in the US is it better to hire employees or contractors?

Question

Is it better to hire employees, or have the employees form corporations, and then contract the corporation for its labor? what are the pros and cons of each way of doing things?

Answer 1

Its depends on exactly what you're talking about. I would hire contractors. They are going to cost you more per hour but then you only pay for them when you need them.

Employees are expensive and there's workmens comp insurance, payroll deductions, and employer contributions to social security.

But if you're talking about full time positions you're not going to be able to dodge the social security. I've heard some doctors create corporations and take their pay as dividends from the corporation thus dodge social security, but they occasionally get nailed on that.