How + Why to Build your Online Business with Outsourcing and Hiring Freelancers
The Pink Ink is all about streamlining life and business with digital planners. The right planner keeps business owners organized so they can grow their business and their income. However, the organization only gets you so far. When you have more work than you can handle, where do you turn?
You could hire employees, but let's be honest: Labor is expensive. Labor is the single biggest cost of doing business, accounting for up to 35% of revenue in some industries. Then there's automation. Business owners are saving money by automating everything from lead management to data entry. Yet despite all the advances of technology, some jobs still need a human touch.
When you need experienced help but can't afford payroll taxes, benefits, insurance, and all the other costs that come with employees, hire independent contractors instead. Also called freelancers, independent contractors fill in an important gap in the labor force.
Why Hire Freelancers?
Saving money is the most obvious reason to work with freelancers. Freelancers also offer businesses a degree of flexibility they can't achieve with permanent employees. However, employers can't classify staff as independent contractors and call it a day. The government uses specific factors to determine whether someone is an independent contractor or a W-2 employee, including the degree of control an employer has over the work and the permanence of the working relationship.
For that reason, independent contractors are best suited to jobs that are:
a. Short-term, or;
b. Not a core part of your business
That might seem like a small pool, but there are a lot of places your business can use independent contractors.
Common Tasks to Outsource for Small Businesses & Online Entrepreneurs
The classic example of a small business freelancer is an accountant. Most small businesses don't need a CPA on staff year-round. A freelance CPA provides much-needed expertise at tax time at a significantly lower cost. Other short-term or one-off projects a business might hire a freelancer for include:
Consulting.
Graphic design.
Illustration.
Packaging design.
Research.
Search engine optimization.
Transcription.
Translation.
Web design.
Web development.
Businesses also work with freelancers on an ongoing basis. When working with freelancers long-term, it's important to give contractors autonomy to keep the employment relationship within IRS guidelines. Long-term freelance relationships are generally routine jobs that aren't an integral part of the business. This frees up your time to focus on growing and scaling your business. For example, a business might hire freelancers as:
Virtual assistants: No one likes answering phone calls or managing a calendar, but it's an essential part of running a business. Virtual assistants offer an affordable alternative to in-house administrative support with remote services that include customer service, data entry, file management, scheduling, and other routine administrative tasks.
Bookkeepers: It's not important when or where bookkeeping happens as long as it's accurate and timely. That makes bookkeeping a great fit for freelance services. Companies that work with a freelance bookkeeper throughout the year can be sure their books are ready at tax time.
Content creators: Do you want to drive organic traffic, increase social media engagement, or develop digital products for your brand? Content is an important part of any business's digital marketing strategy, but content creation is harder than it looks. Outsourcing to freelance content creators gives businesses quality content without the high price of in-house talent.
Marketers: Marketing is another skill that every business needs, but not every business can afford it. Businesses can hire a variety of freelancers to meet their marketing needs, from branding experts to ad specialists to social media managers. More often, businesses outsource to a full-service marketing agency to meet all of their marketing needs in one convenient hire.
Drawbacks of Independent Contractors
Now you know what freelancers bring to your business. So what's the catch? There are lots of benefits to working with freelancers, but it's not all upsides. Businesses have less control over independent contractors compared to employees. Since they're hired on a contract basis, freelancers are also less loyal than employees. Finally, the contractual nature of the relationship complicates firing independent contractors. If a business breaches its contract and wrongfully terminates a freelancer, they could find themselves facing a lawsuit.
Perhaps the biggest risk of hiring freelancers is misclassification. Misclassification is a major problem in the freelance economy as business owners look to save money anywhere they can. However, classifying W-2 employees as independent contractors is an expensive mistake. Businesses that misclassify workers face unpaid taxes, penalties, and potential lawsuits. When deciding whether a new hire is an employee or an independent contractor, err on the side of caution.
Tips for Hiring Independent Contractors
Freelancers aren't all cut from the same cloth. Finding a quality freelancer requires screening and interviewing just as you would when hiring an employee. While factors like culture fit may be less important, business owners should pay attention to a freelancer's communication style, portfolio, and past reviews to ensure a good hire. It's also important to post a thorough project description with clearly defined deadlines and deliverables. After finding your freelancer, outline the relevant details in a freelance contract. Good contracts protect both freelancers and the businesses that hire them.
How to Pay Freelancers and Independent Contractors
Last, but certainly not least: paying your freelancers. Paying freelancers is much simpler than paying employees because there are no taxes to withhold. Businesses must collect IRS Form W-9 when hiring an independent contractor. This provides the tax ID information you'll need to report payments made to independent contractors on Form 1099-NEC (previously 1099-MISC). Businesses are only required to submit 1099 forms for contractors who pay $600 or more in a tax year
As a business owner, you're always looking for savvy ways to get ahead. Hiring freelancers help you grow your businesses while staying flexible and keeping costs low. However, classifying workers as freelancers isn't a cure-all for high labor costs. When adding freelancers to your business, make sure you stay on the right side of labor laws so you reap the rewards of the freelance workforce without the risk.
Blog is written by a guest blogger:
Courtney started Gig Spark to be a resource and the first step for people who are looking to join the gig economy, either to supplement their income or as a way to fulfill their dreams of becoming an entrepreneur.
