Whether your company is small or large, chances are you don’t always need an entire team of full-time employees. Perhaps production ebbs and flows, or there are simply seasonal operations that do not justify hiring workers for the entire year.
In these situations, it can be financially advantageous to choose freelancers or contract workers for your company. Rather than paying them for training periods and providing extensive benefits, you simply need to pay them for the time they work. This can generate significant savings.
Demand for freelancers increased considerably during the COVID-19 pandemic. According to a survey conducted in late 2020, almost 60 million Americans have worked as freelancers in the past 12 months. This represented 36 percent of the entire U.S. workforce and an increase of 2 million freelancers since 2019. How To Save Money By Hiring Freelance or Contract Workers. The benefits are numerous, and it’s likely your company can follow these strategies to save money by hiring freelancers or contractors.
Scale Your Staff To Match Your Projects
It’s essential to have qualified and experienced professionals working with your company. But do you really need to keep salaried workers of all specialties on your staff all year, or can you hire some people temporarily as needs arise?
Working with freelancers has pros and cons. Some of the notable positive aspects are:
- Cost Reduction– If you are about to start a new project requiring heavy labor or niche skills, you can hire some employees specifically for all or even part of the job. You’ll save money by not paying federal or state payroll taxes and health benefits for these workers. If the worker can bring their own tools or equipment to the job, you will save money on that front.
- Quick Hiring– Because you’re not hiring long-term employees, the hiring process is shorter and requires less time and fewer resources. There are many freelancers on the market, so consider using a recruiting agency to separate the wheat from the chaff.
- Identify New Talents– Hiring freelancers or temporary employees can be an excellent opportunity to do a “test drive” of workers. Eventually, you can consider hiring a high-quality freelancer full-time, whom you already know is trustworthy.
- Flexibility– If your company is going through a transitory period and needs more workers for an indefinite period, hiring five or ten new employees would require considerable investment. An independent contract allows you to form temporary teams of all sizes to meet various needs and work for various periods.
Insurance Coverage to Consider
Before hiring contract or freelance workers, you’ll need to make sure you have the right kind of insurance coverage. Different states have different laws about classifying employees as contractors, so be sure to research your state’s laws. In general, there are some types of insurance that are always a good idea:
- Commercial General Liability Insurance– Hiring contractors means you’ll need business insurance that covers contractors. In addition to other benefits (such as covering claims from customers who are injured at your workplace), commercial general liability insurance can protect your business if one of your contractors or freelancers damages customer property during a job. You can purchase the policy yourself or require all contractors you hire to carry it.
- Commercial Property Insurance– This policy protects your company’s tools and equipment, whether owned or leased. Whether your contract employees use your company’s tools or bring their own, this insurance covers damage to the tools while they’re under a contract with you.
One of the best things about contract workers is that you can test the market for professionals you like and trust. Once you find them, you can work with them regularly, creating a win-win partnership without the need to hire them full-time.
Building these connections will give you many benefits of the standard employee-employer relationship (loyalty, trust, confidence that they understand your company’s processes and standards) without some of the costs.
Contractors and freelancers with whom you have good relationships can recommend other professionals of the same quality for future work and may also have connections to potential future customers.
Independence Benefits Everyone
According to Forbes, 47 percent of hiring managers in 2020 said they were more likely to hire independent professionals who work remotely. There are many positive aspects to consider when working with freelancers or contract workers, and many businesses even operate using freelance workers for all functions. Once you start saving time and money by hiring freelancers and contractors, you may even consider this route yourself.