Does your accounting firm hire remote freelance workers?
The increase in reliability within the telecommunications industry has increased the effectiveness of remote workers. Considering freelance accountants for your firm increases your hiring options because their ability to work remotely allows you to hire outside your immediate geographic area.
Here at Gusto, we want to supply our accounting clients with the knowledge and support they need to strengthen their firms and assist their clients. That’s why Gusto, along with our partners at CPA Academy, presented an edifying webinar about how to create a guide to hiring remote accountants.
Our webinar titled “How to Hire Freelance Accountants For Seasonal Work and Short Term Projects” featured the remote hiring expertise of Jeff Phillips, the Co-Founder of Accountingfly and the CEO of Padgett Business Services. You can watch the full webinar here.
In this article, you will learn all about how remote accounting allows you to hire for specific tasks, the remote onboarding process, and the benefits of returning freelance partners.
Advantages of hiring freelance accountants
Freelance work plays a critical role in modern-day accounting, and hiring remote freelancers can be advantageous to your firm. Choosing to hire freelance workers is less risky than hiring a new full-time employee. Instead of investing $50-60,000 a year on a full-time hire, you can pay an hourly rate for the duration of a contract:
“What we’re seeing, more often than not, is small firms who are overloaded with tax return work and not necessarily ready to make a full-time hire commitment right now, but need the help desperately. … You make the [remote] hire to get the work done [without] doing training. … This is a person who knows how to work remotely and knows the work you do. There’s a brief incubation period, and they’re off to work.”– Jeff Phillips
By hiring remote accountants, your firm gains the ability to hire for specific projects. You no longer have to fill a full-time position and hope they can perform every task available. In contrast, you can pick people skilled in the area you need to be filled:
“You’re hiring for the skill set needed to get the job done for the specific task. … What I love about this is you need a skill [and] you plug that gap with a person who has that skill. … When you’re satisfied, they go away, [and] you move on. It’s more profitable.”– Jeff Phillips
Working with remote accountants benefits them as well. It gives freelancers the ability to expand their network, build their resumes, and work with the flexibility they desire. Many remote workers like to take entire seasons off of work, so the idea of working short-term jobs appeals to them. The trend of short-term jobs is becoming increasingly popular, especially in the realm of audit:
“We’re seeing [this trend] in audit. We have a client that has a once-a-year audit project with a mining company. … It’s a six-week audit on a half-billion-dollar client. … They bring in short-term audit senior managers with CPAs [with] experience in construction client accounting. … They come in, do the work, and get out.”– Jeff Phillips
The future of accounting lies within hiring remote freelance workers. You may already need a temporary accountant to fill temporary gaps created by ongoing searches to hire a full-time employee or workers on maternity leave, for example. Hiring a freelancer will diffuse these stressful situations by keeping your firm staffed and allowing you to take on your clients’ workload.
How to classify freelancers for tax purposes
Classifying freelancers for tax purposes is one of the most significant areas where firms have questions. The primary debate surrounds whether or not temporary employees should be on a W-2 or 1099 form. Improperly classifying a hire could result in financial penalties, owing back taxes, and other potential damages. Each state has different guidelines on how to treat your remote workers in relation to taxes as well. One way to determine how to classify your freelance workers is deciding whether they are a business performing a service for you or a worker under an employment agreement.
“I like it best … when a freelancer has their own little business, and they are doing a business service for your business. That is the cleanest way to do it. When you have an employee hired by your business under an employee agreement, including part-time, it’s a lot murkier.”– Jeff Phillips
Working with freelancers who have their own businesses clearly defines them as an independent contractor. Instead of looking at them as your temporary employee, approach them as a company performing a professional service for your firm. When your remote workers are their own entity, they fall under a 1099. If they do not have their own business, the determining factors are less clear.
“You can’t just hire somebody who probably should be a W-2 and call them a 1099 because you don’t want to pay their employment taxes and benefits. It will catch up to you. … You have to look at who has control over what the worker does. [Are] the business aspects of the worker controlled by you or them? [What] is the nature of the relationship? Is it permanent? Are there benefits?”– Jeff Phillips
Deciding to classify an employee as a 1099 can be difficult if they do not have their own business. The IRS also has guidelines posted to help you determine whether or not your freelance hire should be an employee or an independent contractor. To avoid confusion, do your best to hire freelancers who have a legal entity.
Onboarding and paying remote workers
In many ways, the onboarding process of a freelancer looks similar to a full-time hire. You want your remote workers to feel at home in the dynamic of your firm, and that falls on how you treat them during the onboarding process. When you introduce a remote worker into your firm, do your best to keep them comfortable because you want them to offer their services in the future:
“You want to do business with these people and want them to value doing business with you. … I highly encourage you to integrate these freelancers into the culture of your business. … Remember, they may want to come back for multiple projects, [or] you may want to recruit them full-time down the line.”– Jeff Phillips
There are a few strategies to smoothly onboard remote workers. Before their first day, have them complete all of their onboarding paperwork. Assign an internal team member to help integrate them. Consistently check in on them as they gain their bearing within your firm. It also helps to start new hires on Fridays, which will introduce them to a more relaxed environment than at the beginning of the week:
“One of the things that I love is a buddy system. Assign one of your internal team members just to help integrate that person. … If you’re a solo shop, it should be you.”– Jeff Phillips
Another thing you need to consider when working with freelance accountants is how you will pay them. Companies generally pay independent contractors through accounts payable rather than payroll, which tends to be less stringent. Be sure you don’t forget your contractors and pay them on time to maintain their happiness.
“Be crystal clear on the scope of work. Over-communicate, and be overly responsive to these freelancers. Approve what they need quickly so they get what they need. … It’s important to treat them like your most important prospects because they can be critical in building your own business.”– Jeff Phillips
Remember that freelancers have the choice between taking your project and the project of one of your competitors. To maintain their return business, be sure to keep them happy. A remote accountant’s happiness can be the difference between having them only once, or creating a long-standing working relationship.
Using return freelance accountants
The key way to achieve success with freelancers is to treat them like business partners. Ensure that you treat them exceptionally well because you want them back on your team in the future. When you set up an excellent environment for remote hires, you exponentially increase your chances of using their services later.
“I am big into selling you on the idea that you want to do business with your freelancers over and over again. You want them to be the champions for your business”– Jeff Phillips
Once your freelance workers have finished their contracts for you, be sure to create a talent cloud. A talent cloud is a network of vetted 1099 talent that can help you quickly fill open roles in your firm. Creating talent clouds provides depth when you need someone in the future:
“A lot of tax firms I talk to have former partners who come back .… We’re seeing most of the top 10 firms build these [talent] clouds so they can quickly tap into these potential business partners to come back and do projects.”– Jeff Phillips
Building relationships with your freelancers can create partnerships that last for years. These partnerships are vital to keeping your firm running when problems arise.
Learn more about hiring freelance accountants
Freelance accountants offer a low-risk investment into your firm with the potential for filling gaps with quality candidates. As the trend toward remote work increases, so will the necessity of hiring accountants remotely. Freelancers give your firm the ability to hire specialists who fit within the roles of specific projects within your firm. Remember that building good relationships with freelance workers allows you to create business relationships to address your clients’ needs better and strengthen your firm for years to come.
If you’re looking for more ways to expand your firm and better serve your clients, consider signing up for Gusto. Gusto is a people-based platform that makes payroll easy for accountants. We provide critical tools for businesses like HR, health insurance, and benefits, and we provide automatic tax filing for local, state, and federal payroll taxes. Learn more about how Gusto can help your firm and your clients by visiting our Gusto for accountants page.