4 Top Finance Tips for Dealing With Freelance Workers
Hiring freelance workers is a great way for small businesses to leverage the expertise of a large pool of people. You can’t afford to keep a full-time writer, web developer, and graphic designer on staff, but you can enjoy the skilled services of these professionals just the same when you hire independent contractors who work on a freelance basis. Handling payments can be a tricky business in the freelance world. Use these tips to make sure you’re managing your freelancers properly.
Compare Several Quotes
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Take the time to compare quotes from more than one freelance worker when you’re hiring someone for a new project. Ask each contractor what they’ll bring to the project. If you’re developing a new website, you may find that one contractor offers custom logos and typography. Another may only deal with basic layout and backend management.
If you’re not familiar with the going rate for a particular type of work, research the industry to find out what seems fair. Keep in mind that it’s often worth paying a premium for premium work. Just make sure you know what you’re getting, and that you’re paying a fair price for the quality you expect to receive.
Draft a Clear Contract
When working with a freelance professional, it’s wise to draft a contract that details key points of your project. You can use this document to specify:
- The scope of the project
- The agreed-upon rate for the work
- The process for edits and adjustments
- The invoicing process
- Your payment schedule
If you typically pay your contractors a month or two after the completed work has gained approval from all parties involved, it’s important to specify this. You don’t want to receive an invoice demanding immediate payment if you expect it to take you 30 days or more. Establishing your payment guidelines and procedures early can save you a great deal of trouble later.
Issue the Proper Tax Forms
When you’re working with a freelancer, you need to issue a Federal 1099 tax form to report any payment of $600 or more. Though dealing with taxes may seem like a hassle, you can streamline the process immensely with pre-packaged 1099 kits. These include printable forms compatible with popular accounting programs like QuickBooks. Keep careful track of your freelancers’ work throughout the year so you’re prepared to file these promptly at tax time.
Pay on Completion
Never pay a contractor the full sum at the beginning of a project. You may negotiate a small deposit for the work, particularly if you’re hiring a freelance worker for something that requires them to purchase physical materials. However, you should pay for the freelancer’s time and effort upon satisfactory completion of the project. This gives you the opportunity to withhold payment if the work isn’t completed as agreed upon.
When you keep your finances organized and issue payments on time, you’ll find that working with a freelancer can offer a valuable way to tackle big projects easily and affordably with expert talent.