In today’s ever shifting job market, freelancers have become the new normal. With online profiles, remote access and the quick exchange of files and ideas, freelancing seems to be the way of the future.

Hiring freelancers can be a handy tool for startups and small businesses that don’t have enough resources to sustain full-time employees. It’s a quick way to outsource isolated projects such as the design of your new logo, quick legal expertise and expert copywriting. From a business perspective, you can get what you need with few to zero strings attached.

According to the Freelancers Union, freelancers account for nearly one third of the American workforce. That’s roughly 53 million people and counting. But hiring the right freelancer can prove to be a daunting task. With millions of independent workers eager to land their next client, you have to be careful with who and how you hire. Below, we’ll talk about what you need to know before working with a freelancer.

Where To Look?

When looking for a freelancer, common sense tells us to look online. There are numerous websites that allow you to post jobs in a range of different fields quickly and easily. Freelancers create profiles and can apply with the click of a button. Sites such as Elance, Upwork, (formerly known as oDesk), and Guru can be a great place to start. They feature access to a wide range of jobs and industries with many talented individuals from across the globe. However, using these sites usually means that you’re casting a wide net. Expect to see a huge volume of applicants. Sorting through interested parties can be time consuming to say the least.

Searching for freelancers within a particular field can lead to more promising results. Rates tend to be higher, but the applicants tend to have more professional experience. For instance, those of you that are looking to hire freelance web developers should try smaller sites such as Authentic Jobs, Folyo or Gun.io.

Hiring freelancers on major websites tends to attract applicants from all over the world. This has its pros and cons. You may not care where your freelancer lives, but regional differences can cause problems along the way. Time differences may cause a lapse in communication. If you see a problem with the work, it may take another twelve hours for your freelancer to respond. Language barriers might make it difficult for you to communicate your vision or request certain changes. On the plus side, if you hire an offshore freelancer, you tend to get away with charging a lower rate. While, onshore applicants tend to charge higher rates, but usually provide faster, more accurate results.

Many small businesses and startups prefer to higher locally based freelancers. This strategy provides numerous benefits. You can meet the person face-to-face, establishing a more concrete working relationship. Freelancers have the option of coming into the office. It can also be difficult to get a sense of someone’s professionalism when you’re limited to email exchanges and online chat. If you prefer the local route, try using locally based message boards, meet-up groups and job listings. Every city has them. You can also try your area’s version of Craigslist.

Before you choose how and where to look for freelance employees, ask yourself some of these questions. What is the nature of the job? Does my freelancer need to come into the office? Do I need to meet them face-to-face? How often will we need to be in contact? Can they work remotely? If you’ve answered these questions, your search will already be well underway.

Finding The Right Fit

Now that you have a pool of candidates to choose from, the real test begins. Depending on the type of project you have, it may be a massive contribution to your business or a relatively small task. If it’s the former, you need to make sure that you’re hiring someone who’s willing to go the extra mile.

Test the waters with every potential candidate and see how deep they’re willing to go. Do they seem motivated to deliver the best possible outcome for your business? A great freelancer is one who asks questions about your vision as an entrepreneur and your business as a whole. Even better, they’ll present you with a Return on Investment or ROI. For example, if you’re spending so much money on a new website, what kind of payoff are you likely to see? What is your target audience? What are you goals as a business? Do they understand your business’s workflow? If your potential freelancer doesn’t seem concerned with these issues, you’re probably better off going with someone else.

It’s also important to get a feel for your working relationship. Whenever possible, talk to your applicant on the phone or meet them in person. Talk about their past experiences, goals for the future, and primary skillset. At the very least, ask them the same questions online or via email. There’s no point in working with someone that can’t communicate.

As with any job application, ask to see some professional references from previous employers or past clients. If they’re working in a more creative field, ask them for previous work examples. Professional freelancers should have a website, blog, or a social media profile with examples of their work. If you like what you see, it’ll probably be a great fit.

Another great way to weed out the best is by giving your freelancer a trial assignment to complete. Try coming up with a sliver of the original assignment and see how well they perform. This is a great way to test the waters before the real assignment begins. However, you should never ask a freelancer to complete a sample project for free, no matter how small. Remember that freelancers are working professionals and their time is valuable, just like yours.

Finally, make sure that they have the proper time to devote to your project. Be upfront with them about how long you expect the project to take and what you expect from the end result. Make sure that they’ll be able to communicate on a schedule that works for you and that they’ll be able to complete the project on a reasonable timeline.

Negotiating Pay Rates

When it comes to paying your freelancer, amounts tend to vary greatly. It’s hard to know where to begin. From graphic design to photography, every field has a different set of standards. Ask yourself what skill level or professional requirements you’d like your freelancer to have. A BFA? A law degree? Three to five years at a graphic design firm? The more experience they have, the higher the rate of pay. Professionals usually make anywhere from 20 to 100 dollars an hour, if not more.

Next, think about how many hours you’d expect it to take to complete the project. You might have to do some research on your part if your knowledge of a particular field is limited. Multiply the number of hours by your estimated rate of pay and you should have a ballpark estimate. This number isn’t set in stone and will probably fluctuate greatly. You should be prepared to negotiate. Always present your freelancer with a lump sum, not an hourly rate. Hourly rates make it seem as if you’re paying for their effort, not a polished finished product. Some freelancers tend to log hours without putting in the extra effort.

Designate A Project Supervisor

Once the wheels are in motion, you need to designate a project manager. Depending on the size of your business, that person might be you. Whoever it is, make sure that you have someone who can answer your freelancer’s questions on a timely basis, check their progress and verify the results. If you’re planning to be the project supervisor, make sure that you can be available every step of the way.

Legal Precautions

Last but not least, your freelance arrangement needs to meet the proper legal requirements. Any professional arrangement should be in writing. It may seem like a simple transaction, but things go wrong all too often. If your working relationship falls through, you need to have a contract in order to seek legal counsel and get what’s owed to you. You don’t want to be stuck empty-handed if someone just disappears. Many business owners don’t bother with a contract for reasons related to time and money. Try to plan ahead and get a formally written contract from a legal representative. If you can’t afford a professionally written contract, write one yourself. It’s always better to have something than nothing at all. If you expect to hire more freelancers in the future, keep a contract template on hand. You can quickly modify an existing contract for every new job.

Next, make sure that you include a copyright clause. Based on U.S. Copyright Laws, the person who makes the work is considered the owner. Except, when you include a work for hire clause. Stipulate that anything the freelancer makes is considered work for hire. That means that whatever the freelancer creates, it’s your property. You don’t want a freelancer to own the rights to an integral part of your company. For instance let’s say that you hire a freelancer graphic artist to design a cover for your book. Without a work for hire clause, that image technically belongs to the freelancer. This can lead to all sorts of nasty legal debates, especially if your book becomes a huge success.

When it comes to a payment structure, things change all the time. You should always avoid giving a full payment upfront. There’s always a chance that your freelancer will take the money and run. When in doubt, try to bifurcate or split up the payments. You can spread out chunks of payments based on a working timeline. If for some reason, you have to pay your freelancer wholly upfront, make sure you have something in writing.

We’ve saved the most important bit of advice for last: when to give your freelancer a W2 or not.As the job market changes, The IRS is cracking down on small businesses and startups that misclassify their freelancers. Tax gaps occur when someone is reported as a freelancer instead of a W2 employee, causing the government to loose out. But, determining how to classify your freelancer can be tricky.

The best way to keep your freelancers classified as freelancers is by keeping them in control. Pay them with a fixed lump sum, not an hourly rate. Don’t pay for tools or equipment; freelancers should have their own. Let them work when and where they want. Try not to constrict them to certain hours. If some of these details are simply impossible, you’re probably better off going with a W2. When in doubt, remember that employees are told what to do, while freelancers are told what needs to be done. Work Market can be a helpful tool in determining which action to take.

Conclusion

In the end, choosing a freelancer can be more difficult than it seems. The larger the project, the more complicated it becomes. Use reputable sites to look for freelancers, check their qualifications, and make sure that they understand your needs. Pay them with a lump sum as opposed to hourly rates. Whether it’s you or one of your employees, put a project manager in charge to supervise. Take necessary legal precautions to protect your interests. Feel free to add to the conversation in the comments below.