Texas First Hire

Alternatives to Hiring an Employee

By Jeremy Kenerson, Founder and CEO at DeskTeam360

Last updated . Every number on this page was checked October 2, 2026.

The main alternatives to hiring an employee full time are a part-time employee, an independent contractor, a virtual assistant, an overseas contractor, a staffing agency and a flat-rate outside team. This page is about options other than a full-time employee on your payroll. It isn't about ways to recruit one. The six differ in who manages the work, how many skills you get, and which paperwork lands on you. One limit applies to all of them: you don't get to choose whether a worker counts as a contractor. The IRS and the Texas Workforce Commission each have a test for that.

This page is a plain reading of the rules. It isn't legal or tax advice.

What are the alternatives to hiring an employee?

The alternatives to hiring an employee, meaning a full-time employee on your payroll, fall into six kinds on this page: part-time employment, an independent contractor, a virtual assistant, an overseas contractor, a staffing agency and a flat-rate outside team. Each one changes who manages the work. The table lists them with the guide that covers each one.

Table: Six alternatives to a full-time employee. Sources: IRS, Texas Workforce Commission and DeskTeam360's published plan details. Checked October 2, 2026.
Alternative What it is Who manages the work Where it's covered
Part-time employee An employee on fewer hours. For Texas unemployment tax, it doesn't matter whether the employee is full time or part time You do Hiring an employee guides
Independent contractor A worker who isn't your employee under the IRS and Texas tests The contractor has more independence in how the work is done hire independent contractor
Virtual assistant A person who helps from another place, on tasks you hand over You hand over tasks and check them. If a service supplies the assistant, ask who manages the person Virtual assistant guides
Overseas contractor A contractor who lives and works in another country The same as any contractor. You agree on the work and check what comes back, across a time gap Overseas hire guides
Staffing agency A company that supplies a worker for a fee. This page gives no price for it Ask the agency before you sign The Texas section below
Flat-rate outside team A company with its own staff, paid a set price each month The team's company. DeskTeam360 uses a North American account manager, who assigns the work and checks it outsourcing vs hiring

The first hire cost page shows four of these by the month, with the math.

What does Texas list as alternatives to hiring employees directly?

The Texas Workforce Commission's employer guide has a page called "Alternatives to Hiring Employees Directly." Its sections cover temporary employees, professional employer organizations, payrolling, hybrid situations, best practices for staffing firms, joint employment and independent contractors. Here's what it says about three of them. The page was read October 2, 2026, and it's linked under Sources.

  • A temporary help service. The guide says you can hire temporary employees through a temporary help service. In that case, it says, "the temporary service is the employer and will deal with any unemployment claims from such employees". It names a trade-off too: "Hourly labor cost is higher, but at least there will be no unemployment claims to worry about". And it says a temporary employee can be counted as an employee of both the client company and the staffing firm under joint employment rules, so cover that in any staffing agreement you sign.
  • A professional employer organization, or PEO. The guide says that in Texas a PEO is considered the employer of the workers it assigns to its clients, as long as it's properly licensed and certified under Chapter 91 of the Texas Labor Code.
  • An independent contractor. The guide says independent contractors are self-employed, and that a business that uses one is "merely one of the clients of that contractor". It also says all the laws presume that a worker who does services for pay is an employee. An employer that thinks otherwise has the burden of proof in almost any possible legal situation, the guide says.

These are the state guide's own words about Texas. They aren't legal advice. Ask an employment lawyer before you sign a staffing agreement.

How common is it for small firms to use contractors?

In the Census Bureau's 2020 Annual Business Survey, 33 percent of the companies that answered said they used contractors, subcontractors, independent contractors or outside consultants. A Federal Reserve Banks survey gives its own numbers below. Neither survey is about first hires.

  • Census Bureau. The 33 percent figure is in a US Government Accountability Office report from November 2022.
  • Federal Reserve Banks. Their survey of US firms with no paid employees ran from September 4 to November 4, 2024. Among older firms that plan to hire, 51% already use contract workers. Among newer firms that plan to hire, it's 32%, and among firms with no plan to hire, it's 33%. "Older" means in business for more than two years. The survey isn't a random sample, and its data are weighted to stand for the whole country.

Those numbers count firms that use contractors at all. They don't say how first hires are made.

On first hires, this site has one owner's view and no statistic. Jeremy Kenerson's view is that, among small businesses, entrepreneurs and agencies, most first hires are contractors, not employees. The two surveys above don't prove that view.

DeskTeam360 runs this site and sells one of the six options, a flat-rate team. If you'd like to see whether it fits your work, you can book a call.

Book a call

The button opens DeskTeam360's Book a Call page.

What does each alternative ask of you?

Each alternative to a full-time employee asks you for a different mix of managing, paperwork and money. Here's a short section on each.

A part-time employee

You manage the person. A part-time employee is still an employee, so the steps on the first hire steps page still apply. Texas unemployment tax doesn't look at hours. An employer owes it after paying $1,500 in wages in one calendar quarter, or after it has had one employee in 20 different weeks of the year.

An independent contractor

You agree on the work and the pay, and you handle the contractor forms. On payments to an independent contractor, the IRS says a business generally doesn't withhold or pay taxes. Who counts as one isn't your call: the IRS and the Texas Workforce Commission each have a test for it. Not legal or tax advice. Ask your accountant. For the steps to bring on a contractor, see hire independent contractor.

A virtual assistant

You hand over tasks and check them. How the person is paid and who manages them depend on whether you hire them yourself or go through a service.

An overseas contractor

You agree on the work and check what comes back, across a time gap. The IRS has its own rules on pay for work done outside the US, and the overseas hire guides cover them. Rules inside the person's own country aren't covered on this site.

A staffing agency

You pay the agency, and it supplies the worker. Ask who the worker's employer is, who manages the daily work, and what the fee covers. For a temporary help service, the Texas Workforce Commission's guide says the service is the employer.

A flat-rate outside team

You send tasks and review what comes back. DeskTeam360's Entrepreneur plan is $1,497 a month, its published price as of October 2026, and it works on 1 task at a time. DeskTeam360's site says every plan includes the full team, and that the plans differ in how many tasks run at once.

For a hire next to an outside team, and for what the team takes on and what it doesn't, see outsourcing vs hiring. DeskTeam360 doesn't do payroll.

Charisma Ink. is one agency that went this way. The agency was ten years old when its owner, Gaynor, told the story. It does PR, digital marketing, ghostwriting, book publishing and influencer marketing, and its clients are accounting and fintech firms. Before DeskTeam360, Gaynor worked through a string of contractors. The DeskTeam360 team now handles her design work and the Amazon filing for her book publishing, with a project manager who tracks it all. Close to a year in, Gaynor put her savings at "at least 20 grand a month" against what hiring or contracting would have cost her, and said she had the confidence to take work on. The number is hers, for her own agency. It isn't a promise for yours.

"I Don’t Have To Worry About If They Are Working On My Tasks Or Not Because I Know They Are."

Gaynor, Charisma Ink.

When is an employee still the right call?

An employee fits when the job needs you to direct the work yourself, or needs one person on hand all week. This page doesn't tell you which to choose. These are the cases where the alternatives fall short:

  • You need to control what's done and how. The IRS says a worker is an employee under the common-law rules if the business can control what will be done and how it will be done. That holds for a remote worker too.
  • The job needs a person on hand. Answering the office phone is one example. An outside team doesn't do that.
  • The job is one steady role, full time. A flat-rate plan works on a set number of tasks at one time, so it's a different thing from one full-time person.

If an employee is the fit, the next question is the budget. For the money test, see can I afford to hire an employee.

More on budget and other options

If the flat-rate team is the option you want to look at, a call is where you find out whether it fits your work.

Book a call

The button opens DeskTeam360's Book a Call page.

Sources

All checked October 2, 2026.

This site isn't connected to the State of Texas or any government agency.

What changed

  • October 2, 2026: First version of this page.