As a small business owner, you know that the costs of your business don’t run cheap. There’s keeping the equipment maintained, space rent, travel expenses and employee salaries. These are such known money crunchers that people looking to start their own business are warned to expect not be able to make a large salary. The Small Business Administration (SBA) tells business owners that they can really only pay themselves “what [the business earns] in sales minus [the] costs and taxes.”
Owning a small business isn’t the only dream you’re figuratively feeding, you’re also responsible for making sure your staff are paid a livable wage to feed themselves, literally. If you’re business is growing and you need more hands on deck but aren’t sure that you can cover the salary of another employee, hiring a freelancer could do you good. But, like with all things, hiring a freelancer does have its drawbacks. Take a look here at the pros and cons of hiring a freelancer, you’re sure to find the answer you’re looking for.
Positives of Hiring a Freelancer
–Hiring a freelancer is more cost-effective: There are hidden costs that come with hiring full-time employees, including paying a share of your staff member’s Medicare and Social Security taxes and state unemployment compensation insurance. You are paying a freelancer an hourly rate, not a salary, and you are not required to offer insurance or pay the above taxes. This can cut your costs down by 20-30 percent.
–Freelancers put quality above quantity: Freelancers are responsible for maintaining a brand of excellence if they wish to sign and retain clients. They will work fastidiously to preserve a good working relationship with your company in order to keep your business, guaranteeing you excellent work and follow through.
–Open access to a pool of talent: It has been estimated that by the year 2020, 40 percent of the American workforce will be made up of independent contractors, i.e. freelancers. Using skill-specific sites to advertise, you can choose from a pool of qualified freelancers who have knowledge and experience in the area you’re looking to hire.
Negatives of Hiring a Freelancer
–There might not be a sense of loyalty to your company: If you’ve hired a skilled freelancer, you’re most likely not their only client. Because you’re not their only client, there isn’t a sense of loyalty to your company’s mission and values, or even its success. Full-time employees will work harder because the success of the company will directly affect them.
–Freelancers can sue you: If a freelancer is injured performing a task for your business, they can sue you for liability. Full-time employees cannot readily sue their employers, especially if said employer has workers’ compensation insurance. To get the benefits of workers’ compensation should an employee be hurt on the job, they are required to sign a contract that essentially voids their rights to sue the business. It’s extremely more difficult for a full-time employee to sue you than it is a freelancer.
–Managing a freelancer is not as easy as managing a full-timer: Freelancers work on their own schedule and usually off-site. This can make them more difficult to keep contact and get ahold of them in a work-related project emergency. Full-time employees are in the office eight hours a day, five days a week. If you have a question or need clarification about something work related, all you have to do is walk down the hall and visit their cubicle.
There are benefits and drawbacks to hiring and working with a freelancer, so before you decide to hire one, really think about what you expect and what your business needs.