In this modern and fast-paced economy, many entrepreneurs decide to hire freelancers. This kind of cooperation offers a lot of flexibility and forward-thinking solutions, which matches the energy of the gig economy. It comes, however, with a few crucial rules.
As a commissioner, your job is not only to hire the freelancer, brief him and await the end of the project – you need to take care of all the legal and formal matters that are part of the cooperation and make sure to avoid illegal labour.
Here are a few of our tips on what should be taken into account when working with a freelancer.
Navigating the legal labyrinth – law & regulations
Nobody is above the law – bear that in mind when doing business with anyone, freelancers included. Having a solid legal background in your project is necessary for you (to achieve your business goals), as well as for your freelancer (to feel secure and focus on the work). Some issues in particular need to be addressed if you want to hire freelancers.
Contracts and agreements
Always remember to base your cooperation on contracts. A clear and fair agreement can spare you a lot of trouble in the long run.
Some of the most common contracts that can be used if you want to hire freelancers include:
- Specific-work contract – the most flexible contract available for freelance work. This civil law agreement is usually signed when one party commissions a specific project – e.g. logo design, mobile app development, photo shoot, article proofreading. This contract should be as specific as possible, providing in detail deadline information, remuneration and payment, among other important factors.
- Contract of mandate – a civil law agreement which can be shaped to fit the project needs. It also allows the employer to pay social contributions. If the work performed under this contract resembles actual employment, it should be terminated and converted to a proper employment agreement.
- B2B contract – when a freelancer is actually a legal entity (juridical person). Their business enters into agreement with your business and together you agree on specific contractual arrangements for a particular project or long-term cooperation.
- Hire a freelancer through a remote work platform – there are platforms that let you legally collaborate and pay freelancers without signing any contract with a subcontractor. One of them is Useme.
How does it work? Useme becomes the legal employer of your freelancers and signs a contract with them on your behalf. The platform takes care of all admin tasks related to hiring. Then, they resell you the freelancers’ work based on buy-sell transaction. After a successful collaboration you receive a tax invoice regardless of wether your freelancer has it’s own company or not.
In practice, the freelancer uploads the work you ordered into the system, and you pay pro forma. Despite the fact that the portal charges a service fee for such transactions, the total cost on your side is still less than in the case of signing a work contract.
If you want to start settling deals with freelancers through Useme, you just need to fill in the form inviting your freelancer to settle a deal.
How to pay your freelancer – take care of this
Freelancer status
Another important issue related to the agreement between you and your freelancer is properly recognising your freelancer. Are they your employees? Do you need to contribute to their social insurance? Can you expect them to work in specific hours or across different time zones? Are they entitled to any benefits based on the work they do for you? It often depends on the fact if your country (or freelancer’s country) recognises freelancing as work or rather considers them independent contractors. If you want to hire freelancers legally, do your research considering these country-specific criteria.
It is vital that you review all these matters beforehand and address any doubts before signing a contract. The agreement between you and your freelancer should be profitable to both of you, and the freelancer’s status must be reflected in it.
Take care of intellectual property if you want to hire freelancers
If you are working with a freelancer, you need to consider the intellectual property (IP) rights, especially if you are going to use their work to gain revenue. To avoid any IP disputes in the future, make sure your contracts outline the specifics of the project: attribution (if any), use, modification and distribution of work. If freelancers want to showcase your project as part of their portfolio, discuss it with them beforehand and make sure it is clearly stated in the contract before you decide to hire freelancers.
A well done agreement protects both a commissioner and a freelancer against intellectual property infringements. If you do the billing through the Useme.com platform, it allows clients to receive copyrights on the following basis:
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- License – a license grants the client the right to dispose of the commissioned work for 15 years. A license does not require signing printed documents on Useme. Note: the freelancer can still sell this work to other people.
- Copyrighting protocol – it requires an additional form, but it guarantees that your project will not be sold to other clients.
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On Useme, freelancers can also choose not to transfer the copyrights, but then they pay higher taxes.
Whatever you agree upon with a freelancer you work with, it is essential you put it in writing in your contract to avoid any future disagreements on IP.
Non-disclosure agreements (NDAs)
Confidentiality is now a vital part of many businesses. If you feel like the work you are getting a freelancer to do is sensitive, consider drafting a non-disclosure agreement in addition to a standard agreement (or as part of it). If done well, an NDA will not only protect your intellectual property, but also your know-how, the business itself, as well as other aspects. Some entrepreneurs decide to sign an NDA with a freelancer even before any business-sensitive information is shared – that is even before signing the actual contract. Decide what is best for your business.
Fair pay and fair play
Both you and your freelancer are in this for the money. That is why it is so important to go thoroughly through payment details when deciding to hire freelancers. This should me a non-negotioable element of your freelancer onboarding checklist. As a commissioner, you should know your budget, but also learn about the market rates for the project you want to start. If it is not a similar amount, it may indicate that it might be harder to find a suitable freelancer to do the job. Try to be reasonable about the money you are giving to a freelancer. If it corresponds to the average pay on the market, it is a fair price.
How to pay your freelancer
Ar you wondering how to pay your freelancer? Setting the amount is one thing, billing is another. There are many payment options to choose from – it all depends on the character of the work, the industry, and particular arrangements between you and your freelancer.
Some freelance work can be paid by hourly rate or in stage payments (according to the progress of the project). If you know the freelancer well and trust them, payment in advance is an option. The most common payment, however, is being done after the task is complete and delivered to the commissioner. This seems fair, but some freelancers might not be happy with this particular solution.
Escrow payments
This is where Escrow payments come in handy. It is a type of transaction where a commissioner pays in advance and a freelancer is informed about the deposit made. They begin work on the project and once it is finished and accepted by the client, they receive their payment.
In the meantime the money is stored securely on a dedicated platform. This solution guarantees transparency of transactions and is a good compromise for both parties involved. Useme.com is one of the freelance websites that uses Escrow payments to ensure the highest satisfaction rates among freelancers and their clients.
Of course there are other forms of payment available – a simple bank transfer, a payment platform (e.g. PayPal), or even in cash. Nevertheless, Escrow payments are on the rise and their convenience is a strong argument for using them.
Currency rates & fees
Always bear in mind who you are working with. If you happen to hire a foreign freelancer and their remuneration is in a foreign currency, pay attention to currency exchange rates. Making a wire transfer can also entail some exchange fees. Try to find solutions that do not incur extra costs and at the same time pay the highest possible amount to the freelancer. Going an extra mile to find a satisfying compromise can be a great foundation for a good business relationship with a valuable freelancer.
Foreign freelancers – things to remember
All of the points discussed above are especially important when you decide to hire freelancers globally. The foreign talent pool is vast, but there are many extra concerns that you need to be aware of when it comes to hiring a freelancer from a foreign country
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- Legal and taxation – these matters are critical. If you want to go global, be sure to research labour law in your as well as freelancer’s country, learn about tax regulations and any other formal requirements that are connected to working with a foreigner.
- Payment – as described above, payments can be tricky, and when you need to transfer money overseas, it can be extra difficult. Pay attention to currency exchange rates and transaction fees. Specify in the contract who covers extra costs and agree on a platform for paying remuneration. We’ve got a blog post wich will let you discover how to hire and pay foreign freelancers.
- Copyrights and Intellectual Property – as the regulations may vary across the borders, make sure your interest is secured according to your needs. A good contract should regulate what happens to the work done by the freelancer after your cooperation is finished. Similar provisions should be implemented when it comes to international data security of your work, if necessary.
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We’ve got special guides for chosen countries which may interest you. For example a blog post on how to hire a freelancer from Italy.
Apart from the above formal and legal matters related to hiring a foreign freelancer, it is also important to be aware of the less critical, but nonetheless important issues. These include communication (make sure your foreign partners speak the language you need them to speak on a satisfying level); cultural differences (your work ethics may be different from theirs); time zone differences (video calls may have to be replaced by emails) – to name a few.
In order to gain access to the best global talent pool of trustworthy and professional freelancers who can cope with the challenges mentioned above, use a reputable site like Useme to look for them.
Key takeaways
Always be prepared – freelancing is the future and there is no doubt about the advantages of this kind of cooperation. Doing the right research, using renown platforms and consulting experts about any doubts regarding regulations and formalities should result in a fruitful cooperation. With the right approach and skilful freelancers your business should be thriving!
