Over the past decade, there had been a steady growth of freelancers all over the world. According to an article published by Forbes last year, over 57 million people in the US, or about 36% of the entire workforce are freelancers.
This growth spurt is a result of more companies allowing telecommuting and remote working with their employees. Even Fortune 500 companies from the Silicon Valley hire freelancers regularly, like Facebook and IBM.
The growth of this “Gig Economy” is also the reason why companies providing payroll services like payroll for contractors and freelancers are also thriving.
If you’re a small business hiring freelancers, you are not going through this whole ordeal alone, because even big businesses go through this 1099s headache every year.
In this article, we will walk you through 5 fool-proof payroll solutions that have proven themselves in this industry.
Choose a trusted PEO.
There’s only one way to rid yourself of all the HR and payroll issues altogether, outsource it!
Find companies offering payrolling services, like a PEO or a Professional Employer Organization. If you choose to work with a PEO, they will become the legal employer of your freelance workers and will be responsible for all employer responsibilities.
With this arrangement, you essentially become the client the freelancer is assigned to. You still have full control over all work-related concerns all the while staying compliant to the law.
Aside from payroll, the PEO will take care of the freelancers’ taxes, insurance, benefits, and other HR and admin roles.
So, how do you pay them? Well, the freelancers are usually paid on an hourly or per project basis, and the PEO will put an additional service fee on top of the freelancers’.
Companies with a growing need for freelancers ideally use PEOs to reduce payroll complexity and to manage non-employee work relationship efficiently.
Use a time- tracking software with a built-in payroll and invoicing system.
Have a multi-national team? If your team is spread across globally, you are most of the time rid of all the legal compliance complexities even if you hire them “full-time.”
This is great, but paying your workers through a freelance website often times takes away a significant part of their payment as a fee for the platform’s “referral service.”
Upwork and Freelancer, for example, charges up to 20% to the freelancer’s fee. If you pay your freelancer $500, they can only withdraw $400 from the platform after the referral fee.
To answer this dilemma, many time-tracking software developers provide a built-in payroll and invoicing system to ease the payroll process and make things fair for freelancers.
Among the widely-used time-tracking software with this capability are Hubstaff and QuickBooks. These apps can be integrated into online payment services such as Paypal, Payoneer, and TransferWise.
With these apps, you can set up an automated payroll system that only pays the amount of time worked; fair for both you and your freelance workers. They also keep a good record of things, such as invoices, you can easily download for documentation purposes.
Online Payment Platforms
If you otherwise don’t need to track time or you just pay your freelance workers on a per project basis, you can use online payment platforms such as Paypal, Payoneer, or TransferWise to send payments.
These three are among the commonly used online payment platforms used across the globe and any freelancer or remote employee will most likely have an active account in any of these service providers.
These payment services also allow you to send payments in batches, making them ideal for both small and big enterprises.
Use Cloud-based Payroll Software
Cloud-based payroll software solutions are ideal for small businesses who don’t want to outsource their payrolls for freelancers.
They offer a single software solution for both HR and payroll processes, like submission of taxes, filing 1099s, time-tracking, pay-on prepaid and debit cards, and much more, ensuring an automated payroll system with accurate data.
Among the most commonly used cloud-based payroll software are Gusto, Intuit Enhanced Payroll, OnPay, SurePayroll, and Square Payroll.
These cloud-based payroll systems are easily scalable for growing businesses and provide employee access, which often times are not possible with your own payroll system in place.
Moreover, these cloud-based payroll systems are available through mobile apps, have multi-channel available customer support, and easily accessible everywhere.
Compared to in-premise/in-house payroll systems that are prone to data loss and system crash, cloud-based systems are heavily secured and data is kept secure and safe everywhere you go.