Are you short staffed, but you’re not sure you’ve got the workload to sustain an ongoing head count? Or maybe you’re after higher productivity and specialist knowledge, without the overhead cost that comes with a new staff member?
You’re probably wondering how you can achieve either of these, given that hiring specialists generally comes with higher prices, expectations of holiday pay, sick leave and various other benefits. You wouldn’t want to have your employees wasting time with kitchen chitchat because they’re feeling secure in their full time job, or sitting around unproductive due to an unpredictable workload.
So, as a business owner you might like to consider if a freelancer better suits the task at hand. But before you run out and hire your first freelancer, you might like to weigh the pros and cons.
Did you know? The work trends 2015 survey identified that 31% of the SME workforce is made up of freelance employees, and, more interestingly, this is expected to rise to 40% by 2018.
First things first though – what exactly is a freelancer? A freelancer is someone who essentially runs their own business, contracting their skills out to one, several or many companies at a time.
When you think about the term “freelancer” do you immediately think designer or writer? Think again. Freelancers can be found for almost any area including, engineering and architecture drawing, data analytics, IT, networking – if you can name it, there’s probably a freelancer available to do it for you.
5 benefits of hiring freelancers
- Arms length for tax and super
A freelancer is known as a contractor in legal terms. Contractors do not have the same entitlements as employees, which means a freelancer is generally responsible for paying their own tax and super (which requires their own ABN number, of course). Without an ABN you’d be responsible to withhold tax and Medicare levy at the top tax threshold. However, if you require the person to work on your premises, with your equipment, within the hours that you set, the ATO might consider the freelancer an employee for tax reasons and you might be thought to have taken part in sham contracting (link) – so check your liabilities first.
- Someone who gets things done
As a business owner you can probably relate to a strong work ethic. As freelancers run their own business, they carry the same work ethic as most business owners do. And that means they’re much more likely to produce high quality work that reflects their skills at a productive pace. Freelancers rely on being able to showcase high quality work at fast turn over rates in order to maintain their workflow and cash flow.
- Control and efficiency
When hiring a freelancer, you have the freedom and control to allocate a deadline and a budget for completion of your projects. And what does that mean for you? Met deadlines and reduced ongoing wage costs.
If your business has an unpredictable workload within a specific skill set, you don’t want to find yourself wasting money with full time employees in the office when there is little work to complete, or bombarded at certain times with too many tasks to be done, therefore tarnishing the quality of work.
- No training required
When you hire a freelancer, you’re hiring with the expectation that they are knowledgeable in the service they’re providing. Therefore removing the need to send staff off to training courses – and that means getting the work done sooner – and that tends to cost less in the long run.
- Fewer – if any – overheads
As the freelancer is, in essence, the owner of their own business, overheads are their responsibility. So as costs like program memberships or subscriptions are generally assumed as a necessary tool of their business, they’re included in the provision of services.
The downsides of freelancers for business owners
They can disappear
There can often be a disconnect between you, your employees and the freelancer. And where there’s disconnect, you might also find they’re inclined to disappear unannounced, miss deadlines or drop off the grid entirely with no explanation. While people are easily replaced, this can still lead to productivity issues for you.
Have you ever wondered how genuine someone is about their claims of quality and ability to deliver on their promises? Of course, you don’t want to be left with a finished project that doesn’t meet your expectations, or worse having to re-do the project and pay for the work again.
Lack of control / high turnover
With a freelancer in control of their own hours and where they conduct their business, you might find yourself lacking the ability to oversee every step of the process as you may with your own staff within the office.
In the nature of contracting there is always a high possibility of high turn over rates, potentially resulting in inconsistent workflow, style and/or quality.
If the work required has the potential of a similar permanent ongoing basis it is generally easier to maintain style and quality control over a permanent employee.
Copyright & IP issues
As a contractor, the freelancer owns all rights of Intellectual property, unless stated otherwise in a written agreement. So it’s important you’ve set out the terms of your agreement (in writing) with your freelancer prior to commencing work. Of course, when it comes to financial contracts we always recommend you seek professional legal advice.
3 tips for hiring the best freelancer
- Ensure you view their portfolio of work
When it comes to picking from a few candidates for the project, it’s a good idea to ask to view a portfolio of previous works. That way, you’re able to get a feel for their true quality of work. And why stop there… a portfolio provides insight into more than just the visual of a project. You might also ask them to talk you through their thinking process to ensure the work is work they’ve actually done.
- Write up an agreement to ensure no nasty surprises
Be clear and upfront before any work commences; draw up an agreement regarding copyright or IP concerns, deadlines and budget considerations.
- Ensure they have their own ABN
Ensuring they have their own ABN number can absolve you of the responsibility to pay any tax and Medicare levy ontheir behalf (just beware of the earlier mention of sham contracting).
If you are a business owner, it might be worth giving some thought to which employees best suit the work required for your business to help you increase efficiency and reduce wage costs.
As always, if anything above strikes a chord with you, we recommend you seek professional advice. If you’d like to chat, you can always give us a call on (02) 6023 1700 or drop us a note.