Employee vs Freelancer – When to Hire Whom from the Company’s Perspective – 1(3)(annaleijon.se)
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Employee vs Freelancer – When to Hire Whom from the Company’s Perspective – 1(3)
https://annaleijon.se/employee-vs-freelancer-when-to-hire.html
These are differences on paper, which can be measured, and which are pretty much factual.
Administration For the company hiring freelancers, it means different payment terms (paying for an invoice compared to creating a salary statement) and less bookkeeping in terms of not having to pay, report and document income taxes (including social taxes etc). Regarding the payment terms, usually freelancers get paid one, or even two, three, months, later or when the job is finished (this is stipulated in the freelancer’s contract and personally, I have experienced up to three months later, as demanded by the client) but employees could get their salary the same month (unionen.se). The freelancer has to administer and pay the income tax themselves and also pay self-employment tax and so on (ramseysolutions.com). Therefore, there usually is both less administration and payment at a later stage with freelancers compared to employees for the company. Costs Hiring freelancers compared to employees results in lower running costs. The total cost, which mainly depends on the employee’s salary and the freelancer’s hourly fee (and other peripheral costs) can be lower or higher in total for the company, but we can at least declare that it is a different kind of cost. Costs for salaries (as payroll expenses are overhead costs), benefits, computers and phones as well as other perks are allocated each month on a certain account in a hiring company, but as an expense when contracting freelancers (and not including benefits, phones and other perks, but sometimes computers due to security reasons). As such, freelancers result in lower running costs and headcount than employees. Whether or not the total cost for the company is higher or lower is more complex and varies from case to case, something I will not discuss further here. (paro.ai) Employment benefits The company does not have to pay or administer paid vacation, share or option programs, maternity leave, possible medical insurance, travel and retirement plans etc to freelancers (freelancers can choose to pay for these themselves instead and in their own company, if they want). Thus, freelancers receive no employment benefits from their client, meanwhile employees do that according to their contract and the company’s guidelines. (paro.ai) The hiring process From attracting talent to getting a freelancer onboard, in contrast to an employee, it goes faster and is less complex. For example, hiring companies may include several interviews spanning over several months and involving lots of different departments and people. There may be aptitude tests - both personal and competence wise as well. A freelancer can be ‘onboard’ by tomorrow ( no training or orientation needed) and the shortest interview process I have had was just a 10 minutes phone call. In conclusion, the hiring process is cheaper and easier with freelancers compared to employees that usually go through the traditional and extensive hiring process. (linkedin.com/pulse)