A freelancer is an independent contractor who works for themselves and is hired by a company on a per-job or per-task basis, either on a short-term basis or by a retainer.
A freelancer is not an employee and has the discretion to charge their preferred rates and choose freelance jobs that suit them.
What is a freelancer?
The term freelancer covers a broad category of independent contractors, including gig workers. As self-employed workers, freelancers earn wages on a per-job or per-task basis. Relationships with organizations can be short-term or long-term on a retainer basis.
Independent workers usually sign a contract before starting work, agreeing to a predetermined fee (either a flat fee or a per-hour, per-day, or per-project rate).
Freelancers can work entirely independently or perform contract work to supplement part-time or full-time employment (if their employment contract permits).
The most common fields for finding and hiring freelance work include;
- Bookkeeping and finance
- Copywriting and editing
- Customer service
- Graphic design and web design
- Social media and marketing
- HR and recruiting
- Education and training
- Computer, IT, and programmers
Freelancers typically demonstrate specific soft skills that help them find success and build productive relationships with organizations. For example, discipline, persistence, organization, communication, and initiative.
How is a freelancer different from an employee?
A freelancer is a self-employed individual who works for various clients as their own boss. In contrast, an employee is hired by a single company. While freelancers usually work on shorter projects, employees are committed to a specific role within the company.
Freelancers and independent contractors are responsible for their own tax contributions and are not eligible for company benefits such as health insurance contributions. The company manages employee tax contributions, and their contract usually includes additional perks.
Take note: A digital nomad could be a freelancer or an employee that works remotely. If hiring non-US citizens as digital nomads, it’s important to remain compliant.
8 benefits of hiring a freelancer
Freelancers are highly skilled professionals with valuable skills. Companies can benefit in the following way when hiring freelancers;
- Save money by reducing overheads (such as training, health insurance, payroll taxes, etc.)
- Connect with workers demonstrating an expert skill set through freelance marketplaces
- Reduce company risk by working with a contract
- No long-term commitment required
- Increase company diversity
- Enjoy schedule flexibility and quick turnarounds
- Gain a fresh perspective when working with an experienced self-employed person
How to hire a freelancer?
Regardless of which method you choose to find freelancers, there are a few key steps to consider.
Determine the scope of work
Create a detailed brief of what needs to be done, with as much information as possible. The brief should include the desired deadline, the required job, the pay, and contact details.
Establish a price point
The cost of the job depends on various factors such as the worker’s geographical location, the amount of experience, and the going rate. Keep in mind that freelancers’ rates are usually higher than in-house employees as they have reduced job security, uncertain earning potential, and must pay their own taxes.
Find the best freelancer for the job
Using referrals is an effective way to discover freelancers with desired skills within your own network.
Various freelance job boards list independent workers, along with their skills and pricing. For example, Upwork and Fiverr connect freelance talent with new clients.
Take advantage of social media platforms, including LinkedIn and Facebook groups, to post about freelance job opportunities.
Assess the freelancer
Ask each shortlisted freelancer for previous work and assess if they can match your requirements. Request a portfolio, assess their knowledge using a skill test, or conduct an interview call.
Hire and pay the freelancer
Onboarding freelancers requires a contract and a shared understanding of expectations. Determine how much access the freelancer needs to internal tools and documents and whether a non-disclosure agreement should be established.
For example, a freelance writer won’t need access to internal systems, yet freelance web development talent may need access to the company’s website.
It’s important to remain compliant when hiring independent contractors, especially when hiring internationally. The contract will also determine the payment details, including when payments will be made and the payment method.
Build a database
It’s helpful to stay in contact with freelancers, especially if the relationship is productive. Whether a small business or a large, global enterprise, it helps to have a network of reliable freelancers to contact when needed.
How to pay a freelancer?
The exact process for paying a freelancer depends on the arrangement between the two parties.
Choose from paying the contractor upfront, making payments upon each milestone completion, making a downpayment, or paying the contractor per hour.
Various methods exist for paying independent contractors, such as international bank transfers, international money orders, digital wallets, cryptocurrency, and money transfer services.
The best option will depend on the worker's remote work status, invoicing protocol, and the specific freelance business platform policy.
If you regularly hire freelancers, it’s worth following an independent contractor invoicing and time tracking policy template to keep the wheels turning smoothly.
How to terminate a freelancer?
If a freelance relationship sours or the job doesn’t work out, businesses can terminate a freelance relationship using the following steps.
- Ensure that the freelancer is correctly classified with the IRS
- Document everything and communicate the issue early
- Review the contract for termination provisions
- Pay the contractor for the work completed
The gig economy is rising, and businesses are turning to freelancers for specific jobs such as project management or freelance writing. At Deel, we offer a platform built for today’s world of work. Businesses can benefit from our hiring, payroll, and compliance tool — find out more today.