Freelance workers come with well-developed skills and fresh ideas, which can help your company get a competitive edge without permanently adding to overhead. For many companies, freelancers offer affordable, flexible alternatives to in-house employees. But they’re not the right choice for everyone. To help decide if freelance workers are a good choice for your company, check out our pros and cons of hiring freelancers.

Benefits of hiring freelance workers

• Cost savings. Wait, what? Doesn’t a freelance employee get paid higher wages than an in-house employee? Well, yes, but remember that a worker’s total cost includes more than just wages. Freelancers don’t company-sponsored medical insurance, office space, or equipment; they pay for those themselves. They also take care of their own Social Security contributions, workers’ compensation insurance, Medicare, and unemployment insurance. This can add up to big savings for your company—from 20 to 30 percent over an in-house employee.
• Flexibility. A pool of great freelancers means always having qualified staff available. Freelancers can supplement staffing levels when the workload increases, when it’s neither necessary nor practical to hire permanent staff. And because freelancers bring specialized knowledge and experience from the get-go, they can immediately reach maximum productivity.
• Legal benefits. Unless explicitly included in the service contract, many employment laws that protect permanent employees don’t apply to freelancers, including minimum wage, overtime compensation, family leave, and wrongful termination. The fewer laws to balance, the fewer potential legal troubles.

Negatives of hiring freelance workers

• Control. Employers can tell freelancers what project they want done, but not how freelancers should do it. Setting a deadline for completion is fine and expected. That what/how line is a key factor in the IRS definition of an employee. If you’re telling freelancers how to do their work, you’re treating them like employees, which can get you into some employee-classification trouble. (The compliance and IRS rules around freelancers is complicated, so best check with an HR expert or legal counsel on appropriate classification of any worker.)
• Government audits. That trouble can come from the IRS, FTB, and OSHA, to name a few agencies that could audit your employee classifications and levy hefty fines for misclassification errors. Common sense and attention to employment regulations are key to getting this right. Your workers can also ask the government to evaluate their classifications if there is any dispute.
• Flexibility. Flexibility was a benefit, but a flexible workforce also comes with a price! While freelancers won’t need skills training, they will need education about the company and its goals. There is also no guarantee that the quality of work will be consistent from freelancer to freelancer in your pool. If you don’t feel like dealing with this every few months, a long-term freelancer or a permanent employee might be a better option.

Freelancers can be an asset to streamline many workforces. But do you know if freelancers are right for your business? If a qualified, professional opinion can help you optimize your workforce, look to the friendly HR consultants at YES! Your Human Resources Solution. Let our free consultation show how we can guide your unique business toward continued success!