Tax & Accounting Blog

Do Freelance Workers Make Sense for You?

Accounting Firms, Business Practices February 14, 2014

Hiring independent contractors to supplement your staff during busy times or for specific tasks can be a smart strategy. However, there are a number of questions to answer and a few potential drawbacks to consider first.

One obvious advantage of using freelancers is the money saved by avoiding Social Security and Medicare tax payments, unemployment insurance, health care coverage, and 401K benefits. Firms can also avoid covering expenses like overtime and comp days – and, if the freelancer isn’t a good fit for your firm, termination and severance pay.

Hiring temporary help may also allow you to find an individual with the specific skill set or background you need for a particular project or client. Moreover, if a rush job comes in when your team is already overburdened, hiring a responsible independent contractor to focus exclusively on it can be a smart business decision.

On the downside, each new freelancer is an unknown entity. Even with references, you can’t truly gauge their work habits, talent level, or ethics until you work with them. And, unless they’ll be working from a remote location, you’ll be adding a new personality to the mix, which can affect your team’s morale and mood.

Remember, too, that your ability to manage independent contractors is limited. You can’t legally dictate a freelancer’s hours and workflow as you would a full-time employee’s. By extension, be careful how you classify them on paper and what you demand of them to avoid liability for employment tax.

If you decide to use freelance help, where can you find qualified experts? Start with your existing network. A member of your team or a colleague in the industry might be able to recommend qualified individuals. Former employees may now be self-employed and willing to freelance for you. If not, a number of websites specialize in connecting freelancers with those looking to hire them, including LinkedIn, Elance, Guru, and Mom Corps.

Has your firm ever used contractors or freelancers? If so, was it a success? Share your experiences below.