What To Know Before Paying Freelancers

Are you finding yourself with overwhelming workloads and looking to hire a freelancer? Use these best practices for hiring and paying freelancers the right way.

It’s very common for businesses of all sizes to hire some help. As a small business owner, you may be ready to hire a freelancer but are unsure about how paying works.

Paying a Freelancer

Know that when you hire a freelancer, they fall under a 1099 contractor in terms of taxes and expenses. When you use marketplaces, this is not an issue, as the freelancer will file their own 1099s with that company.

If you hire a W2 employee, chances are they are not a freelancer. They are now working for you, taxes will be deducted from their check, and they are categorized as an employee.

For tax questions and concerns contact a professional CPA for the best advice.

Use Marketplaces When Paying Freelancers

Platforms like Upwork and Fiverr take the guesswork out of payments. You search for the type of work you want the freelancer to complete. Screen their profile and reviews. Some require you to pay before, while others allow you to pay after delivery. If edits are needed, you have a number of days to reach out to the assistant. If there is a problem that you cannot resolve, you can file a dispute and the platforms will help intervene.

Finding the Right Freelancer

If you decide you don’t want to use a marketplace as we mentioned above, they are tons of Facebook groups that are dedicated to freelancers and virtual assistants. The downside is that you will have to manually screen all of your applicants.

When interviewing, be sure to ask about their workload, the deadlines you need them to work by, and the best form of communication.

You will also need to determine if the location is an issue. While you can hire cheaper freelancers overseas there may be a language barrier or timezone issue.

More Ways to Pay

Most of the time you will be making your transactions to your assistants by a processor like PayPal. Be sure to use a business account. This will cover disputes if the work is not complete or if they break the contract.

You may opt to pay with checks but this is not ideal. Workers are scared of checks being lost in the mail, the time it takes to receive them, and fear they may bounce.

Credit cards are also an acceptable form of payment and can be linked to Paypal. Most time, these companies provide more protection against fraud and handle disputes well if needed.

Set Clear Expectations In the Beginning Before Paying Freelancers

Make sure both of you understand the currency exchange if there is one and exactly what is being completed for money that is being paid. The best to cover you and your business is to have contracts and NDAs in place (if applicable). Any conversations that are promising work or regarding payments should be in written format versus over the phone. If needed, you have proof of the conversation between the two of you.

More Tips for Working with Freelancers

Set up milestone payments if you are contracting them yourself.
Do not pay entirely up front until there is a contract in place or you have built a relationship.
Beware of scams when using marketplaces. Choose the best reviews and have a conversation with the freelancer before ordering a gig.

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