If you own a small business, there’s a good chance you hire freelancers at least once in a while. This is smart. Freelancers can provide targeted expertise for short-term projects, at a much lower cost than hiring an employee—no payroll taxes or fringe benefits.
And there is no shortage of freelancers, with about 53 million in the U.S. alone—about 34% of the American workforce.Freelancers are an important resource for small business owners, but don’t abuse those relationships. I’ve written before about the difference between employees and contractors (one category of freelancer). Getting it wrong, even unintentionally, can cost you. Plus, it’s a bad way to run a business.
Know Before You Hire: The Difference Between Employees & Freelancers
The IRS has a three-part test to distinguish between employees and contractors/freelancers:
- Behavioral control: Do you control how, where, and when a person does her job? If so, she’s probably an employee.
- Financial control: Do you have a right to direct or control the financial and business aspects of a worker’s job? If you do, that person is probably an employee.
- Type of relationship: There are always going to be gray areas, but if you expect a worker to clock in every day at the same time, request time off rather than just letting you know, and work for an indefinite period (rather than on a project-by-project basis), you’re treating that person like an employee and need to classify her as such.
Line2 serves freelancers and small business owners with cloud-based phone services, so they’re experts in this space. They put together this infographic to show the different types of freelancers and how they use the Internet to find and communicate with their clients.
For small business owners, the infographic provides insight into how you can find and hire freelancers: Look to the Internet, specifically social networks.
This graphic comes to us courtesy of www.blog.line2.com.
