BBB Business Tip: Hiring A Freelancer

By Rick Walz – President/CEO

In an uncertain economy, freelancers are a good choice for small businesses who can’t afford, or simply don’t need, a permanent staff member. Many types of work, from writing to graphic design to bookkeeping, can be done on a freelance basis. To find and hire a freelancer who will do quality work for a reasonable cost, the Better Business Bureau recommends the following tips.

Know the difference between an independent contractor and an employee. Knowing the difference is vital since the answer can affect how you withhold taxes. Unlike employees, freelancers are independent contractors who control when and where they work and furnish their own equipment and tools. That said, situations vary, and should be handled accordingly. You can find more information about differentiating between employees and freelancers at IRS.gov.

Research prices and create a budget. The prices freelancers charge for specific projects can vary greatly. Prices depend on factors like where the freelancer lives and how much experience they have. Don’t rush to hire someone who offers the lowest rate. Instead, start by setting a budget and then take your time shopping for a qualified candidate. If you aren’t sure how much you can expect to pay for a particular service, ask around. Most freelancers are willing to discuss your project and give you an estimate for free.

Create a clear description of the work. To find a freelancer who is a good match for your project, you must get clear on what you need. Start by writing out what work you need completed, your timeline, a description of your business, your budget, and any other pertinent details. A detailed description will help you clearly communicate your needs and expectations.

Know where to find talented freelancers. Before you post your job online, ask around your business network for recommendations. It’s possible someone you know already found a talented freelancer, which can eliminate much of your search. If that doesn’t work, then post your job to a freelance marketplace or job board. Be prepared to receive (and weed through) a lot of emails. Narrow your search by pre-selecting communicative freelancers who have the appropriate skill set and can work within your budget.

Interview potential candidates. Be ready to share information about your needs and be frank about your expectations. It will quickly become apparent if this is a person with whom you will feel comfortable working. If you have a few options and are having trouble making a choice, consider offering paid test projects to freelancers you are interested in hiring. It’s a great way to see the person’s work first-hand before committing to a longer-term working relationship.

Sign a contract. Contracts are especially important, as they provide legal protection for both parties. Contracts should clearly outline the scope of the project, any deadlines you’ve agreed upon, when deposits and full payments are due, cancellation policies, and confidentiality requirements.

Get the tax forms right. Before the freelancer begins working, be sure to have them fill out a W-9 form. This form will request the correct name and Taxpayer Identification Number of the freelancer. Keep the W-9 on file for four years in case any questions arise from the worker or IRS. If you paid the freelancer $600 or more by the end of the fiscal year, you need to complete a Form 1099-NEC for nonemployee compensation. You must provide the freelancer and the IRS with a copy of this form by January 31 of the year following payment.

To learn more ways to improve your business practices, go to bbb.org and visit the BBB Small Business Resources page. You can also visit BBB.org/get-accredited to learn how to stand out as BBB Accredited business.