How to Manage Your Independent Contractor Relationships

My small business couldn’t survive without independent contractors. We’ve relied on them since we started to help us do more than we could on our own. But managing independent contractor relationships can get tricky. Here are some tips to make the most of these valuable partners.

Make sure the person truly is an independent contractor. Depending on what you ask them to do and how you want them to do it, you might find the person you thought was a freelancer is considered by the IRS to be your employee. This can result in not only an unexpected tax burden, but an even more unwelcome fine. Visit the IRS website to read about what defines an independent contractor vs. an employee and be sure you’re not crossing the line.

Understand availability. Independent contractors promise you flexibility, but just how flexible they are can vary. If your contractor gets a bigger, better-paying project, will your important deadline suddenly be less-than-important to him or her? Make sure the person is available to handle your desired timeline.

Provide predictability. By the same token, you can’t expect independent contractors to sit around 24/7 waiting to work for you. (If that’s what you need, you probably need to have several independent contractors in reserve to work on the same project.) Let the contractor know the expected timeline, deadlines and other information about your project so he or she can decide whether it’s a good fit or not.

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Put it in writing. Even with independent contractors you’ve worked with before, written contracts are essential to define a project’s scope and keep things from getting out of control. Contracts protect both sides, so be sure to carefully think over all the elements that may need to go into your contract. If the contractor creates a contract, read it carefully—or you may regret it.

Communicate clearly. Unshared expectations are the downfall of many an independent contractor relationship. Clearly define your terms at the beginning of the project so you both understand what the other expects. This way, you won’t end up paying for something that falls short of what you wanted.

Wrap it up. At the end of each project, it’s a good idea to go over what went well and what didn’t, so you can learn from it and fine-tune your relationship going forward. It’s easy to skip this step, but it really pays off if it enables you to streamline your independent contractor process.

Follow these steps, and you’ll end up with a roster of reliable contractors that you can turn to again and again.

Rieva Lesonsky is CEO of GrowBiz Media, a media and custom content company focusing on small business and entrepreneurship. Email Rieva at rieva@smallbizdaily.com, follow her on Google+ and Twitter @Rieva, and visit her website SmallBizDaily.com to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.