Are independent contractors the future of work? Employment trends point to yes. MBO Partners reported that between 72 and 73 million Americans were doing independent work in 2025, up from 41 million in 2019.
If you’re one of the many businesses managing independent contractors, you know their time, work, and efforts can play an integral part in the success of your company. But there are a ton of business owners out there who just don’t know how to manage contractors effectively.
As organizations continue to flatten and managers oversee more people, contractors are absorbing more critical, less-supervised work, which raises the stakes on integrating them well. If you want to inspire the best work from your independent contractors, you need to help them feel like a part of your team.
The right approach to independent contractor management can help you integrate them into your business while making them feel like an indispensable part of your team.
Why integrating contractors is better for your business
Before we jump into best practices on how to manage contractors, let’s quickly cover why effective contractor management is so important.
Too many managers never fully integrate independent contractors into their business, take the time to onboard them properly, or instruct the rest of their team on how to work with them. As a result, the contractor never feels empowered to settle into the team and do their best work—and both the contractor and the business can suffer.
There are a few reasons why integrating contractors—instead of treating them like an independent or separate entity—is better for your business:
It creates a cohesive team experience. To produce their best work, your team needs to work like a well-oiled machine. But creating a sense of separation between your employees and your contractors can make it hard for them to work together in a cohesive way—and your business suffers as a result.
It can help you retain top talent… If an independent contractor feels like they’re not being treated with respect or are looked at as an “outsider” in your company, they may quickly move on to other projects. Integrating contractors into your team will help to ensure they stay through the length of the project and are willing to work with you in the future—which can help you keep high-quality talent on your roster.
…and attract top talent. When it comes to attracting top talent—whether that’s full-time or contract-based—your reputation is everything. If you get a reputation as a company that embraces independent contractors as part of the team, more independent contractors will want to work with you—and you’ll get access to more talent when you need to hire a contractor for a project.
It helps you get to know your independent contractor better—which can inspire better work. The more you integrate your contractor into your team, the better you’ll get to know where they shine (and where they struggle). This can help you tailor your projects to play on the contractor’s strengths—and get better work as a result.
Now, keep in mind that while integrating your independent contractor into your team is important, it’s just as important to recognize what being an independent contractor actually is—and respect those boundaries accordingly. Otherwise, you could find yourself dealing with classification issues (more on that later).
Best practices for integrating contractors into your business
Putting in the time and effort to integrate contractors is a solid move for your business. But what are the best ways to manage the integration process—and ensure your independent contractors feel like a full-fledged part of the team?
Set them up for success from day one
When you hire a new full time employee, you make sure you set them up for success from the beginning by putting them through a thorough onboarding process. You introduce them to the business, walk them through any relevant procedures and policies, and invest in any training they’ll need to hit the ground running and thrive in their new role.
Many companies don’t invest that same kind of energy into onboarding independent contractors. They tell them about the project they’re being hired for, let them know when they expect deliverables, and send them on their way.
In order to be successful, contractors need context, which requires proper onboarding.
You don’t have to invest the same kind of time, energy, and money into onboarding a contractor who is going to be working for your company for two weeks as you would a new full-time employee. But you still need to get them acclimated to your processes and systems, answer any questions, and get them up to speed with any training they’ll need to get the job done.
You should also make sure both parties have signed an independent contractor agreement, which outlines the deliverables, scope of work, payment terms, and timelines for the project or period of time in question.
Pair them with a full-time employee to help them settle into their role and the team
One of the most important parts of hiring contractors is making sure they feel like a part of the team. The best way to do that is to pair them with an established team member who can introduce your contractor to the rest of the team and make sure they’re settling into their role with frequent check-ins.
The key to success with this strategy is to make sure you choose the right employee to help your independent contractor establish themselves within the team. Ideally, you’ll choose an employee who takes a mentorship role with more junior team members, is friendly and welcoming, and is working on the same team or project as the independent contractor (so they can show them the ropes, introduce them to other key team members on the project, and make themselves available to answer any questions).
Offer benefits
One of the perks of being an independent contractor is the flexibility; when you work on a contract basis, you have the opportunity to work on a variety of projects with a variety of clients.
One downside of all that flexibility is that, generally, none of those clients are going to offer the kind of health care benefits they offer to their employees—even if the contractor is working on a long-term contract.
Paying for health insurance can be a huge cost (and hassle) to independent contractors. So, if you really want to make independent contractors feel like part of the team, consider extending your employee benefits.
While independent contractors aren’t allowed to receive tax-free benefits from their clients, many health plans do allow companies to add independent contractors to their health insurance, with either the business or the contractor paying the premiums (if your business pays the premiums, the contractor may need to pay taxes on the premium costs).
But because group health insurance plans often have lower premiums than many of the independent plans freelancers have access to on the marketplace, extending your company’s health benefits to your independent contractors could help them save on insurance costs—even if they pay the premiums themselves.
If you’re thinking about extending your employee health insurance to your independent contractors, talk to your insurance provider to see what your options are. Then walk through those options with your contractor to see if receiving health benefits through your company is the right fit for them.
Treat contractors the same as employees…
The best way to make independent contractors feel like a part of the team is by treating them like a part of the team.
If your company offers employee perks like catered lunches or access to a fitness platform for at-home workouts, offer those same perks to your contractors. If you host a company-wide event, extend the invitation to your contractors. If you’re getting your employees together for a video call to discuss progress reports, make sure the contractor is in the loop and gets to present their contributions along with the rest of the team.
It sounds obvious, but the more you treat your contractors like a part of the team, the more they’ll feel like a part of the team—and the better they’ll integrate into your organization.
…unless it would lead to classification issues
You want to treat your contractors like the rest of your employees—but it’s important to understand the legal differences between W-2 employees and 1099 contractors (and respect those differences) to avoid consequences for misclassification.
For example, independent contractors have more flexibility in when, how, and where they work, while you can require your full-time employees to work in the office at specific times. As a business owner, you’re responsible for withholding payroll taxes from your employees’ paychecks—but independent contractors pay their own taxes.
Make sure you’re respecting the legal distinctions between an independent contractor vs. employee.
Create a better experience for your independent contractors, and watch your business thrive
The more you make your independent contractors a part of the team, the better their experience will be at your company—and the better work they’ll do while they work for you. Create a positive experience for your contractors, and watch your business thrive.
Looking for specialized payroll solutions for contractors? Dive into our guide for expert recommendations and find software that streamlines payments and ensures compliance.
FAQs
How is managing an independent contractor different from managing an employee?
Independent contractors control when, how, and where they work, so you generally can't dictate their schedule the way you can with a W-2 employee. You're also not responsible for withholding payroll taxes from their pay—contractors handle that themselves. Respecting these distinctions helps you avoid misclassification risk while integrating them into your team.
Can I offer independent contractors the same benefits as employees, like health insurance?
Yes, in many cases. Some health plans allow companies to add independent contractors to their group coverage, with either the business or the contractor paying the premium. Contractors can't receive tax-free benefits the way employees do, though. If your business pays the premium, the contractor may owe taxes on it. Check with your insurance provider first.
Do I need a written contract with an independent contractor?
Yes. An independent contractor agreement is a signed document outlining the scope of work, deliverables, payment terms, and timelines for the engagement. It protects both parties by setting clear expectations upfront, and it helps establish that the relationship is genuinely a contractor arrangement rather than an employment one.
What happens if I misclassify an employee as an independent contractor?
Misclassifying a worker can leave your business liable for back pay, unpaid payroll taxes, and penalties—plus court and attorney's fees if it leads to litigation. The IRS and Department of Labor apply specific tests around control and independence to determine proper classification, so it's worth reviewing before finalizing how you'll structure the role.
How can I help a new contractor settle in faster?
Pairing a new contractor with an established employee helps integrate them into the team quickly and effectively. Choose someone on the same project who's approachable and can introduce them to the team, answer questions, and check in regularly during their first few weeks on the engagement.
