By: Tina Martin
If you are looking to save your small business money, you may have already considered outsourcing to freelance professionals. This is a smart move for a multitude of reasons, and one of these is cost savings. Not only does it cost less to acquire freelance talent, but you will also save in a few unexpected ways, including paying less on your taxes. Furthermore, utilizing remote workers means you aren’t on the hook for expensive real estate — and the associated taxes — and you only pay for their productive hours.
Employees Are Productive Too… Right?
Hiring a full-time employee has its benefits. You have someone available at your beck and call who has to follow your company’s rules and regulations. But from a cost standpoint, you are probably losing out in unproductive hours. According to Business News Daily, distracted employees are an expensive problem. Business owners lose around $650 billion every year because of things like checking emails and dinging smartphones. Freelance workers have all of the same distractions, but they are not on your clock; you only pay them for the time they are actually working. This could result in hundreds of dollars in savings each week per worker.
Cost of Acquisition
The cost to hire a new full-time staffer is approximately $7,600 per person. If that sounds high, think about this: You are not only hiring someone, but spending money to vet applicants, perform background checks, and train them to do their job. Onboarding freelancers has a definite advantage here. First, it is much easier to find someone with the specific skills you need. There are job boards such as Upwork that are dedicated to hiring remote staffing who can do everything from sales and marketing to graphic design and web development. These online marketplaces allow you to either post a job and get almost instant quotes or choose from a lineup of people with preexisting portfolios and prior client reviews.
Your most prominent expenses when having a full-time employee are the taxes you pay on their behalf. You can’t just get away with paying a salary or hourly compensation. You are also on the hook to Uncle Sam for your share of Medicare, Social Security, and other taxes. Freelancers pay for these things on their own. This is partially why you might wind up paying slightly more per hour for the same position. Also, keep in mind that because freelance workers are responsible for their own office space and equipment, you aren’t paying taxes on these necessities either. If you have to rent a dedicated commercial office, you can wind up paying half a percentage of its value in a transaction privilege tax. This is on top of other expenses associated with operating an office building that may also be taxed. If you do find it necessary to meet with your freelance staff occasionally, consider a day pass to Thrive’s coworking space.
Other Ways You Save
Efficiency, lower acquisition costs, and fewer taxes are a few of the ways you save by using freelance talent. You’ll also have access to their tools and technology, which you may not have the funds for. Something else to think about is that you can utilize a global market and capitalize on less expensive labor for tasks that don’t require a US presence. This is a great way to extend the proverbial olive branch to women and other minorities in areas with fewer job opportunities.
With all of the potential financial perks of going freelance, there’s no reason to wait. You have nothing to lose but a more efficient business to gain. Keep in mind that you are not limited to freelancers in one area — you can fill virtually every need with just a few mouse clicks.
Tina Martin stays busy as a life coach and works hard to help herself and her clients achieve a healthy work-life balance. She is the creator of Ideaspired.
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