We talk through the positives and negatives of an employee, a contractor and in-house options
To scale a business, you need more than a good idea; you need people to bring your vision to life and get it to the market. For start-ups, who generally experience rapid growth, these people are often going to come in the form of a finance function. They'll play a role in everything from payroll to annual forecasts. We'll walk you through the most common options available and weight up their pros and cons.
Start-ups often find hiring a challenge. It’s hard to identify the person:
You'll also need to decide the employment status of the people you bring in, making sure it’s appropriate for the tasks you need to be completed and your business's growth stage.
In the UK, most workers fall under the terms employee or self-employed contractor. There are advantages and disadvantages to hiring people on both of these statuses. However, that’s not all. There is a new employment status that we are pioneering here at Quantico, which we believe gives startups the best of both worlds. We call it ‘in-house’.
In this blog, we’ll look in-depth at these three employment statuses and their pros and cons across four critical areas. When you’re looking to hire Finance Operations experts to make a difference in your start-up, which employment status will provide the most value for you?
Before we begin our employee vs contractor vs in-house comparison – let’s clarify what we mean by all these terms.
Hiring an employee on a full-time contract means you pay them a salary (equal or above the national minimum wage) and must keep to regulations such as sticking to an agreed number of hours and a place to work. You must also pay National Insurance contributions for your employee. As a result, hiring full-time employees is generally the most expensive way to bring people into your business.
That being said, you have complete control over your employee’s work and how they do it. You control the processes and set the standards. In most cases, your employee will only work for you.
Instead of a full-time contract, you will pay them by the hour or day. This is a flexible and economical way to hire as you only pay for the tasks your contractor completes. You don’t have to worry about notice periods if you don’t want to work with them anymore – and there is no National Insurance, sick pay or holiday pay. It’s much easier to process.
However, contractors will work for other companies, not just you, so they may not always be available when you need them. You do not have as much control over how and when they complete their tasks.
In-house gives you the advantages of both employees and contractors, without the downsides.
At Quantico, we provide in-house financial teams to fast-growing businesses. Our experts will be part of your company, sitting in your office (if you wish) they can immerse themselves in how you work, as well as be there for you and your leadership team.
Not only that, you won’t have to worry about employee taxation, admin or upskilling. We'll do all that for you.
It is vital to get your first hires right. You don’t want to hire people who don’t have the right skills. Nor do you want to pay over the odds for a hire at such a critical stage of your business.
Further down the line, the people who work in your business must have the right status. For example, hiring contractors to save money but using them in the same way as employees can put you on the wrong side of IR35 regulations.
Let's see how employees, contractors and inhouse teams fare against the four key criteria you need to consider when scaling out your team.
A strong culture is essential in a scaling business; it’s what keeps you going through the tough times and keeps you moving in the right direction.
You need to hire the right skills in your business if you are going to scale. As your business grows, the levels of skills you need will evolve.
As a start-up, when every pound is precious, your hires need to make financial sense.
Administration is generally something you want to avoid as a start-up, as it takes time away from the work that actually grows your business.
With the traffic light system, we’ve provided an overview of how each individual fares in each of the four critical areas.
Now let’s delve into the details.
It’s clear that the in-house status combines the excellent advantages of employees and contractors - it just gives them to you in one easy package.
At Quantico, we’re a team of FinOps experts. That’s Finance Operations – where finance, operations and technology meet. We provide in-house finance teams to fast-growing businesses, giving you the systems you need to scale without the admin and hassle.
If going in-house sounds like the way forward for your business, get in touch.