Employees Come with Hidden Costs:
Why Businesses Should Consider Freelancers
If you are a small business owner struggling to keep up with customer demand but can’t afford to hire someone full-time to help you out, consider investing in a freelance worker (or two). There are numerous benefits to outsourcing certain tasks to independent contractors. Perhaps the most important is that you will save time and money. Not only are freelancers easy to find, but you are also not obligated to pay for employment taxes or provide costly benefits.
Employee vs. Freelancer
There are significant differences between hiring an employee and outsourcing to a freelance worker. Feedough explains that a freelancer is brought into an organization on a contract basis. An employee is recruited, and it is understood that they will continue to be employed unless the business goes under, their position is eliminated, or engage in fireable conduct.
Both types of workers dedicate their time to your business. A freelancer, however, is not required to abide by company policies, such as a dress code or set business hours. Your workers are expected to act a certain way and to be available at predetermined times. You must understand the difference between before you begin searching for the perfect freelancer.
The Hiring Process
You are already familiar with the process of hiring an employee. Finding a contractor is a bit different. In recent years, staffing firms such as Upwork have made it much easier to locate marketing, creative, administrative, IT, and administrative support. These websites allow you to vet multiple candidates all at once and approach those you believe are a good match. Because of this, it takes fewer man-hours to acquire freelance talents.
Savings from Day One
You should be aware that many freelancers charge a higher per-hour or per-project rate than a traditional employee. Do not let this put you off. When you take into consideration the true cost of each staff member, the higher rates are significant trade-offs. According to timesheet development agency BeeBole, taxes and mandatory workers compensation insurance adds up to more than 10 percent of an employee’s salary.
Taxes that you, as the employer, must pay include FICA, SUTA, and FUTA.
Another tax advantage is that you do not have to have a brick-and-mortar building when using the services of a freelancer. Commercial property taxes may be prohibitively expensive, and the rate you pay depends on your building size, municipality, and classification. Further, because freelancers supply their own equipment and supplies necessary to perform their function, you aren’t paying sales taxes on large purchases, such as computer equipment and office furniture.
Not Just Taxes
Salaried or hourly employees cost you more than just taxes and base compensation. It is generally expected that an employer will offer benefits, such as paid vacation and health insurance, the latter of which can cost you more than $15,000 each year. Freelancers do not expect additional benefits. Instead, they get to enjoy working at their own pace and only accepting projects of their choosing.
In addition to all of the above, another significant benefit of hiring a freelancer is that they are an expert in their respective field. You are not going to pay for on-the-job experience short of nuances specific to your company. This means you get expert-level assistance but only invest in the services and time that you need.
The decision to choose freelancers over full-time employees is an easy one when your budget is your main concern. But remember that the key difference between an employee and a freelancer is how much control you have over how they do their job. If you need control, you need employees. If you can handle giving your help a bit of autonomy, you can save significantly each year by outsourcing to freelance workers.