In today’s work climate, things are shifting. Many more companies are deciding to have their employees work from home. This changing landscape has opened up new doors for people looking to make a career change.
Freelance work remains to be a popular endeavor. There are many advantages to this line of work. One of the biggest is that you are your boss.
On the client side, knowing how to pay freelancers on time is a vital step. Establishing a healthy relationship is best for both parties. Let’s learn 5 tips to ensuring payment is paid.
Let’s first discuss the differences between a regular employee and a freelancer (or independent contractor). Employees will work part or full time and be either paid hourly or salaried. Freelancers will have to keep tabs on their business expenses as they are business owners.
Freelancers are self-employed and often work remotely. They will take on multiple projects simultaneously via multiple clients.
- W-9 Form
Another term for a freelancer is a 1099 independent contractor. They will need to file a W-9 form as a result. The W-9 provides you with the necessary identifying information such as name, type of business, and taxpayer identification number (TIN).
You’ll need to deduct backup withholdings from whatever the freelancer earns. If you do not do so you’ll end up being responsible for uncollected taxes.
- Payment Terms
One thing you’ll want to keep in mind when learning how to pay independent contractors are payment terms. Between the two parties, figuring this out ahead of time will reduce the chance for problems down the road.
You can choose to pay the freelancer upfront. This is best used when there is an established relationship. Trust is needed for the second option as well, paying when then the job is finished. Remember, not all freelancers and contractors are willing to agree to these terms.
As a third and final option, you could offer to pay half up front and half upon completion. This is a win-win for both parties involved.
- Payment Type
Figuring out a payment type is the next step. Thankfully, making a paystub is as easy as one two three.
PayPal and freelancers go hand-in-hand. When wondering how to pay freelancers, PayPal is a solid choice to start. It makes sense to do so since PayPal remains the top dog for digital payments.
Freelancers love it because money arrives in their PayPal account quickly and efficiently. From there, they can move the money earned to their bank if they choose to do so. Opening an account is free and the service is dead simple to use.
From the payee’s perspective, PayPal offers Mass Pay which allows for simultaneous multiple transactions. With one click you will make your freelancers very happy. The speed and ease make PayPal a breeze to use.
One of the simplest ways to pay your freelancers is via Venmo. With an online wallet, freelancers can receive payment from your wallet.
Setting up an account is a snap. You’ll need to first load up your wallet or connect a payment source. Freelancers can then choose to send their earned money to a bank of their choosing.
- 1099-MISC Form
A 1099-MISC form must be filled and filed from the client if payments exceed $600+. The 1099-MISC form is sent to the freelancer or independent contractor, the IRS, and the state’s income tax withholding agency.
You’ll want to stay organized and keep track of all billable hours. This will ensure that you the client and the freelancer are sticking to the books. This is crucial with this line of work.
Refer to Our How to Pay Freelancers Guide
We hope you enjoyed our how to pay freelancers guide. As a client, making your freelancers happy is so important.
The work they produce will be of the highest standard.
For many more informative articles on career and lifestyle, be sure to read our blog. We can’t wait to see you there!