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When you have a project, who should do the work? Do you hire a freelancer or other independent contractor, or assign it to an employee?

It’s easier to decide once you know how they differ and the potential advantages of each.

Freelancer vs. independent contractor (IC)

Freelancers, consultants, agencies…these are all types of ICs that are part of the contingent workforce. Unlike temporary employees (temps), ICs are not employed by a company or staffing firm.

Freelancers are skilled independent professionals, who only work on a project basis. They often specialize in areas including IT, engineering, creative, and legal.

Who they are
In general, freelancers and independent contractors (ICs) are the same and are often used interchangeably. But there are exceptions, which you’ll see in a moment.

What’s important to note is that freelancers are self-employed individuals who function as their own business. Freelancers are typically individuals who:

  • pay self-employment tax
  • do not have employees (but they can subcontract)
  • set their own rates
  • work remotely at their own location
  • choose which project and clients they want to work with
  • work with multiple clients

How they work
Freelancers/ICs work on a project-by-project basis. Much like working with any other business, you should not tell them how to do the work. You should only tell them what you need done and the expected results. Such as: build a mobile iOS app that includes a certain set of API specs.

These professionals maintain total freedom over how they get the work done. This can include contracting parts of the project out to other freelancers. And the freelancer/IC can work any hours, any day, from anywhere—subject to meeting agreed upon deadlines, of course.

When a freelancer is not an IC

Depending on the nature of the work and other factors, an individual who typically works as a freelancer may not always qualify as an independent contractor. Sometimes, an individual should be classified as an employee.

Worker classification is a balancing act of several factors and nuances. But you want to get it right because a mistake can lead to serious tax and employment law violations.

If your company hires freelancers regularly, consider services like Upwork Enterprise Compliance. They’re a cost-effective option to ensure accurate classification.

Who should do the work?

Deciding who should do the work depends on your internal resources and the type of work you need done.
For most companies, freelancers provide a cost-effective way to fill skills gaps, foster innovation, and remain competitive.

These skilled professionals have years of experience across multiple organizations. They’re used to jumping into projects and ramping up quickly. Their varied experience can also provide insights and fresh perspectives that may improve project results.

9 deciding questions
There are numerous factors to consider when deciding who should work on your project. The chart below can help you decide, although it’s not exhaustive.

9 questions to ask when deciding if a project should be completed by a freelancer or employee

Online agencies for more complex projects
For larger or more complex projects, you may want to consider a “an agency”. These are companies with employees or freelancers who hire other freelancers to get projects done.

Agencies are a convenient choice for projects that can’t be done by a single person. If you need a mobile app built, you may need a UX designer, a front-end developer, a back-end system engineer, and so on.

Hiring a team of individuals can be time-consuming and administratively taxing. A single development agency can provide the many skillsets you need, at the scale you need. While you enjoy a convenient single point of contact.

If you’re in a larger organization with multiple needs, consider solutions like Upwork Enterprise. Upwork Enterprise provides fast access to premium freelancers and agencies through a centralized channel. What’s more, you can save more time by managing all your contracts from a single dashboard.

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