Upwork, the world's largest global freelancing platform, with 3 million jobs posted annually, vets its talent and offers a premium solution for enterprise that ensures worker classification and onboarding requirements are met. For clients that subscribe to its compliance services, Upwork can also receive indemnification from misclassification risk, which can lead to an IRS audit.
Small-business owners who do use freelancers say there are a few practical considerations to keep in mind in order to maximize use of this labor market alternative and minimize the expense.
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"I don't think that small-business owners should let fears of business reputation or security stop them from working with freelancers," said Amber Hinds, owner of digital agency Road Warrior Creative. "In many instances, freelancers are going to be more invested in the outcome of their work for you than are W-2 employees. If they don't produce good results for you, you have more recourse with freelancers than you do with an employee," Hinds said.
She said business owners can sue, report them to the Better Business Bureau or write negative reviews of freelancers online. "I think most freelancers are aware of this and will strive to provide great results because of it," Hinds said.
Jonathan Weber, CEO of tech publishing company Marathon Studios, said it's fair to have trust and security concerns. "Most people who consistently use freelancers have been burned at some point," he said. But Weber added that the benefits still outweigh the risks: Most freelancers are highly skilled professionals who can bring value to a company at an affordable cost.
"To identify the best freelancers, my strategy has always been to hire multiple contractors to work on portions of a single project and then retain the ones who prove themselves to be the best workers," Weber said.
He added, "As time goes on, you start to build relationships with a network of individuals who you have worked with before, and will be able to directly approach them with work without having to face the uncertainty and risk of hiring someone new."
— By Zachary Basu, special to CNBC.com