What is a freelancer?

Freelancers are skilled professionals who exercise their talents on a per-job or per-task basis. While an employee usually works exclusively for one company, freelancers may find themselves working for various clients simultaneously. Freelancers are also self-employed and are responsible for paying their income tax and social security and arranging their own private pensions.

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 do not have the same obligations to them as they do to their employees.

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 pension plans, sick pay, and holiday pay that conventional employees are required to have.

Whether you choose to employ freelancers or permanent employees depends on a number of things, including your human resources budget, the skills you require, how long you might need them and what value they bring to the business. For example, as a result of the COVID-19 pandemic, many permanent employees turned to freelancing as struggling businesses cut their labor force and there wasn’t much opportunity in the permanent job market. Conversely, businesses increased their use of freelancers to temporarily fill the knowledge gap created by cuts and reduce their liabilities.

Examples of freelancers

Freelance jobs are usually abundant in the design, creative, and technology industries. Marketing agencies commonly use freelancers to supplement their in-house talent when a given project demands it.

Typical freelance jobs include:

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

However, freelancers are not confined to those industries. A freelancer could also provide pretty much any professional service where they are not employed by a company or corporate entity.

For example:

• Hair/beauty technician
• Researcher
• Tutor
• Childcare assistant
• Fitness instructor

There is a range of websites on which companies can search for freelancers with the skills they require, such as Upwork, Fiverr, and PeoplePerHour.

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 speak for themselves:

• 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 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 can’t always vet freelancers to the same extent that they do in-house employees
• onboarding a freelancer can take time in comparison to a permanent employee who understands your way of working

Frequently asked questions about freelancers

Can I include both freelancers and employees in my workforce?

Yes, 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 usually expected to make payment in full within 30 days. However, it may benefit your relationship with freelance talent if you can make payment sooner. Paying within 14 days of receiving your invoice may help freelancers with cash flow and help them feel more valued.

Can I freelance alongside my day job?

Yes, this helps to reduce the risk of starting a freelance career from scratch. Just remember to declare all income received from freelance work to the IRS. 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.