Business Glossary

What is a Freelancer

Freelancers are skilled professionals who exercise their talents on a per-job or per-task basis. While an employee will work exclusively for one company, freelancers may find themselves working for a variety of clients simultaneously. Freelancers are invariably self-employed and are responsible for paying their own income tax, as well as managing their own super contributions.

They can pursue freelance work on a short- or long-term basis, depending on the needs of the company hiring them and the specifics of their contract. While a company may hire the same person for a variety of freelance jobs, they are not required to keep using the same freelancer outside of the confines of a given contract.

Hiring freelancers can be advantageous for businesses as they provide access to skill, talent and experience on a pay-as-you-go basis. They do not have the same long-term obligations or overheads such as superannuation and leave entitlements that conventional employees are required to have.

The pandemic has created a landscape where companies want to keep their liabilities to a minimum, and contractors want the freedom to keep their options open.

Examples of freelancers

Now we know the definition of a freelancer. But where are they most commonly employed? Freelance jobs are usually abundant in the design, creative and technology industries. Freelancers are commonly used by marketing agencies to supplement their in-house talent as and when a given project demands it.

Common freelance jobs include:

  • graphic designers
  • web designers
  • app developers
  • copywriters
  • proofreaders/editors
  • virtual assistants
  • accountants
  • social media strategists

Freelancers can be found by talking to your networks and asking for a referral, or via local business directories and events. There is also a range of marketplace websites in which companies can search for freelancers with the skills they require such as Upwork and Fiverr.

Find out how Square can help freelancers make invoicing easier and get paid faster.

The pros and cons of using freelancers

The advantages of hiring freelancers include:

  • it’s a budget-friendly alternative to taking on a new employee
  • you have flexible access to specialist talent
  • you only pay for the work that’s done, with no need for employee benefits
  • freelancers are highly motivated to deliver great results in order to secure future work

That said, there are some caveats, which include:

  • freelancers do not owe you loyalty, and you may lose them to a competitor
  • finding a freelancer that meets your specific needs can be time-consuming
  • companies don’t have the luxury of vetting freelancers to the same extent that they do in-house employees

More on making the leap from employment to working freelance.

Frequently asked questions about freelancers

Can I include both freelancers and employees in my workforce?

Yes. In fact, many companies use freelancers to supplement their existing workforces when a given project demands it. Freelancers can fill in skill gaps among your existing employees or lighten their administrative load, allowing them to deliver a better quality of service on behalf of your brand.

What payment terms should I use when hiring freelancers?

Freelancers typically send an invoice to the client when their work is complete. The client is then usually expected to make payment in full within 30 days. However, it may benefit your relationship with freelance talent if you are able to make payment sooner. Paying within 14 days of receiving your invoice or sooner may help freelancers with cash flow and help them feel more valued.

Can I freelance alongside my day job?

Yes. Indeed, many nascent freelancers pursue freelance work alongside their existing jobs in order to mitigate the risks of starting a freelance career from scratch. Just remember to declare all income received from freelance work to the ATO. You will have to fill in a tax return for every year you are self-employed – even if you are also in full-time employment.

This article is for informational purposes only and does not constitute legal, employment, tax or professional advice. For specific advice applicable to your business, please contact a professional.

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