Freelancers are third-party contract employees like bookkeepers and graphic designers who perform various tasks for your business. There are eight steps to hire freelancers, including choosing the right freelance hiring website and writing an effective job description. Following these steps correctly will help you hire high-quality freelancers at a lower cost than traditional employees.
The eight steps needed to hire freelancers include:
1. Determine Your Project’s Scope of Work
A scope of work summarizes the goals, responsibilities, and timelines for the freelance position you want to fill. Create a scope of work by clearly defining and writing down your project and its deliverables, including the required milestones, budget, timing considerations, and other job details. A well-defined scope of work will make it easier to hire freelancers with the skills and experience to get the job done at a reasonable price.
The factors to include in your scope of work are:
- Job, project, or task at hand – What is the task you need to complete or the problem you need to solve, and what is the outcome you expect?
- Activities the freelancer will perform – Break your project into steps and determine what activities the freelancer will likely perform during their employment.
- Milestones the freelancer should meet – Identify specific milestones the freelancer will need to meet. Include a timeline and relevant due dates.
- Deliverables the freelancer will complete – If the freelancer will prepare deliverables, clearly describe expectations for each.
- Other duties of the position – List miscellaneous duties the freelancer may be expected to perform, like travel, attending meetings, and teleconferences.
- Budget for the project – Identify your preferred hourly rate or the total budget for the project.
“The more well-defined the project, the more likely you are to hire a freelancer who’s right for the job. More nuanced projects are not the best-suited for freelance positions.” – David Waring, Co-founder, Marc Waring Ventures LLC
2. Determine Minimum Freelancer Qualifications
Next, determine the characteristics you need in a freelancer based on the scope of work. Consider factors like background and experience, necessary specialization, schedule flexibility, and price. If you take the time to consider exactly what you need, you can draft an accurate job description, identify the right candidates, and hire the best freelancer available.
Factors to consider include:
- Experience and specialization – Decide whether you’re looking for someone with a specific talent, like logo design, or whether you can hire someone with more general skills, like data entry.
- Rates – Determine how much you’re willing to pay. Your preferred hourly wage or overall project budget will help determine the type of freelancer to hire.
- Length of contract – Your pool of freelance applicants will vary based on your project timeline. Determine whether you’re hiring for a quick task or a long-term project.
- Flexibility of schedule – Decide whether you need a freelancer who is available for in-office meetings or will need to travel to perform the job. If you don’t need them on-site, making the freelance position totally remote will broaden your hiring pool and make the job more appealing to qualified candidates.
3. Identify the Freelance Websites to Use
There are numerous websites for hiring freelancers, but Upwork and Fiverr offer a range of services that should meet your needs. Upwork is perfect for hiring a more specialized freelancer, like a CPA, whereas Fiverr is great for smaller tasks, like designing business cards or a logo. Choose the freelance website that has the talent pool you need for your job or task.
Fiverr is a great option if you need a high-quality freelancer for short, low-cost projects. Many freelancers on Fiverr offer fees as low as $5, and the variety of services is likely to fit a wide range of small business needs, like logo design. They also offer Fiverr Pro, which pre-screens highly qualified professionals with exceptional reviews. Fiverr’s website is easy to navigate and enables you to search and choose freelancers based on performance ratings.
To find a freelancer who meets your needs, create a Fiverr account, go to the “Buying” tab on their website, select “Post a Request,” and enter your job description in the online form. Once the job listing has been approved, you’ll start receiving offers. In addition to seeing the number of offers received, you can sort your offers by date, rating, or experience. You can also browse freelancers based on their “gigs” and then work with them to craft a project that meets your needs.
Upwork is an excellent hiring website if your project requires more specialized experience or a longer employment period. Upwork links employers with highly qualified freelance candidates through an easy-to-use website and comprehensive mobile app. For $500 per job search, they also offer Upwork Pro, which identifies carefully vetted professionals with 10+ years’ experience and great reviews.
To post a job on Upwork, register for an account and follow the on-screen prompts. Once the listing is posted, qualified freelancers will bid on your project. Simply make an offer based on a flat-rate or hourly bid, strongest qualifications, and other factors. Upwork enables business owners to post on multiple websites without breaking the bank by offering free postings and a low 2.75 percent processing fee on each invoice.
Fiverr and Upwork are both excellent options if you’re hiring someone for a quick job or a more complex project. For a detailed look at the top freelance websites, check out our buyer’s guide to the best freelance websites for small businesses. Within the article, you’ll find a cost and features breakdown for each website plus helpful pointers for choosing the best option for your business.
4. Write an Effective Job Description & Post It Online
Once you’ve determined your scope of work, evaluated minimum qualifications and decided on a hiring platform, it’s time to draft an effective job description that summarizes your project needs. Accurately describe the scope of work, necessary experience, and other important hiring factors like cost. Job descriptions that include these necessary elements attract candidates fast.
Effective job descriptions have the following elements:
- Job title – The job title is the first thing a potential applicant will see, so make it clear, concise, and descriptive of the position. If the job requires specialized skills, reference them using details that are both appealing and descriptive. Instead of “Cold Caller,” use a title like “Vital Force Lead Generation.”
- Scope of work – Include enough detail about the position for candidates to understand what they’ll be doing as part of the job. This can be as simple as saying “Your job will be to….”
- Required education, skills, and experience – Narrow your pool of applicants by accurately describing the minimum education, skills, and experience necessary for the job. If you want someone with experience generating sales leads, say so.
- Budget and fee expectations – Clearly state your budget and fee expectations. Let highly qualified freelancers know they’ll be compensated for their experience.
- Necessary turnaround time – Often, freelancers work for multiple businesses at the same time, which can lead to scheduling conflicts. Get ahead of timing issues by including time constraints in the job description and let freelancers know if the job could become more long-term.
- Expectations regarding availability – A freelancer’s availability can make or break their ability to complete a project, so clearly state your expectations. List necessary meetings, teleconferences, and other commitments and let freelancers know if the job is restricted to a geographic location.
For more tips on writing an effective job description for your freelancer needs, check out our guide to writing a job description.
“Be thorough in your proposals and job descriptions. There are tons of free resources out there, so use a template if one is available. Google ‘job description’ for the position you’re trying to fill and choose search results that fit your needs. You don’t have to be overly creative, as many templates were designed by HR professionals.” – Conor Gleeson, Principal and Co-founder, RIA CFO™
5. Screen Applicants & Identify 5 Promising Candidates
Once you post your job on a freelancing website, qualified candidates should begin applying for your job or task. Review information provided to identify qualified candidates to interview. Compare and contrast the candidates and identify the top five based on several factors, including work history and skills. You can use this information to interview five candidates or hire someone right away.
Because Fiverr and Upwork reach millions of freelancers, expect to receive a large volume of responses. Take the time to familiarize yourself with applications or bids as you receive them, and use a spreadsheet to track applicants by ranking them on characteristics like education and reviews.
Identify your top five candidates by screening applicants for characteristics like:
- Education – Evaluate whether the applicant’s education is relevant to the scope of work, but remember that the other factors you’re looking for may not be degree-specific. Upwork makes this easy by including an education section in their freelancer profiles.
- Skills and work experience – A freelancer’s prior work experience can provide extensive insight into their specialized knowledge and relevant skill sets. Upwork’s “Work History and Feedback” section provides relevant reviews and work history.
- Attention to detail – The overall quality of a candidate’s resume speaks volumes about their attention to detail and writing quality. Use the completeness of a freelancer’s Upwork proposal to gauge their ability to submit high-quality work product.
- Previous work product – Many freelance platforms enable applicants to submit examples of their work. Upwork makes reviewing previous work easy by including a portfolio section and a summary of relevant Upwork experience and reviews.
When you post a job on a platform like Upwork, you’ll receive proposals from interested freelancers with access to their education, relevant work history and feedback, skills, portfolio, cover letter, availability, and typical fees. Upwork even suggests freelancers based on your proposal. It’s then up to you to determine which qualifications are most important for your role and what extra information you’ll need from the interview process.
Here’s a typical Upwork freelancer profile and the information you should expect:
In addition to reviewing resumes and portfolios, you may assign candidates a test project to see how they’ll perform as part of your team. Read more about test projects below.
“I find that more often than not, freelancers have a tendency to overinflate their experience and qualifications to try and get a leg-up on other candidates who are being considered. When looking to hire your first few freelancers, you should keep this in mind: proceed with caution and be skeptical.” – Tabitha Jean Naylor, Owner, TabithaNaylor.com Inc.
6. Interview Your Top 5 Applicants
After evaluating each freelancer’s information, you can hire someone right away or choose to interview the top five applicants. The complexity of the job and the strength of the applicants will largely determine what you should do. If you hold interviews, determine whether you’ll conduct them via phone or video, choose an interview style, and prepare questions and a test project.
Steps for interviewing your top five applicants include:
Select an Interview Method
The freelance hiring process often occurs online, so small business owners should expect to conduct interviews via telephone or video conferencing service, like Skype. Upwork makes interviews even easier by including an “Interview Room” on their website. Once you decide how to conduct the interviews, determine your interview style and make a list of important questions.
Choose Your Interview Style
After scheduling the interview, determine how best to evaluate each freelance candidate. There are several interview styles to choose from, but the most common for freelancers are behavioral and problem-solving interviews. Learn more about each freelance candidate by hosting the appropriate type of interview.
Interview styles you can choose from when evaluating freelancers include:
- Structured interview – This is the most formal style of interview. Be prepared to describe your company and job description and ask structured questions about the applicant’s education or professional experience.
- Unstructured interview – Unstructured interviews rely on casual conversation, rather than structured questions. Ask candidates open-ended questions and allow them to speak freely.
- Behavioral interview – This interview style is extremely common because it allows business owners to judge an applicant’s future performance based on how they responded to circumstances or assignments in the past.
- Problem-solving interview – Problem-solving interviews focus on how a candidate approaches a hypothetical problem and evaluate a candidate’s analytical ability and communication skills.
- Panel interview – Panel interviews involve several people interviewing the candidate at the same time, and are best if you want to include other members of your small business in the interview process.
Expect to interview each candidate once for roughly 30 minutes to an hour. Depending on the time you can dedicate to each interview, you may choose to employ a combination of interview styles. However, evaluate your candidates using similar or identical questions so you can easily compare and contrast applicant responses.
Regardless of your interview style, always remember to steer clear of illegal areas of inquiry, such as age, race, religion, national origin, sex and/or sexual orientation, and marital status. For a more thorough discussion of illegal interview questions, check out our guide to the most common illegal interview questions and how to avoid them.
Ask Candidates Standardized Interview Questions
Education and professional background are important considerations when interviewing a freelance candidate. However, you must also evaluate the candidate’s ability to perform job responsibilities and work with your team. Ask the same standardized questions of every candidate to compare and contrast applicants and determine whether each is a good fit for your business.
Insightful questions to ask your top five candidates include:
- How do you describe your work style? – As with any position, it’s important for a freelancer to fit into the company’s culture or brand. Make sure the freelance candidate’s personality and work style jive with your business model and existing team.
- Describe the best freelance position you’ve ever had and why it worked for you – This question is a great way to learn more about a candidate’s previous freelance work. Ask what the candidate liked about a previous job to evaluate whether they’ll be a good fit for your small business.
- Describe a time when you were unsure of how to approach an assignment. How did you overcome the uncertainty? – A question like this provides the candidate an opportunity to discuss their weaknesses in a productive way. Ask about difficulties a freelancer had in the past to learn about how they’ll approach future obstacles.
- What is your availability? – Because many freelancers work for multiple companies, it’s important to understand an applicant’s time commitments. Make sure the freelancer is available for the relevant period of time and confirm they can complete the project by the deadline.
Request a Test Project
Test projects gauge applicant expertise and ability to perform tasks involved in your scope of work. Assign all of your candidates the same test project to obtain relevant work samples and directly compare freelancer work product. Having applicants complete a test project provides real-world examples of how they’ll perform as freelancers on your team.
Ideas for test projects include:
- Activities similar to the relevant scope of work
- Written assignments that mirror the type of content your business needs
- General assignments that highlight a candidate’s personality or work style
This can be accomplished through platforms like Upwork by creating a small test gig and hiring your top candidates to complete it. Because it’s a best practice to compensate candidates for their time and effort, this process can get expensive. Be sure to narrow down your applicants before spending money on test projects. Also consider that an added assignment may scare off otherwise interested candidates.
7. Extend and Sign Formal Offer
Once you interview your top five applicants and choose the right freelance candidate for your needs, extend a formal offer. The offer should be written and must accurately describe the job being offered, including the agreed price and method of payment.
Types of Freelance Agreements
There are four types of freelancer agreements. These documents protect your small business’ legal interests and offer freelancers a sense of stability. Protect your business by fully executing one of four types of freelance agreement before allowing the freelancer to begin work on your project.
Types of written freelance agreements include:
- Formal freelance contract – A formal contract is the most formal and provides the greatest amount of protection for your business because you control its contents.
- Statement of work – A statement of work is less formal than a contract and includes the major terms of the work, like scope, deliverables, payment terms and time frames, and work for hire terms.
- Letter of agreement – A letter of agreement is informal and less binding than a contract, but includes all of the terms you’d include in a statement of work.
- Non-disclosure agreement (NDA) – An NDA prevents freelancers you hire from sharing information they encounter during paid work with your business.
- Non-compete agreement – Non-compete agreements prevent freelancers from stealing clients from your small business by eliminating their rights to work with specific clients or in a specific geographic area.
Terms to Include in a Freelancer Agreement
The terms you should include in a freelancer agreement include:
- Description of the work – Include a description of the work the freelancer is expected to perform. Also state whether the freelancer must travel or attend meetings or teleconferences.
- Deliverables – Clearly list and describe the deliverables you expect at the end of the freelance relationship. If there are time constraints, include completion dates for all tasks and deliverables.
- Work for hire terms – In the absence of proper precautions, the work product of freelancers can lead to copyright issues. Ensure you own the work freelancers prepare while you’re paying them by including “work for hire” terms in your freelance agreement.
- Confidentiality, NDA, and privacy terms – Confidentiality terms protect your small business’ privacy and sensitive proprietary information from misuse by freelancers. If you don’t want the freelancer to sign a separate NDA, include confidentiality and privacy terms in the written agreement.
- Dispute resolution terms – Dispute resolution terms are an excellent way to control how and when disputes with freelancers are resolved. Include language requiring mediation, informal negotiations, or written grievances prior to court actions.
- Payment terms and time frames – Payment terms are an important way to protect your business from unanticipated costs and inform your freelancer how and when they’ll get paid.
Make it easy by using our free independent contractor agreement template.
8. Meet Legal Obligations
After hiring the best freelancer, you need to meet the legal obligations of an outsourced employee. The legal obligations of hiring a freelancer include providing a Form 1099-MISC and limiting your control and oversight of the freelancer. By meeting a few necessary legal obligations, you’ll get the tax benefits of hiring a freelancer and keep within the limits of the law.
Legal obligations you should meet after you hire a freelancer include:
- Provide a Form 1099-MISC – Form 1099-MISC is a tax return document used to report miscellaneous payments to non-employee individuals, like freelancers. Check out our guide to IRS Form 1099 reporting for small business owners for everything you need to know about IRS reporting requirements.
- Don’t dictate your freelancer’s work hours or location – While you may establish timelines and due dates, don’t tell your freelancer where or when they have to work.
- Allow your freelancer to use their own tools and supplies – Don’t supply materials for your freelancer or otherwise dictate the equipment they use to complete your project.
Once you hire a freelancer, it’s important to monitor and document all of the above factors to evaluate and classify workers. You can protect your small business from back taxes, penalties, interest, and unanticipated workers compensation by staying proactive and understanding your business’ relationship with freelancers.
Freelancer Employer Tax Benefits
The major benefit of hiring a freelancer over a traditional employee is that small businesses don’t pay as many taxes for freelancers. Instead, freelancers pay their portion of Social Security tax (6.2 percent) and Medicare tax (1.45 percent), known as FICA tax, as well as the employer’s portion of Social Security and Medicare tax, which are 6.2 percent and 1.45 percent, respectively. You also won’t have to pay state and federal unemployment insurance for your freelancer, known as FUTA tax.
Additionally, freelancer costs are a tax-deductible business expense that can save your company money. What’s more, the actual cost of hiring a freelancer comes out of your business’ operating expenses and is a tax-deductible expense itself.
Because of the tax benefits of hiring a freelancer, the IRS carefully distinguishes between traditional employees and independent contractors. It’s important to understand this distinction before determining what taxes you’ll pay. Review the IRS’ Common Law Rules for classifying workers and check out our comparison of W2 and 1099-MISC employees for more information.
Pros & Cons of Hiring a Freelancer
Freelancers are an attractive alternative to traditional employees, but aren’t the best choice for every small business. There are several advantages of hiring a freelancer, such as reduced costs, but freelancers may be higher risk and add instability to your business. Understand the pros and cons of hiring a freelancer before adding one to your team.
Pros of Hiring a Freelancer
The pros of hiring a freelancer include:
- Lower cost – Freelancers allow small business owners to hire skilled workers and eliminate the costs of hiring and onboarding a traditional employee. Plus, small businesses don’t have to pay FICA or FUTA taxes for freelancers.
- Reduced risk – Small business owners generally don’t have to pay for workers compensation and freelancers aren’t entitled to unemployment insurance.
- More specialized – Because freelancers are often hired to perform a specific job, like graphic design, you can select a more specialized candidate without worrying about more generalized skills, like data entry.
- Higher quality work product – Specialized freelancers are more likely to excel and produce high-quality work that meets your exact needs.
- Increased profitability – Hiring a freelancer frees up your time to do other things that make money for your small business.
Cons of Hiring a Freelancer
The cons of hiring a freelancer include:
- Limited oversight and control – To comply with the IRS’ rules and regulations, you must limit the amount of control you exercise over your freelancers. Limited control can lead to lower quality work that doesn’t satisfy the needs of your small business.
- Initial risk – No matter how carefully you screen candidates, there is always a risk that a freelancer’s work will not be as advertised.
- Reduced communication – Because freelancers are often remote, it can be more difficult to communicate with them than with in-office employees.
- Lack of stability – Freelancers are typically hired for more short-term projects, rather than permanent employment. This may reduce the stability of your workforce.
Freelancers are an excellent option if you need qualified professionals without the costs, formalities, and tax implications of traditional employees. The most important steps of hiring a freelancer are selecting hiring websites and drafting effective job postings. Follow the eight steps above to identify and hire the perfect freelancer for your small business.