Many companies turn to freelance workers, especially during peak seasons such as the holidays. They can save money which can be used to recruit more employees once a portfolio of customers has been established. However, incorporating freelancers into your organization requires procedures which are distinct from those that are used to hire employees. Your goal is to ensure that your interests are served from the relationship, the roles between you and the freelancer are clarified, and that taxes and other legalities regarding the contractor are met.
Never Confuse a Freelancer with an Employee
This is a common mistake made by business owners which can lead to serious, undesirable consequences. Both the IRS and other government agencies aren’t fond of business owners that employ freelancers so that they can avoid having to give them the benefits which would be expected of employees. Freelancers that work full time in your office, under your supervision, and who have contracts which are open ended put you in danger of being forced to pay fines, as well as Medicare and Social Security benefits.
One way to avoid this problem is by understanding the differences between an employee and freelancer. A freelancer is essentially a business owner, often a sole proprietor. They should operate their own business in their office, and should have a website, business card, as well as their own clients. While you will instruct them on the work you need done, they will work independently, at their own pace, without you looking over their shoulders.
The labor hours and work schedule in regards to the difference between employees and freelancers is this: if you tell them what time to show up to work, they are an employee. If they have their own schedule, and work in their own location – they are a freelancer.
Benefits and Guidelines for Dealing with Freelancers
Perhaps the greatest benefit of working with a freelancer is that you don’t have to micromanage them. Good freelancers are self-driven and motivated. They are masters of time management, and once you’ve given them a task with a deadline, they will get it done. With employees, especially new hires, there is a lot of micromanaging that needs to be done. You are responsible for handling their payroll, sick leave, and other benefits. Freelancers handle all these things on their own.
Freelancers are also flexible with regard to their rates. Due to state or federal law, employees may have to be paid a minimum amount for the work they perform. Freelancers, on the other hand, are often very flexible in regard to fees, and may offer discounts depending on the type of work that needs to be done as well as the quantity and whether you’re a repeat client.
However, freelancers expect to be paid for the work they perform, and they want their money sooner rather than later. Slow payments are one of the biggest problems freelancers face, and most don’t like dealing with payroll departments. Freelancers can add tremendous value to your organization, but only when you understand the role they play as well as their distinction from employees.