Most small business owners will hire freelancers or independent contractors at one time or another. It’s important that you understand the guidelines to have a better relationship with your freelancer(s), and stay in regulatory compliance.
Carol shares some of her best advice in “6 Tips for Working Better with Freelancers,” a recent post on Bank of America’s Small Business Community. Carol begins:
“By necessity, small business owners often rely on freelancers and independent contractors to expand their own business productivity. Whether you hire freelancers to replace vacationing employees or if you need help on specific projects, you need to ensure a seamless fit while understanding the legal requirements that govern their contracts.
These 6 tips can help you retain control over a variable workforce when you need your small business to operate like a larger one.
1. Know the law
In May, 2017, a new Freelance Isn’t Free Act (FIFA) goes into effect in New York. This law essentially states that if a business hires a freelancer for $800 or more worth of work over six months (for either one project or a cumulative series of projects), a written agreement must be put in place. The term “freelancer” covers an independent contractor or any other worker not in a traditional employee-employer relationship.
It also outlines key items to be included in the contract and penalties for non-compliance, among other things.
Any municipality can impose legislation like FIFA that affects the company-freelancer relationship. In fact, other states might follow suit to impose similar laws — and laws can change at any time.
Before hiring freelancers, seek advice from a lawyer that knows employment law for any location where you plan to hire freelancers and where your own business is based. These attorneys typically also understand tax considerations, such as the very specific definition for identifying independent contractors used by the IRS. Local taxing bodies might have their own definitions as well.
2. Clarify job parameters before hiring
Let’s say that you bring in an enthusiastic order entry person to clean up a backlog of orders. You described the order entry requirements in detail and you mentioned that paper filing will be part of the job. If you didn’t mention that filing will actually be 75 percent of the job — and that the file room is hot and claustrophobic, the freelancer may walk out on the first day.
Training new freelancers costs money, so you want to maximize the chances upfront that the relationship will be a good fit. During the interview, qualifications are important, but you also need to spend significant time discussing the high and low points of the job. Your goal is to identify tasks that excite the applicant, but also paint a realistic picture of the less-attractive ones.”
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