Startups often have needs that are best met by short-term contractors rather than full-time employees.
Outsourcing projects to programmers, marketers, project managers and the like can come with their own perils, however, so be sure to build in safeguards to keep your project on track and trouble-free.
You don’t want to use a freelancer to avoid the expense and paperwork of hiring a regular employee. The IRS may consider your freelancer an employee if you require them to work on site or put in regular hours, if you pick up the cost of their expenses or benefits, or if you require mandatory training. Break the rules and you could be on the hook for the cost of Social Security, overtime and penalties.
Be sure to sign a written agreement with freelancers at the start of the project. The contract should include a “scope of work” that outlines the work you expect and when you expect it to be completed. Include “circuit breakers” that require your contractor to check with you before going over budget.
And be sure to understand your contractor’s availability so you’re not left hanging at a critical point in your project. Freelancers often choose independent work so they can enjoy the freedom to travel, spend time with family, or pursue hobbies. Knowing their availability ahead of time can help keep your project on track.
Adapted from How to Prevent Foul-ups with Freelancers by Joe Taylor Jr. at Small Business Computing.