No matter how talented you are or how hard you work, you can’t always run a business on your own. If the business can support it, you might hire an employee. But small businesses often find that they are in the in-between stage of needing help but not needing a dedicated employee for certain tasks. And that’s when you might hire a contract worker.
Contract workers — also called independent contractors, subcontractors, or freelancers — can be lifesavers when it comes to getting the work done. From writers to designers to accountants to PR and everything in between, you can pay for just the work you need on a project by project basis. But they also be nightmares when things go wrong. It’s up to you to protect yourself and your business when working with independent contractors.
References
The first — and most often skipped — step to hiring an independent contractor is to ask for references and samples. We can all claim we’ve done PR for the governor, but you won’t know if it’s true unless you actually check.
In some cases, references can be a sensitive matter. Let’s say you’re hiring a ghostwriter for some content marketing you’d like to do. You want to give them your ideas, have them write the content, and you’ll be credited for the work. But a main component of ghostwriting is secrecy, right? In those cases, your potential hire should be able to provide some sort of contact that will be willing to vouch for their work, even if they can’t necessarily give you certain details about the assignment.
Contracts
What’s the most basic way to protect yourself in a work-for-hire situation? A contract. It will spell out exactly what the expectations are on each side of the table and what will happen if either of you don’t come through on your part of the deal. Any written correspondence can work as a written agreement in a pinch — like an email or physical letter — but contracts are still the way to go.
Anyone you want to work with who insists on not using contracts is probably not someone you should work with. Your best bet is to come up with a boilerplate contract for your business’ subcontractors and add or subject language depending on the situation. And if you’re using the contract that they are providing, be sure to read it thoroughly before agreeing to anything. Remember this is going to be your insurance policy just in case anything goes wrong with the relationship.
Progress Payments
Another good way to avoid being scammed by an independent contractor is to make progress payments instead of one large sum. This is especially important for long term assignments or high cost projects. The idea is that you break the project into stages and make a payment once each stage has been completed, starting with an initial deposit.
Let’s use a website development project as an example. You get a proposal from the contractor that you approve and you make a deposit payment. Then, perhaps they’ll do the basic format of the site and you’ll make another payment. When they have uploaded all of your content and photos, you’ll make another payment. When you’ve given your final sign off on any odds and ends, you’ll make the last payment and the project will be over. If at any point during the project, your contractor flakes on you, you have only paid for the part you’ve received up to that point.
In some cases, a freelancer trying to avoid chasing checks is probably going to ask for the entire payment upfront. That’s a safety net for their business. If their references check out and you can establish they are trustworthy, that’s fine. But otherwise, try to negotiate a deposit and then a payment on delivery. The whole point is to avoid giving a big check to someone, only to have them suddenly not answer your phone calls or emails anymore.
