For many small businesses, hiring freelancers is the only way to meet all of the company's responsibilities. Having a full-time employee for every role is convenient, but paying salary and benefits can strain a small business' already tight budget. By hiring a freelancer, you pay for the work only when you need it, and save the money usually spent on benefits, social security taxes and unemployment benefits. And with more people opting for freelance careers, you can be sure you'll have plenty of talented and committed freelancers to choose from.

Before hiring a freelancer:

1. Check out freelance bidding sites to find the most qualified freelancer at the best rate.
2. Find talent at industry-specific websites, such as those for copywriters or graphic designers.
3. Research the legal side of working with freelancers.
   

Action Steps
The best contacts and resources to help you get it done

Find qualified freelancers at a rate you can afford with bidding websites

Salaries for full-time employees may be basically set in stone at your company, but when hiring freelancers, you must negotiate rates every time. If you're on a tight budget, posting your project on a bidding site puts you in contact with several qualified freelancers, and gives you plenty of options to choose from.

I recommend: Elance can connect you with professionals in everything from sales and marketing to writing and translation to management. You can post your project, which freelancers then bid on, or you can search the profiles of the more than 100,000 freelance professionals who are active on the site. Guru also boasts more than 100,000 active freelance profiles, in everything from legal to marketing to finance.

Find a freelancer who specializes in what you need at industry-specific sites

There are a lot of freelancers out there, specializing in everything from copywriting to graphic design. Finding the most qualified and experienced professionals among the thousands out there may seem impossible, but through the Internet you can locate and evaluate freelancers quickly and easily. Many professional associations for freelancers include a 'marketplace' section on their websites, where freelance professionals can post their resumes, work samples and contact information. Rather than sitting down for an interview with dozens of prospects, you can narrow your choices based on their client list or range of experience.

I recommend: Search the member directory at the Editorial Freelancers Association to find freelance writers, translators, indexers and proofreaders. The Association of Freelance Internet Designers also includes a searchable member directory.

Understand the legal aspects of hiring a freelancer

Hiring a freelancer is very different from hiring a full-time employee, not only because they work off-site, but also because the legal requirements and practices differ. For example, while you pay a portion of social security for staff employees, you're not responsible for those with freelancers. You'll need a contract, to outline in detail the freelancer's job duties and pay. And because freelancers work for many companies, you may need a confidentiality or non-compete agreement to protect your company's privacy.

I recommend: Download sample independent contractor agreements at FindLaw. Consult the Internal Revenue Service Small Business Resources section to find out whether someone would be considered an employee or independent contractor, and what your responsibilities are in both cases. Watch the IRS webcast concerning the difference between employees and independent contractors, or download a training manual to help you determine status.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  If a freelancer quotes a price you can't afford, try to negotiate. Maybe you can get a discount for paying in full upfront or signing a contract for multiple projects. Or, the freelancer may be willing to lower the price in exchange for a longer deadline.
• •  To evaluate a freelancer, look at his or her website. Most include work samples on the site, in addition to client lists and testimonials. The client list can tell you if they've worked with companies similar to yours, and several testimonials probably means they have good relationships with their other clients.