When you need extra help for your business, where do you turn? Increasingly, more business owners are hiring freelance and contract workers instead of permanent employees. There are numerous benefits to working with 1099 contractors, including lower payroll costs and the ability to meet temporary labor needs. However, working with freelancers also comes with unique challenges.
From screening and hiring to collaborating with contractors, this guide from Tempus Nova offers an introduction to adding freelance workers to your business’s team.
Hiring Freelance Workers to Your Team
Working with freelancers allows employers to broaden their applicant pool from local job-seekers to talented self-employed people around the city, state, country, or globe. With a larger talent pool, companies can find workers with the right skills at the right price. However, while the ability to shop around is great in theory, it can be overwhelming. For example, if you’re looking for a WordPress developer to help you build, maintain, or troubleshoot your website, you’ll quickly see that there are a plethora of candidates to choose from. If you’re not careful, you could end up with someone who doesn’t fit your requirements.
Before searching for freelancers, have a clear understanding of the skills required for the job and whether you’re prepared to work with remote workers across time zones or prefer a freelancer located in close enough proximity to attend in-office meetings. Then, do a cursory search of applicants who meet your criteria to establish a competitive pay rate for the role.
Freelance marketplaces allow employers to either post job listings and solicit bids or reach out to contractors directly. However, while portfolios and reviews offer valuable information, it’s not enough to know if a freelancer is a good fit for your team. For that reason, it’s important to add an additional layer of screening via phone or video interviews with key stakeholders. Video conferencing tools like Zoom and GoToMeeting allow employers to conduct remote interviews either one-on-one or with a panel.
Confirm Payment Methods
As you screen and vet freelance applicants, explain up front your method of payment and regular paydays to eliminate confusion and to set expectations. The number of hires and their locations will be a determining factor in how you remit payment, but choose a solution that fits your business model.
One option is to add freelancers to your payroll setup, making it easy to pay by check or direct deposit. Alternatively, you can use online payment systems for quick mass freelance payouts with nominal fees and payment tracking; however, this becomes a pricier choice if you plan to send money to international contractors. If this is the case, opting for a transfer service like Remitly can be a better choice, allowing you to save on payment fees depending on how soon the funds are available. For example, if payouts are to workers in the Philippines in pesos, then the fees are waived.
Tax Filing for Freelance Workers
Taxes are another important piece of the freelancer puzzle. While freelancers are much simpler than employees come tax time, there are specific processes companies must follow.
Any freelancer your company pays $600 or more in a year must be issued a form 1099-NEC by January 31st. In order to correctly issue 1099s, companies should collect Forms W-9 upon contracting with a freelancer (or a W-8BEN for a foreign contractor). Businesses are also responsible for mailing Form 1096 and copies of 1099s to the IRS. The Balance outlines the filing process for 1099 contractors in more detail.
Collaborating with a Distributed Team
Finally, hiring the right culture fit is the first step toward productive collaboration with freelance workers, but it’s not all a company needs to integrate contractors into their team. Whether freelancers are located locally or overseas, they’re entitled to a greater degree of flexibility. As such, employers need tools that allow them to effectively collaborate with remote freelancers.
When distributed teams need to collaborate on complex projects, there are project management tools like KissFlow or Asana, which start as low as $10.99 per user per year for small teams. And for day-to-day communication, employers can turn to communication apps like Slack instead of relying on messy and distracting email threads. You can also tap into Google Workspace, which is a boon when it comes to connecting workers from anywhere in the world, and you can customize your workspace to fit your business’s needs.
Freelancers can be a great asset to your company’s team, but bringing on contract workers isn’t a decision to take lightly. Rushing into freelance hiring without the right tools in place to recruit, screen, and communicate with freelancers sets businesses up for frustration and wasted funds. Before hiring freelancers, be sure that you have a clear vision for how freelance workers will add to your company and how you’ll collaborate effectively with a distributed team.