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Best Approach to Outsourcing Work

Small businesses can outsource effectively by following with best practices. Outsourcing can be a great way to grow a business and clear your schedule to work on high-level executive tasks. These practices will help you determine what you need to know before you outsource.

Outsource time-consuming, repetitive tasks

Standardized time-consuming and repetitive tasks should be outsourced so that you can spend more time on the big picture. “As a business owner, you do not want to be spending a significant portion of your week on work that could easily be done by an intern or someone with much less experience,” says Charles Dugan, president and owner of American Image Displays in Seattle.

Outsource highly specialized tasks that require time to learn

Conversely, tasks that are too specialized for a business owner to do well should be outsourced if you can’t afford to hire a full-time employee with the necessary skills. “Outsourcing pieces of your business such as graphic design, photography, content marketing, and SEO strategy can bolster a business’ power and stability without presenting the burden of paying overhead,” says Sas Terani, sales manager for Terani Couture in New York City.

For some specialized tasks, you may not require a full-time employee. If you only update your web design every few years, it would make sense to use an agency rather than hiring a full-time developer.

Maintain close oversight of high-level finance

While you may outsource some aspects of accounting and payroll, the small business owner or chief financial officer should keep a close eye on high-level aspects of the business’ financials. “Keeping finances and bookkeeping in-house is important for having full access to your finance team and keeping a pulse on your financial temperature,” Terani says.

Provide clear goals and proactive management

Outsourcing can reduce the workload for business owners, but it still requires oversight. Be prepared to provide clear goals and feedback for revision to ensure that the work is completed to your standards. “Oftentimes, owners hope that outsourcing is going to take a project completely off their plate. ‘Someone else can get that done for me.’ This is seldom the case,” says Grant Polachek, director of marketing and operations for Squadhelp in Chicago. “Just like an internal project, outsourcing requires clear goals and proactive management.”

Understand IRS guidelines for outsourcing

Independent contractors are subject to specific requirements under IRS guidelines, and incorrectly classifying employees as independent contractors can lead to serious consequences. One common misclassification mistake is working under the assumption that if an independent contractor is properly classified under one law then the contractor is properly classified in other laws, as outlined in NFIB Legal Ease. “A big mistake small business owners make is hiring an independent contractor for tasks and not properly classifying them with the IRS,” says Yolanda Crowley, a virtual team builder and consultant in Charlotte, North Carolina. “It is very important that one determines correctly whether the people hired are employees or independent contractors. If a small business misclassifies an employee as an independent contractor, they could be subject to pay back taxes along with hefty fines. And, the independent contract can be penalized as well.”

According to the IRS, if you provide specific supervision by telling the worker when and where to complete the work; provide detailed instruction for completing tasks; provide evaluation of the process used to complete the work rather than just evaluating the outcome; or provide detailed training, the worker may not be classified as an independent contractor. The IRS also sets guidelines for financial control, permanency of the relationship, and whether the worker is completing tasks that would be considered key activities for your business.

If you have questions about whether a worker qualifies as an independent contractor, it’s best to consult an employment attorney for guidance. You can also file Form SS-8 with the IRS for clarification on how to classify independent contractors and employees

By: Karen Sams


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