Are you thinking about using freelancers in your business for the first time? Great. Considering that there are more than a billion freelancers across the globe, you will have plenty of options, and the expertise you have to choose from is virtually unlimited. If the idea of hiring people that aren’t dedicated to your time clock is intimidating, keep reading as we answer a few of the most burning questions many business owners have.
What is a freelancer?
A freelancer is an individual that works on their own time on your (and other company’s) projects. They are typically experts or specialists in their field and are only paid for the time/projects they complete. A freelancer typically receives a higher hourly or per-project rate than an employee, but you save money in the long run because you do not have to invest in training, benefits, or a physical office for them to work. Freelancers have the tools and expertise they need to get your job done without you having to make an additional investment.
Keep in mind, however, that freelancers set their own schedule and, unless a non-compete agreement is in place, can work for whomever they wish, and that includes your competition. This is something to consider strongly if you have proprietary processes and systems.
How can I prepare to hire freelance employees?
Start by doing your research. Decide which roles are best completed by a freelancer and which are best to keep on payroll. Playing off what we mentioned above, if you have sensitive data or processes you do not wish shared, positions that deal directly with these aspects of your business may be better off as a salaried or hourly employee. You should also understand that, although you will save money, there may be additional costs associated with hiring freelance employees. This could include the cost of collaboration software or being billed for the extra time it takes to check emails and take phone calls.
It’s also beneficial to form a legal business structure and open a company bank account to pay your freelancers. If you’re not sure how to start an LLC, you can use an online formation service to walk you through the process. While this is less expensive than having an attorney draw up the paperwork for you, you will need to do additional research since each state has its own rules regarding LLC formation. In addition to being able to open up a bank account in your company name, forming your LLC may have some tax advantages, and you will remove personal liability from yourself in case your business winds up in a legal battle with a scorned contractor.
Are there tools that make it easier for my freelance staff to communicate?
Because freelancers are not confined to a specific geographic location, communication between individuals and teams may be a challenge. But, there are plenty of tools that make it easy. One example the Do In Digital blog recently highlighted: Grammarly. While Grammarly is mostly used as a grammar-checking software, it’s also a great way to share documents and edits between individuals. When you upload a file to the platform, it keeps a copy, meaning that anyone with your login information can access content with ease.
Google Docs, Slack, and Redbooth are examples of other collaboration, communication, and project management software that don’t require a physical location.
Where do I find freelancers?
There are plenty of places where you can find freelance talent, including your current employees. Considering that 70% of people in the US and 85% of people abroad are unhappy with their jobs, but the vast majority of freelancers are happy with their career decision, you may have employees that wish to move to a freelance structure. You can also look online at freelance job platforms, such as Toptal, UpStack, and Fiverr. The Guru99 blog has a list of more than 50 general and specialty freelance platforms where you can find the right contractor for your needs.
How do I pay people in different states/countries?
Payment is an issue that many employers are concerned about when they first think about hiring freelancers. However, you can pay your contract staff through many of the same methods you do with employees, including direct deposit, check, and PayPal. To offer direct deposit, you will need your freelancer's bank account and routing numbers. If they do not have this information, and you have hired them through a freelance job platform, you will likely need to pay through this platform.
Something to keep in mind here is that you will need to be very specific and openly communicative about payment terms. This is especially important if your freelancers are located in a different country. There may be currency issues or tax questions, and these are best discussed with your CPA for further guidance based on your situation.
Can I require my freelancers to come to the office?
Yes, and no. While there is nothing wrong with requiring local freelancers to pay an in-person visit to your office before hiring them, you cannot dictate their schedule or demand they work in your brick-and-mortar location. Doing so blurs the line between freelancer and employee, and that can get you into all sorts of legal trouble if they dispute their employment status with the IRS.
Remember, the reason that you are hiring freelancers in the first place is to take advantage of cost savings and their expertise. The last thing you want is to take away their creative and professional freedom just so you can micromanage their every move. Further, many freelancers choose to work from home so that they can tend to other obligations, such as children or aging parents. If having someone frequent your office is important, make sure they are aware of this from the beginning or consider paying them as an employee and having a set schedule.
The freelance workforce is huge. It’s made up of talented individuals whose skills and experiences can help your business grow without the expenses associated with maintaining a roster of full-time staff members. But, there are many things that you should know before collaborating with contractors, and certain steps, like forming an LLC and agreeing on payment terms, must be done ahead of time to sidestep potential disagreements or legal ramifications.