03/09/2020
Financial Perks of Hiring Freelancers by Tina Martin
It’s not uncommon to find a whole slew of contract workers and freelancers fueling the fire of a small business. In fact, 63 percent of American workers are choosing freelance work, and many small business owners look to hiring freelancers instead because:
● There is less overhead with freelancers and contractors.
● Ending a contract is a lot less messy than terminating an employee.
● Fewer hours and dollars are spent in the onboarding process.
● Space to house employees may be limited, and freelancers tend to work from home.
● You don’t have to pay a salary even when there isn’t work available.
It’s easier to find talented workers via online job boards for just about any task. For example, you can hire remote freelancers with talents in web design, marketing, architecture, engineering, customer service, accounting, and more. You can also partner with a professional virtual assistant through Easy Office Help if you’re overwhelmed with administrative tasks. Bring in one of their expert virtual assistants to handle invoicing, answer emails, and much more.
One of the major benefits, however, comes in the form of tax perks — for both businesses and often the freelancers. Here are four of the most common benefits a small business can reap when they choose to work with contractors and freelancers.
Less Tax Paperwork to Complete and Submit
When you bring on a new employee, whether they are full-time or part-time, there is a large amount of tax-related paperwork that has to be submitted. However, contractors and freelancers only require one form — the 1099 — in order to get them up and going. This is especially helpful when you have a backlog of projects that need to be addressed or a wide range of administrative support that could free up your time.
No Need to Pay Unemployment Taxes
When you hire freelancers, contractors, and other gig-based employees, you eliminate the need to pay unemployment taxes. When you end a contract, the worker isn’t eligible for unemployment income like a terminated employee would be. Plus, experienced freelancers and contractors understand how to exit a professional relationship gracefully. Using the right job board can connect you with top-quality professionals.
No F**A Taxes to Be Paid
When you hire freelancers and contractors, they pay 100 percent of the Medicare and Social Security taxes on their work for your company. That means that you pay less in F**A taxes when you hire freelancers for contract work as opposed to hiring a permanent employee. You can save your company time and money from a human resources standpoint with contract work. For example, an experienced remote data entry specialist can help you stay on top of important client information and inventory records — including payroll.
Fewer Sales Taxes on Personnel Equipment
When you hire a permanent employee, there is office equipment involved — even if they work from their own home office. Computers, desks, phones, software, and other tools are needed from day one. Freelancers and contractors, however, supply their own materials and equipment. Not having to foot the bill on these expenses means you also save on sales taxes. It might sound small, but it can add up quicker than you may realize. For example, if you need a graphic designer to complete some marketing materials, you won’t have to pay for the Adobe graphic design software or the computer with a high-processor to churn out large files. That can save you thousands in costs and hundreds in sales tax.
Hiring freelancers has many benefits, but it is important to make sure you understand the pros and cons. For example, if you want workers who will be invested in the future success of your company, you may want to consider hiring employees over contractors. The same can be said for a company that is looking for committed talent who will want to grow with the company. However, if you have the need for a qualified professional to manage short-term projects, one-off tasks, infrequent work or work that needn’t be performed nine to five or onsite, then freelancers can be a boost to your business and bottom line.
