The Most Common Freelancer Payroll Mistakes

Freelancer Payroll

Today, more so than ever before, many businesses rely on freelancers to fill skill gaps, meet project demands, and provide flexibility in staffing. While hiring freelancers offers numerous benefits, managing their payroll can present unique challenges for companies of any size. Even if you have a robust internal HR team, chances are they are not experts in freelancer payroll and aren’t equipped to manage this flexible audience. From compliance issues to communication breakdowns, there are several common mistakes that businesses make when it comes to freelancer payroll.

AllWork helps over 60 brands manage their freelancer payroll from start to finish and these are the most common freelancer payroll mistakes we see clients make before transitioning to a specialized freelancer management and payments platform.

1. Misclassifying Freelancers

One of the most significant mistakes companies make is misclassifying freelancers as independent contractors when they should be classified as employees. Misclassification can lead to legal and financial consequences, including penalties for unpaid taxes, overtime, and benefits. To avoid this mistake, first, companies should familiarize themselves with the criteria used to determine a worker’s classification and ensure they accurately classify freelancers based on their level of control, independence, and integration into the business.

2. Disorganized Onboarding

It takes a significant amount of time and effort to get your freelancers up and running. This labor-intensive process can bog down your internal staff with manual tasks like gathering and reviewing onboarding paperwork. A disorganized and slow onboarding process means it takes even longer to get your freelancers to day one of work.

AllWork handles all onboarding steps for you. We even do the work of monitoring federal, state, and local compliance regulations so you don’t have to think about it. As a result, your managers have more bandwidth than ever for pursuits that drive innovation, improve customer satisfaction, and move your business forward.

3. Poor Communication

Effective communication is essential for successful freelancer management, including payroll, yet many companies fall short in this area. Whether it’s unclear expectations, lack of feedback, or delays in responding to inquiries, poor communication can lead to frustration and dissatisfaction among freelancers. Communication is most likely also happening through email or text and messages get lost.

By partnering with a company that gives your managers and freelance teams access to a mobile app, your team can communicate directly from anywhere, at any time. Giving them one organized place to record all of their messages and a quick way to connect with their team even when their states apart.

4. Inconsistent Payment Processes

Consistency is key when it comes to freelancer payroll, yet many companies make the mistake of having inconsistent, late, or unclear payment processes. Whether it’s delays in processing payments or discrepancies in invoicing procedures, inconsistent payment practices can damage relationships with freelancers and could cause serious legal issues for businesses. In fact, 71% of freelancers have dealt with clients paying them late or not at all.

What businesses need is one centralized platform and system of record where they can easily pay each freelancer, track their spend, manage the work being done, and ensure that they are compliant with all state and federal laws. That’s why at AllWork we brought together not just freelancer management technology but also an integrated payments platform specifically built with freelancers in mind.

The simplest way to avoid ALL these issues? Bring in the experts. Make sure you’re partnering with a freelancer platform that not only puts technology first, but also knows the ins and outs of freelancer compliance, HR, and payments.

Ready to learn more about how AllWork can help you classify, onboard, manage, and pay your freelancers? Email or schedule a demo here to get started!