7 Important Factors to Consider When Hiring a Freelancer

In today’s business environment, it is common for companies to occasionally or consistently work with third parties to help fill in employee gaps, work within budgets, or provide services your business cannot fulfill on its own.

It is fairly common for a company, especially small businesses, to be unable to afford full-time employees to fill certain roles, and working with a freelancer or other type of service provider is within their budget since usually set fees are involved. This includes hiring freelancers abroad – such as digital nomads.

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Additionally, working with freelancers empowers you to grow your business, expand its expertise, and/or add new perspectives. It’s important to select the right freelancer because you want someone who will work well with your internal employees or who can attain a strong grasp on your company’s goals.

As you begin the hiring process to find a freelancer who is the right fit, here are seven important factors you should consider.

1. Verify the freelancer’s credentials

Once you identify potential freelancers to hire, you’ll want to verify their credentials to ensure they possess the skills and experience you need. Ask to see their portfolio, so you can take a look at their former work.

This way, you can better identify if the freelancer will be a good fit for the project or day-to-day tasks that you need assistance with. The person you ultimately hire should have the specific hard and soft skills your company needs, perhaps especially possessing strong communication skills.

When searching for freelancers, there is a high probability to come across potential freelancers from whole different places around the world, expat employees, or digital nomads. Therefore, it is recommended to always make sure that the freelancer’s interests and needs fit your business and that they are able to commit to working in the same time zone.

2. Seek recommendations from past clients

A good freelancer should be able to provide you with a list of recent references from their past or current customers. Ideally, the references should be no more than a year old, since you want someone who is up-to-date on current practices or knowledge. This also demonstrates to you whether they are consistently active or just occasionally doing these sorts of projects.

In addition to verifying a freelancer’s experience and successful completion of former jobs by speaking to former customers, be sure to check any online reviews. Due to the proprietary nature of many projects, many freelancers may not have traditional reviews since they cannot identify who they have worked for. However, you can still get a good idea of their professional reputation by doing a web search.

3. Define the scope of a project or ongoing work

Never hire a freelancer without first defining a “scope of work”. Elaborating on these specifics will ensure the freelancer can meet your needs, along with giving them a full understanding of your expectations. To do this, the following should be clear when outlining the work.

  • Outline the objective of the project or work
  • Specify the expectation you have for deliverables
  • Set a timeline for project (or job) completion
  • Include any deadlines, if applicable, remembering to be realistic with the deadline if other dependencies (e.g. other employees or third parties) are involved for the freelancer to complete their portion of the work
  • Factor in freelancer availability and verify that they are realistic with their own schedule and be able to complete your work in a timely fashion while balancing other clients
  • Determine whether the freelancer is working solely for you during the specified time frame or if they’ll be working for others as well
  • Outline any specifications the freelancer will need regarding expertise and knowledge, along with any tools that will be required

Ensuring clear communication about the scope of the project, along with each party’s expectations, goes a long way toward enjoying a successful partnership.

4. Agree upon a pricing structure

Once you select a freelancer who possesses the type of talent you need and is available to take on your job, you’ll want to discuss pricing. As you enter this discussion, be sure to clarify the terms of payment, including the freelancer’s rates and how you will disburse payments to them. Examples of questions you will probably want to obtain answers include:

  • Does the freelancer work per project or by the hour?
  • How will you be making payment(s) to the freelancer?
  • Will the freelancer require you to pay them a retainer?
  • Does the freelancer offer any discounts for bulk or ongoing projects?
  • Are there any other pricing considerations to discuss?

Sometimes, other factors may apply, such as incremental payments or other terms. If you and your freelancer discuss the partnership openly and come to an agreement, this helps to avoid misunderstandings and ensures a fair and mutually beneficial contract will be drawn up.

5. Write up a fair contract

Like any other business arrangement, you should standardize your work agreement in writing. Construct a contract for you and the freelancer to sign, so you are both legally bound to its terms. Common items inserted into an employer-freelancer contract usually include details to protect both parties and eliminate potential problems throughout the course of the agreement.

  • Set a start and end date
  • Provide a description of work and services
  • Outline and confirm agreed-upon payment amounts and terms
  • Eliminate the freelancer from adding hours or time to the agreed project
  • Ensure no “scope creep” occurs from the employer
  • Includes a clause for revisions, adjustments, or other requirements
  • Provide legal protection in the event the freelancer doesn’t deliver
  • Confirms intellectual property/product ownership rights (trademarks, patents, copyright, etc.)
  • Outlines terms and termination if the partnership isn’t working
  • Avoids costly court processes if disagreements emerge
  • Includes a non-disclosure agreement (NDA)

A contract solidifies the agreement and ensures both parties understand what’s involved and expected. It also shields both parties in the event something goes wrong because a good contract is clear in its terms.

6. Obtain a non-disclosure agreement (NDA)

You can potentially note any non-disclosure items in your contract, but it is probably an important separate document you want your freelancer to sign. Your business is competitive, and to protect yourself from any secret or proprietary information getting out that could harm your company, you should strongly consider putting an NDA document in place. The NDA is a legally binding document to protect yourself, so your freelancer keeps specific information or practices they see under wraps.

Chances are, during the course of the work, your freelancer will get exposure to sensitive information that you do not want to be disclosed to anyone outside the company, especially competitors. NDA agreements often include items such as, but not limited to: specific software developments, client lists, business strategies, company financials, and any other proprietary information. Essentially, you should note any confidential details you would not want to publicly share in this document.

7. Additional legal considerations about business structure

As you work out the details of the agreement with a freelancer, you’ll want to think about additional legal considerations that may be less apparent. Certain factors may apply that might be important to the success of your company, project, or other work you’re outsourcing.

For instance, is your freelancer a sole proprietor or are they an LLC? While you may not think this affects you, it could. A freelancer is essentially an independent business owner and, if they’re registered as a certain type of LLC it could demonstrate a higher level of commitment, thus credibility. It can also indicate their level of professionalism.

If the freelancer is an LLC, this means they also have the ability to obtain an Employer Identification Number (EIN), permitting them to hire employees if needed. Even if you don’t want employees (who haven’t been vetted by you) working on your project, being an LLC, the freelancer has the prerogative to assign their other work to their employees. This enables them to keep up with demand and also means there is less of a chance for your project to experience delays or other complications if the freelancer runs into obstacles maintaining the timeline.

Finally, an LLC would have a business bank account, which helps the freelancer manage their business finances separately. This simply streamlines the process for everyone involved in an agreement.

Working with freelancers can be a win-win partnership

Modern business owners often find themselves overwhelmed or lacking certain types of expertise that could prevent them from being competitive in their industry. They also may not have the funding to hire full-time employees to fill important roles, making outsourcing an attractive opportunity. Working with third parties, such as freelancers, frequently becomes an appealing way to get the job done swiftly and within budget.

Once you identify the right professional, vet out their credentials, develop a mutually beneficial partnership, and set the terms, the process is pretty clear-cut. Whether you have a special project needing completing or need someone to manage daily tasks, a freelancer could be the perfect solution to your situation.

However, finding the right individual is key. You want someone who can effectively do the work, but you also ideally want someone who understands your company’s goals and shares similar values. After you find the right individual, your company can focus on its core competencies while being confident your project or other type of job is in good hands.

David Tompkins
Author: David Tompkins