As the economy shifts, technology advances, and working in a particular physical location becomes less and less a necessity, employers are faced with more hiring choices – such as whether to hire a full-time salary employee, contract labor, or a freelancer.
It’s not only the shift in technology and volatile economics that is behind this cultural phenomenon, the idea of working for one company until retiring is a foreign concept for millennials who on average stay with a company for 4.4 years. At the same time, the internet now provides a way for individuals to telecommute to work. So what does that mean for those hiring?
Ask yourself, does your company have enough work to justify hiring a full-time salaried employee regardless of hours worked, who may also receive benefits including paid vacation, health insurance, 401K, etc.); not to mention your company is paying their tax withholdings. Would the better financial choice be to hire a freelancer or contractor? From personal experience, as the owner of Schoner Communications, we often turn to freelance web designers, illustrators, and web programmers to support our team when we need help on very specific projects.
While the relationship of a freelance or contractor is different from an employee, most often these individuals are highly skilled in one or two areas (for example: computer programming, graphic design, or technical writing). Do you remember the last time you hired an individual based on your company’s specific needs at the time, only to realize your company would benefit from someone with more diverse skills?
The distinction between freelance and contract work can be a bit blurred. Speaking strictly from a financial perspective, freelancers usually work for multiple companies and are required to pay their own tax withholdings and health insurance coverage. Freelancers only get paid for the hours worked which can save a company substantial dollars if the individual’s service is not needed year round (as with the case of our marketing and public relations agency). Furthermore, because freelancers possess “expert” knowledge, they are able to complete task efficiently and accurately while an employee may require countless hours of research and paid instruction to complete the same project.
Independent contractors work like freelancers, with multiple clients on a per-project basis, but generally speaking, they work with one company at a time for an extended and specified period (the “contract”) and are paid by the hour. Similar to freelancers, they may also report their own taxes or they may receive a W-2 from a third-party at the end of the year for hours worked. Completely independent contractors (so called 1099 workers) can be required to show up in an office or work remotely. Independent contractors do not receive employee benefits.
It is fairly common to find individuals with tech and marketing experience working full-time positions while moonlighting as freelancers and contractors in their off-hours.
So the next time your company is looking for additional help, you may want to consider a freelancer or contractor instead. Otherwise, you could pay twice as much for a full-time employee when really a contractor or freelancer is the better investment.