your situation.©2017 KeyCorp. KeyBank is Member FDIC. E90160 170711-258497

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