How to Hire Freelancers & Thrive in the 1099 Economy

Freelancers abound: writers, translators, editors, marketing strategists, researchers, graphic designers, engineers and paralegals are some examples of the myriad professionals available for hire on a contract basis. Employing a freelancer can be a strategic solution for enhancing, growing and streamlining your small business.  

Autonomous experts in their areas of focus, freelancers can bring insight, experience and polish to your small business’s undertakings. Some freelancer work through an agency. Others are small business owners like you-peddling their skillset is their business.    

Hiring a freelancer can help you refine your business’s identity, strategy and offerings. It’s key, however, to start with a clear sense of what you need from the relationship and what you can afford. Here’s how to get started. 

Freelance basics

Freelancers, consultants and contractors are all in the same category; if you hire an individual professional, and you expect to pay him or her $600 or more within a tax year, then yours is a 1099 contractor.  

Freelance arrangements can look a variety of different ways. In some cases, your freelancer may assist you with a single project, after which your relationship ends. In other instances, you may need his or her on-going efforts; at which point, your freelancer may become like an adjunct member of your team. Erika Klein, President and Founder of Social Butterfly Social Media Management Services, explains: “Our writing team is comprised of two amazing freelancers. I love that they are able to work from anywhere-one is even in a different state than we are!”

Freelancers are different than your full or part-time team members; each freelancer operates as his or her own professional entity. They use their own workspace spaces and equipment. You may give them the specs as far as what you need and when you want it done, but you don’t train or supervise them as you would your staff.  “Keep in mind that an independent contractor/freelance team member is not an employee. You cannot designate when, where or how they work” advises Klein.  

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Scaling your business with freelance help 

Using freelancers can be a nimble, targeted way to grow your small business. You can experiment with avenues for growth before taking on the financial risk of hiring a new full-time staff person. This gives you the freedom to experiment with new offerings, test marketing to your audience and building success incrementally. Klein explains: “My company is able to offer another level to our services because of our freelance writing team.” 

Just like with any new hire, it’s imperative that you take time and chose the right freelancer for your business. As is the case when you call in a professional to paint your home, reupholster a piece of furniture or fix an appliance, you’re counting on that professional’s skills and experience to get work done right. Therefore, it’s important to enact your due diligence and to choose a freelance professional who suits your needs, who can demonstrate quality work and who comes highly recommended. 

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Onboarding your freelancer-the basics 

Hiring the right freelancer takes care, thought and patience. If you read a great blog post, that doesn’t necessarily mean you’ve found your perfect freelance writer for your business. It does mean that you found an interesting prospect, and reaching out to that writer may prove a good fit for your needs. Perhaps you can hire that writer or engage with one of his or her contacts. 

Small business owners can find freelancers in a host of different ways: some consult their networks to see who others are using. Some connect with prospects by creating job posts. Others search for freelancers on networking sites. There are also agencies through which you can connect with freelancers. 

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As you think about what you need, devise interview questions that are relevant to the project or assignment that you have to offer. Next, research how much the type of freelancers you’re aiming to hire generally get paid. This will give you a basic sense of that professional’s market value. Keep in mind that freelancers pay their own their taxes, expenses, etc. The IRS explains: “Self-employed individuals generally must pay self-employment tax (SE tax) as well as income tax. SE tax is a Social Security and Medicare tax primarily for individuals who work for themselves.” 

You can expect to discuss pay with a freelancer when you have a conversation about your needs and his or her availability. Be clear about expectations. You manage this employee differently than your others, but it’s still an important relationship, so treat it as such. Also, keep in mind that in some cases you’re competing for a freelancer’s time with their other clients and potential clients. Don’t hire a freelancer that you can’t comfortably afford. It won’t work for you or your freelancer.  

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Nuts and bolts

Klein recommends: “Have all freelance team members sign an independent contractor agreement prior to taking on projects. My company uses Quickbooks to generate 1099s and we pay our freelancers electronically through PayPal. Each month they send us an invoice of their services and then we send out the payment. It’s so simple!”  

An independent contractor agreement is a legal document that stipulates the terms of your arrangement. It outlines important dimensions of your relationship, formalizing expectations around compensation, accounting for confidentiality between parties and outlining other terms. Since no professional training takes place, this document ensures that all parties have a shared understanding as far as obligations, expectations and restrictions.

If you’re pursuing a freelance employee, it’s a good policy to work with your attorney to prepare this document in advance of hiring that professional. It leaves both you and your freelancer in a legally precarious position to start work without the benefit of a signed contract. Your freelancer will also need to populate and send you a W-9 tax form.  

Hiring a freelancer can earn your small business big rewards. Make sure to take time and care, though, as you prepare. This ensures the arrangement works smoothly for you, your business and your freelancers.   

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