Light entrepreneur or employee – which should you choose and when?
Companies encounter situations where more expertise, extra hands, or help in executing a specific project are needed. But what is the best solution: hiring an employee or collaborating with a light entrepreneur?
There is no single correct answer. The choice depends on the nature of the work, the duration of the need, and how independently the work is intended to be performed.
When you know the options, making the decision is significantly easier.
1. When is hiring an employee worthwhile?
Hiring an employee is often a good option when the company has a continuous need for a particular work contribution.
An employee can be the right solution, for example, when:
- Work is available regularly and long term.
- The person must work according to working hours and operating practices defined by the company.
- The tasks are an integral part of the company's daily operations.
- The company needs the person as part of its own team and management structure.
An employment relationship involves obligations for the employer, such as paying salaries, employer contributions, and taking labor law obligations into account.
In return, the company gains the employee's expertise in accordance with the agreed employment contract.
2. When can a light entrepreneur be a better option?
A light entrepreneur can be suited for situations where the company needs expertise for a limited project, a specific task, or a temporary need.
Utilizing a light entrepreneur can make sense, for example, when the company needs:
- Help updating websites.
- Expertise related to marketing or content creation.
- Support for sales or customer acquisition.
- A specialist to carry out a specific project.
- Temporary additional expertise alongside its own personnel.
A light entrepreneur operates primarily as an independent service provider and invoices for the work done through an invoicing service.
From the company's perspective, cooperation can be a flexible way to acquire expertise that is not needed full-time or continuously.
What is essential is that the cooperation is genuinely based on an independent assignment. Merely invoicing through an invoicing service does not make the work entrepreneurial if the actual circumstances of performing the work meet the criteria of an employment relationship.
3. What is the difference between the options in practice?
There are differences between an employee and a light entrepreneur, particularly regarding responsibilities, management of work, and the nature of the cooperation.
An employee:
- Works in an employment relationship under the employer's direction and supervision.
- Receives a salary based on the agreed employment relationship.
- Is covered by legislation governing employment relationships and related rights.
- Can be part of the company's daily operations on a long-term basis.
A light entrepreneur:
- Offers services as an independent contractor when the arrangement meets the characteristics of entrepreneurship.
- Invoices for the agreed work or service package.
- Is responsible for executing the agreed assignment according to their own operations.
- Can bring specialized expertise into the company right when it is needed.
However, differences are not determined solely by the title of an agreement or the invoicing method. The whole situation is assessed based on the actual working conditions.
4. Which is more cost-effective for the company?
This is often the first question – and no wonder.
When comparing costs, however, it is worth looking beyond just the hourly rate.
The costs of hiring an employee can include, in addition to wages, employer contributions, tools, orientation, and other expenses associated with an employment relationship.
The price of a light entrepreneur's service, on the other hand, may include specialized expertise and an independently executed assignment. The price is affected, for example, by the scope of work, complexity, and agreed deliverables.
A light entrepreneur's hourly rate may be higher than an employee's wage, but the prices are not directly comparable. On the other hand, for ongoing work, hiring an employee may be more expedient.
The best solution is therefore not automatically the cheapest hourly rate, but the most sensible way overall to get the work done.
5. Five questions to help you choose
Before making a decision, it is worth pausing for a moment and considering the following questions:
1. For how long is help needed?
Is it a single project or a continuous labor need?
2. What is actually being purchased?
Is a specific result or expert service needed, or a person to continuously carry out tasks defined by the company?
3. How independently is the work performed?
Can the service provider independently decide on the execution of the work, or does the company in practice direct the work like an employer?
4. What expertise is needed?
Is the expertise already available within the internal team, or is external specialized expertise required?
5. What serves the company's goals best?
Is it better to build expertise in-house or acquire it from outside when the need arises?
Answering these questions will help clarify what kind of arrangement suits the situation.
6. Three practical examples
Example 1: A company is updating its website.
The company needs a professional to execute the website redesign to the agreed scope. An independent specialist can be an effective solution here when the task, responsibilities, and timeline are clearly agreed.
Example 2: A company continuously needs more customer service representatives.
If the work is regular, follows shifts defined by the company, and takes place under the employer's direction and supervision, an employment relationship may be the right solution.
Example 3: A company needs specialized expertise in marketing.
The company can hire an external marketing expert to plan a campaign or develop its marketing. The cooperation can be carried out as an assignment if it is genuinely independent.
These examples are indicative. The solution must always be evaluated based on the actual circumstances.
7. The most common mistake is choosing an option based on price alone
A company should avoid viewing an employee and a light entrepreneur as completely identical options with different price tags.
It is not just about costs, but also about the content of the work, responsibilities, and the nature of the collaboration.
A light entrepreneur can bring flexibility and specialized expertise to a company. An employee, in turn, can be the best solution when the company needs a continuous work contribution as part of its own organization.
When the choice is made based on genuine need, both the company and the worker benefit from the collaboration.
Summary: select the solution that fits your need
A light entrepreneur and an employee do not always compete for the same role. Both have their place in a company's operations.
Hiring an employee can suit a continuous need for labor. A light entrepreneur, on the other hand, can be an effective partner in defined projects and in situations where external expertise is needed.
The most important thing is to identify the company's genuine need, evaluate the alternatives as a whole, and ensure that the chosen form of collaboration corresponds to the actual conditions of the work.
When collaboration is structured properly, the company receives the expertise it needs and the worker has a clear framework for success.
- Henni, Sales Manager
