Freelancers Vs. Staff: Costs Vs. Benefits

freelancingWhen you have a task for someone else to accomplish, you have a few choices. You could parcel it out to an employee you already have, but if your current workers already have too much on their plates you will have to find outside help. In this case you could hire on a new employee or you could take on a freelancer. Both types of workers have advantages and disadvantages. Read on for an outline of the costs versus the benefits.

Freelancers Cost Less

You may be in for a shock when you first learn how much a freelancer costs. On paper they seem much more expensive than an employee. However, hiring a freelancer allows you to forgo many of the costs associated with keeping on an employee. You are not responsible for providing benefits to a freelancer, nor do you have to pay a portion of their taxes. Freelancers also come with their own workspace and equipment, so you will save on overhead as well. Many locations consider hiring a freelancer a business expense, allowing you to deduct the cost from your taxes. While what you pay a freelancer may be more than an employee's salary, it will total less when all other expenses are considered.

Freelancers are Flexible

Hiring on an employee to complete a task leaves you with a surplus of workers once the project is finished. Firing or laying off a redundant employee is stressful and can leave you open to legal troubles. A freelancer, on the other hand, can be hired specifically for a particular project. Once the work is over the freelancer goes on his way without any hassle on your end.

Employees are Easier to Monitor

Working in an office with your employees gives you more opportunity to monitor their work. This makes it easier to catch problems before they begin and to answer questions as they come up. Freelancers are much more autonomous. Instead of dictating when and where the work is done, you and a freelancer will work together to create goals and schedules. The freelancer will stay in communication, but will not be physically close while completing the work. This may appeal to some employers but is a major detriment to others.


When an employee goes to work he does so with an understanding that his quality of life is affected by whether or not your business succeeds. The employee works with the same people every day, building friendships and loyalty to the company. Freelancers do not build these sorts of relationships. While a good freelancer will work hard to make sure his assigned work is completed well, he will not feel the same loyalty towards your company that employees will. If your business fails, he can easily move onto the next client.

Time to Hire

The hiring process differs greatly between employees and freelancers. When you hire a new employee you have to spend time making sure the person is a good fit for your team. You run background checks, you conduct interviews, you read through resume after resume… and it all takes time. Once you find the perfect employee he must go through an orientation period, further delaying the date when he can start working. Even with outsourcing payroll processing to ADP or Paychex, the set-up time may be substantial.

It generally takes much less time to hire a freelancer. You look through portfolios and exchange emails or calls, but that's it. Once a freelancer is hired he can get to work - no orientation period required. However, you must go through this process much more often with freelancers than you have to when hiring an employee, which can be a downside for some business owners.

One should be extremely careful not to hire someone as a freelancer, but who really is an employee. Simply calling someone a “freelancer” who is really an employee frequently gets employers into a lot of trouble. Check with your attorney for expert legal advice on that issue.

There are costs and benefits to hiring on both employees and freelancers. Depending on your needs and preferences you may find either to be a superior choice. Both types of workers can bring value to your business.

Sarah Jackson is a freelance writer who shares a home with her three adorable children in San Jose, California. More challenging and permanent than employees, she hopes her children will some day work for others.

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