9/27/2012

A Study Of Independent Contractors By Phillip Romero

By Virginia French


Independent contracting is a type of business in which a government or other client firms come into agreement with normally a small business or individual to perform work that could have been done in-house by its employees. In California, Phillip Romero, PhD, Professor of Finance, University of Oregon, did a study. He found out that independent contractors are important and determining factor of economic strength and growth.

For independent contractors to maintain that level and not to be seen as employees. Different rules have been set for them to follow. They should be capable of retaining mandate of work they are given.

This is achieved by scheduling working hours within the deadline. Furthermore, they should set paying and supervising any workers or assistants hired. They should have own working station unless it is agreed to work from the firms premise and not asking for instructions from the hiring firm.

This is a key rule because it distinctly shows there is a difference between employees and independent contractors. It clearly shows that contractors are independent while employees take to follow instructions from their employers.However, contractors are able to do the work in the most efficient way they prefer.

For the fact that the contractors are independent, they should be able to show that they are able to make losses and profits. This test is passed by the small business or individual by being able to show their recurring business expenses like office rent, internet costs, and salaries for workers, or purchase of equipment. Opportunity of profit and loss can be shown when charging for a project done. It is important to invoice the firm for the whole project once it is done rather than daily billing so that total expenses are known to avoid undercharging.

Ensuring that there is increase in service provision is important. The target market of independent contractors is not one person or company therefore through marketing should be done of services offered. This can be done effectively by registering business contact in doth telephone and postal directories, running a website, designing business cards and letterheads, registering in professional organizations, participating in trade exhibitions, making calls to find clients and advertising in magazines, newspapers or journals. This increases the customer base for independent contractors therefore their status isn't suspected.

It is very important to document using a written agreement to confirm that a firm is in agreement of doing business with the independent contractors. The agreement should indicate clearly that the services are being offered by an individual contractor. It also should note that no level of interference by the hiring firm should be experience with the major goal for both is to get the expected results. With great confidence the independent contractor should clarify that they are not there to perform their duties as employees.

Phillip Romero understands that the set barriers and plans to get rid of individual contractors would have a negative effect on economy of California. The percentage of registration of small and new companies is considered to be one of the highest in California. This is a factor that has increased employment in California.




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