Companies both large and small are always looking for ways to cut costs and increase their profits. Since labor costs comprise a large portion of an organization's total expenses, it behooves business owners to search for potential savings in this area. In reality, most companies require a certain number of hours from their workforce, so a reduction in pay isn't an option. However, there is a legal tweak that can boost your company's savings without having to sacrifice working hours. Here are some tax perks of hiring freelancers instead of full-time employees.

You don't have to mess with income tax withholdings.

Every company in the United States is responsible for collecting a withholding tax on the personal income for each contracted employee on their staff. This is known as income tax withholdings and acts as a credit for the income tax that will be paid by employees come April 15th. Even though each individual worker is responsible for paying their taxes in full, the Internal Revenue Service (IRS) has seen it fit to have companies withhold a certain portion of an employee's paycheck and send it directly to the government. You can easily avoid the hassle of collecting income tax withholdings and the potential associated penalties for incorrect payments by simply hiring freelancers instead. There is no requirement for employers to collect these withholdings for employees registered under a 1099 form.

You don't have to cover employment taxes.

Income tax makes up a large majority of employment taxes owed to the IRS by employers. However, there are additional taxes that must be taken out of an employee's income, including Social Security and Medicare taxes. Not only are employers responsible for removing the correct amounts, but they're also expected to match the amount for each employee. When working with freelancers, on the other hand, you can eliminate the hassle of calculating these taxes and keep from paying matching amounts. This means greater savings for your company overall and a greater ROI per 1099 employees that you hire.

You aren't obligated to provide any benefits.

Legally, contracted employees are viewed as part of a company. Due to this relationship, employers are responsible for providing a certain number of benefits to their workforce. Some of these benefits include healthcare coverage, dental and vision care, 401(K) contributions, paid leave for vacation or illness, life insurance, and much more. While some of these are only obligatory for large companies, these benefits represent a major legal expense for employers. Since freelance employees aren't viewed as part of a company, business owners can effectively skip out on all of these obligations without suffering any loss in labor by hiring more freelancers.

It's easier to find what you need.

Even though there are enough tax benefits to motivate your hiring choices alone, there are some other advantages to hiring freelance workers as well. It's easier than ever to find qualified and experienced gig-based employees for any task you need. A job board like Upwork can put you in contact with dozens of capable and reliable candidates, giving you the pick of the litter. Whether you're hiring for web development, design work, sales and marketing, or administrative support, it's easy to find a freelancer to fit any role you need. Furthermore, employers have the advantage of being able to cycle through freelancers quicker than contracted employees to find the ideal team.

Overall, the tax perks of hiring freelancers instead of full-time employees boils down to less responsibility and, therefore, less work. Since 1099 employees aren't technically part of the company, business owners have significantly less to worry about come tax season.

Article Submitted by Tina Martin Creator of Ideaspired