Subcontracting certain tasks to freelancers
For many business owners or senior management, contracting work out to a freelancer or hiring a subcontractor can help them land even more work. But, at the end of the day, it’s the business owner’s reputation on the line. Think through the costs as well as the legal issues of hiring out rather than having an in-house team.
‘Freelancers’ Does Not Mean ‘Free Lunch’
When in the market for freelancers, the goal of what you want is threefold: fast, cheap, high quality. But, as business owners know, they can only have two of these three. It’s possible to have fast and high quality but be prepared to shell out a pretty penny. Still, a study conducted in 2015 shows that nearly 54 million people in the United States alone are freelancing. Which means that businesses are relying on hiring subcontractors to offload work. But businesses should remember that hiring a freelancer is not a workaround to hiring an employee without having to dispense commensurate benefits. Nor does it mean that freelancers get to enjoy managerial perks and positions. In fact, failure on the part of either the freelancer or the business hiring subcontractors to properly classify their roles in the transaction could lead to invasive and time-consuming audits and legal action filed on part of the State. Being a freelancer and hiring a freelancer binds together the economic and legal: how income gets claimed and taxed, whether the right business articles have been filed to set up a freelance business and the information and forms the hiring party will need to ensure a freelancer fills out before putting them on the payroll roster.
There’s also another dimension to hiring out: contracts. Freelancers may have their own contracts in place or the hiring business can choose to have their own HR department create one for the period of time they’ll be working together. A contract or a service agreement between a business and freelancers does more than simply outline the hourly rate and start date. A well-written and smart contract can describe the scope and progression of a project, show how milestones or project objectives fulfilled are tied in to payments, can break down fee and deposit structure and ensure both parties are clear on what their individual responsibilities are. For example, if a business wants to ensure that the project rate they’re paying the chosen freelancer also includes particular services, having a letter of agreement that states these sets up a paper trail.
Ongoing work, especially on defined projects, always runs the risk of moving ‘out of scope’, especially as deadline dates loom closer. It’s at this point that both the hiring business and the freelancer can refer back to the letter of agreement or contract. What they’re looking for, firstly, is the agreed-upon project scope and, secondly, how the two have agreed to proceed in a situation where a freelancer must go beyond.