Archive for September 20th, 2010

Do You Need an Administrative Consultant or an Employee?

One of the biggest challenges the administrative support industry at large has is helping a significant part of the marketplace understand that independent professionals are business owners, not employees.

In reading this, you might be wondering, “Huh? I just need someone to do my stuff.” But as a business owner intending to work with a Administrative Consultant, understanding the nature of your relationship is going to be critical to your success in working together, and making sure there is an alignment of expectations.

It’s important that you understand one thing very clearly: An Administrative Consultant is not a replacement for employees. As independent professionals running businesses (not working in employment to you), there are going to be very distinct differences in how and when you work together. The better you understand this, the better the chances are for a successful business relationship.

How to Tell When You Need an Employee

Sometimes a business just needs an employee. This is generally the case if you need someone to be solely dedicated to you and pretty much at your beck and call. Also, if you require control over the worker’s schedule, how the work is performed, etc., you need an employee. You might also need an employee if the workload is so great that it simply requires a dedicated in-house employee (or several) to manage it on a daily basis.

When an Administrative Consultant Is the Best Solution

Sometimes, having an employee isn’t an option for a business. It might be because there’s not enough of a workload to warrant hiring an employee (and dealing with all the attendant taxes and legalities that go along with it). Or, you might not have anywhere to put an employee, such as if you work from a home office or are on the road a lot. Or, you simply aren’t interested in the extra administration, supervision and management that comes with an employee, and prefer to work alone.

But just because your business is smaller, doesn’t mean you don’t need help. Every business does!

When that is the case, working with an Administrative Consultant will absolutely offer you the very best, most convenient and strategic alternative in meeting your administrative support needs.

What’s the Difference?

An Administrative Consultant is an independent professional who is in the business of providing ongoing administrative support to business owners. As administrative experts, they can also help you streamline your business and instill systems and processes to improve your workflows and create a more cost-effective operation. While Administrative Consultants do a lot of work that is similar to what an employee would do, it’s important to keep in mind that since they are not employees, there are going to be differences in when and how you work together.

When you hire an Administrative Consultant, you are hiring an independent professional who runs her own business. That means, unlike an employee who is paid a wage or salary to be solely dedicated to you and your business, an Administrative Consultant sets her own fees, has her own business policies, procedures and systems for working with clients, and is in business to support several clients at once.

The very best way to create a successful, mutually respectful relationship with an Administrative Consultant (and avoid costly liability due to worker misclassification) is to understand that you are a client, not an employer. That means you understand that:

The Administrative Consultant runs her own business and sets her own fees, hours, policies and procedures;
You won’t be managing or supervising her, or the work, in any way;
The Administrative Consultant doesn’t “report” to you in the way that an employee would (e.g., reporting for duty, submitting time sheets, etc.); and
You as the client have the right to control or direct only the result of the work performed by your Administrative Consultant, and not the means and methods of accomplishing that result.

This Isn’t a Choice, It’s the Law

In the United States, the U.S. Dept. of Labor and the IRS govern what constitutes an employee versus an independent contractor relationship. A business owner who gets it wrong can wind up paying not only costly back taxes and penalties, but also all the expenses that the worker would have had as a full-time employee, including overtime and benefits.

You can avoid all of that by simply understanding that your Administrative Consultant is a business owner—a vendor to whom you turn for administrative consulting services—NOT your employee, and treating the relationship accordingly. The resources below provide excellent information on understanding the differences so that you can establish a great relationship with an Administrative Consultant and avoid getting yourself into legal hot water.

RESOURCES: For more information, check out these publications: IRS: Independent Contractor vs. Employee (U.S.); IRS Publication 1779: Independent Contractor or Employee? (U.S.); CRA Publication RC4110(E): Employee or Self-Employed (Canada).