Freelancers Versus Employees: Which Should You Hire?
Three different controls distinguish employees from independent contractors: contractual, financial and behavioral. In these categories, the core differences include:
- Contracts
- Freelancers typically work long and short term on a project or contract basis for clients, and while they often have written agreements that outline the scope of work, timelines, payment terms and other important details, the contract does not promise future work.
- Even in states with at-will employment, most employees assume that, barring misconduct, contracts promise tenure and thus higher job security.
- Taxes
- Freelancers are responsible for self-employment tax.
- Full-time employees’ Social Security and Medicare tax are shared with their employer.
- Benefits
- Freelancers don’t enjoy employment benefits such as vacations, family leave or sabbaticals.
- Full-time employees are often offered paid vacation and/or sick time, family leave, and even sabbaticals as well as medical insurance, retirement benefits and unemployment coverage.
- Rate of pay
- Independent contractors set their own rates for the specific services they offer.
- Employees work for a fixed wage or salary set by their employer.
- Professional development
- Freelancers manage their own professional development.
- Employees should be provided with opportunities to advance professionally. Employers must also provide onboarding, orientation and mandatory trainings.
- Work hours
- Freelancers work at their preferred times; it’s not wise to hire independent contractors for work that requires frequent mandatory meeting attendance.
- Employees have required work hours and must attend mandatory meetings.
- Company culture
- Freelancers may not be as dedicated to helping your business grow or fitting in with your company culture as they are to maximizing earnings or obtaining clients.
- Employees are invested in your company’s success, as that furthers their employment.
When does hiring an independent contractor work best?
- When the costs of having an office and maintaining staff loom large.
- When you need expert help for a project. Freelancing platforms and job boards such as Upwork, Fiverr and PeoplePerHour make it easier to find the right IT professionals, marketers, designers, academics, writers and accountants. Many freelancers are highly skilled specialists with years of industry experience who can create value for your firm.
- When you are reluctant to make personal changes.
- When you do not have geographical restrictions.
Hiring freelancers has advantages and disadvantages. Your hiring decision ultimately depends on your requirements and the resources you’re willing to spend on a professional.
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