Tips for Freelance Contractors
Eight tips to protect you as a freelance independent contractor.
Freelance contractors are more commonplace than ever before. Freelance contracting provides an opportunity to work from home, be self-employed, or make extra money from freelancing.
The problem with the increase in freelance contractors is that scam artists have become more common too. Freelance independent contractors should know these eight tips to protect from freelance scams.
1. Never pay someone to give you a freelance contract.
A legitimate freelance contract will not require you to pay money to the employer in order to provide a job or freelance contract. While some internet sites require users to purchase a membership to bid on freelance jobs, the person who awards the freelance job should never charge a fee in order to gain the freelance contract.
2. Secure a deposit or milestone payments on freelance assignments.
Some freelance contractors, especially over the internet, require payment in advance for freelance contracts. However, especially when you are a new, unproven freelance contractor, it is difficult to find employers who are willing to provide payment in advance.
One solution to this problem is to request milestone payments. The freelance contractor can decide what milestones of completion exist in the project, and then partial payments are made to the freelancer once each milestone is completed. Another solution is to secure a deposit on the freelance contract, which shows the freelance employer is willing to put up funds to secure the freelance contract.
3. Do not give employers personal information.
Go to this IRS website and apply for an employer identification number (EIN). This will prevent you from having to provide the freelance employer your social security number. After you have this number, you need not provide the employer with any other information besides your business name and EIN.
4. Do not give bank information to a freelance employer.
Do not fall for the scam of a freelance employer asking for your bank account information in order to send a bank transfer. Someone who has your bank information can wipe out your bank account.
If the freelance employer says bank transfer is the only way they can pay, upgrade to a business account with PayPal and send a request for funds to the employer. The employer can initiate an eCheck transfer to your PayPal account without having any personal information except the PayPal email address. The freelance employer doesn’t even have to have a PayPal account to pay you this way.
5. Never wire, forward or transfer money for a freelance employer for any reason to a third party.
When a freelance employer asks you to forward money to someone else or transfer money to someone else, this is a warning sign of a scam or illegal activity.
6. Do not send an overpayment back to an employer.
Another common scam is for a freelance employer to send a check or money order in excess of the invoice and ask you to send the balance back to them. Don’t fall for this. Return the entire check or money order and immediately request the freelance employer issue a new payment for the proper amount.
7. Always have a freelance scope of work or freelance independent contractor agreement with every freelance employer.
It’s not unusual for an employer to hire you as a freelancer and agree upon a price for the freelance services but then discover later the freelance services the freelance employer expects more than the original agreement. Have a firm freelance contract that details exactly what freelance services you provide prior to beginning the freelance assignment.
8. Make sure you have contact details for the employer.
An email address or website is not enough to secure payment if an employer chooses not to pay or skip out on the invoice. You need to be sure to get a person’s name who is responsible for paying the freelance contract and a mailing address and phone number in case the freelance employer doesn’t pay.
A freelance contractor can provide quality service and receive fair payment, while the freelance employer saves money on overhead. Freelance contracting can be a win/win situation for both the freelance independent contractor and the freelance employer.
However, one bad scammer and the freelance contractor can lose a lot of money and suffer a setback from which it may be difficult to recover. Use common sense, trust your intuition if something doesn’t feel right and follow these eight steps above and freelance contracting can be a very profitable and rewarding business.