Should I Use Per Diem or Fractional Personnel or Workers in My Business?
Running a business means you must decide everything from what equipment to buy, to what software you should use, to whether you use one or more employees or contractors. Even down to the temporary workers you need on a particular project.
Sometimes it can be quite challenging to determine whether per diem help, fractional personnel or regular workers are right for your business. I will walk you through the advantages and disadvantages of both options so you can make an informed decision based on your situation.
But first, let me explain to you what each of these terms means to a business.
What is Per Diem in Business?
Per diem is a Latin phrase. It means “for each day.” It is used in business to refer to employees who are paid an hourly rate, not on salary. Per diem workers are typically hired temporarily, but can work for the same company for years.
- Offers flexibility in employment.
- You can always bring a breath of fresh air into your business.
- Allows you to save costs on employment.
- It gives you the liberty to test the employee as you deem fit.
- Per diem employees are paid a flat rate, and you will have to pay them even if they do not work effectively
- Per diem employees are typically less loyal than regular employees
What is Fractional Personnel in Business?
Fractional personnel is a staffing solution that allows you to hire one employee to be shared between two or more roles. It is a great option for your business if you want to increase your workforce without having to hire multiple employees.
Fractional employees are those who work on a contract basis and only provide services when they are needed. They are not part of your full-time staff, but they will work for your business when there is work to be done.
Pros of Fractional Personnel
- No hiring or firing costs.
- It opens your business up to talents that are not local to your company.
- It gives you the flexibility to work with a variety of workers without having to create a new position for each one.
- It lets you save money by not having to hire a full-time employee.
Cons of Fractional Employee
- If you hire fractional workers, they will be considered independent contractors whose earnings should be reported on Schedule C (Form 1040). That means you must pay self-employment taxes on their earnings and the total Social Security and Medicare taxes.
What are Workers in Business?
Workers are individuals who have been hired to perform a specific job within your company. They can be either full-time or part-time employees and provide their benefits and taxes.
Pros of Workers in Business
- Workers are often more reliable than independent contractors since they have a vested interest in the success of your business.
- They can be trained specifically for the needs of your business and will likely be able to perform their tasks more efficiently.
- You will better understand what is happening within your business if you employ a full-time staff member.
Cons of Workers in Business
- It is pretty expensive to hire regular workers. These employees’ salaries and other benefits are usually high, so you will have to spend more on them.
- You may also have to provide them with training programs or incentives to attract them to work at your company.
- These employees may not always be available when the company needs them for personal reasons such as sickness or vacation days off work without prior notice.
Final Thoughts: Which is Better, Per Diem, Fractional Personnel or Workers?
As a business owner, you may ponder whether you should use per diem, fractional personnel, or workers in your business. While all these types of employees have their benefits, there are also some challenges associated with each. So your decision should depend on the size of your business and how much you are willing to spend.