3 Potential problems with hiring freelancers

3 Potential problems with hiring freelancers

Freelance work has become a big part of the business world over the last decade and so many companies are opting to hire freelancers on a project by project basis, rather than employing full-time workers. There are a lot of benefits to this because it means that you’re only paying for labour when you need it and you’re not tied into a contract so if you don’t like a person’s work, you can simply just use another freelancer next time, rather than having to go through the process of firing and rehiring people. A lot of people say that freelancing is the future of business and we’ll move further away from full-time employees, but is that really a good idea? While there are benefits to using freelance workers in your business, there are some downsides. These are some of the potential issues that your business might face when using freelancers.

Tax Issues

Dealing with your tax affairs can be tricky, but it gets a lot more complicated when you’re using freelancers. In general, it’s up to them to file their own tax returns so you don’t need to worry about it, but in some cases, freelancers will offer their services through a limited company to avoid paying tax when they should really be taxed by you as an employee. Legislation was introduced to stop this from happening (learn more here) but there is still the chance that you could be unknowingly making mistakes on your tax returns when using freelancers. Regardless of whether it was a genuine mistake, you may be fined for it and that’s going to have a big impact on your finances.

Status Issues

This is linked to tax issues in some way because a lot of people think that they’re using freelancers when in reality, they’re actually employing somebody. There is a bit of a grey area when it comes to freelancers that you’re using regularly and in some cases, they might be considered your employee for tax purposes. But if you think that they’re a freelancer and you’re not deducting taxes from their payments, you could be liable for that. If you use somebody every now and again for single projects, they’re a freelancer. But if they’re working for you regularly, there may be issues with their status. It’s best to be safe and speak with an employment lawyer if you’re not sure.

Security Issues

Online security is a big deal for businesses because if you are the victim of a cyber-attack, it can have far reaching effects on the company and cost you a lot of money. That’s why it’s important that you’re taking steps to protect yourself online. But when you throw freelancers into the mix, it’s a lot harder to know if you’re really protected. If they need access to certain company documents to complete their work, you don’t know which devices they’re being accessed on or whether they’re using public wifi networks which are vulnerable.

Freelancers can benefit your business but it’s important that you’re aware of the potential dangers before you start using them.  

Christine Buske is a former academic who left science at the bench, and now considers herself a woman in tech. She is a frequently invited speaker, and enjoys talking about career transformation (particularly leaving academia for the business world), tech, issues around women in tech, product management, agile, and outreach. She is a proud Canadian resident, and qualifies as a "serial expat".

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