If you’re a creative sole-trader and your workload is increasing, the chances are you’ve considered using freelancers to provide additional support, or you’re considering hiring your first employee.
This article discusses the considerations to be aware of when deciding to take on additional staff, and the key differences between hiring freelancers, agency staff and contracted staff.
Who to hire? Creatives or admin?
Should you hire admin staff to take care of office duties or creatives to help with your workload? Some argue that hiring non-creative (or ‘non-billable’ staff), such as studio managers or administration staff simply increases your costs, without the opportunity for you to charge for the extra work that a creative can do.
If you’re a one-person studio or a creative partnership, your first full-time or part-time hire will likely be extra creative staff. This is usually the case when a firm is struggling with an excessive workload. Offloading some of this creative work to a competent designer will allow project deadlines to be met, as well as freeing up the founder to continue with the necessary day-to-day administration involved in running a creative business, which as the founder they will know best how to do it.
As a creative business’s workload grows, and you shift from freelancers to contracted staff you’ll need to consider payroll, holiday and sick pay, pension contributions and the various administrative duties.
As Adrian Shaughnessy notes in his hugely popular book ‘How to be a graphic designer without losing your soul’
“I was initially resistant to employing non-designers; I couldn’t see the logic… Surely it would reduce our profitability? In fact… the improved efficiency that came from employing talented and able support staff meant that more work was done (with no drop in quality) and more income was generated.”
Bringing the right skills in
So, if you’re hiring creative staff and not office support staff, often the argument is made to hire someone whose skill set complements yours, and not mirrors it. For example, if you run a branding studio you may choose to hire someone more proficient at web development than you. They may be quicker and even better at that task, which will allow your studio to deliver a better quality of work.
As a rule, and perhaps obviously, the people working in your business should be doing roles that they are most qualified to be doing. This is why the argument makes sense to hire creative staff to offload some of the creative work because only you, as the founder, will be most qualified and well versed enough to deal with new business enquiries, pitching, and other duties based on your studio’s culture and processes.
Knowing when the time is right
Taking on the odd freelancer, and paying them by the hour, week or project is one thing; you’ve no ongoing responsibility beyond what you have agreed to pay them in exchange for the work they are delivering. Deciding to employ a part-time or full-time employee is another kettle of fish altogether.
The first thing you’ll need to do is look at your cash flow forecasts and your sales pipeline to decide whether you can afford to employ someone on a full-time basis. Your accountant will, of course, help you with this and discuss your options. Beyond salary, additional costs will include National Insurance contributions, statutory sick pay, pension entitlement and maternity or paternity pay.
Also, consider the cost of office furniture such as ergonomic chairs and desks and the necessary equipment such as computers, second screens and software subscriptions. You must also ensure you take out employers liability insurance.
Attracting the right fit.
Remember, recruiting takes time; you’ll have all the necessary tasks of writing the job specification, advertising the availability of the position, reviewing applications and interviewing. Creative businesses thrive on collaboration and culture, and the ‘right fit’ personality-wise will likely be more important than exacting qualifications, skill sets or industry awards. Seek someone you’ll naturally get on with because if you’re sharing a studio space, you’ll be spending a lot of time with them!
Making the role attractive beyond the standard ‘holidays and salary’ benefits package is also more important than ever, so consider ways you will attract and retain staff to work for your company.
Take the right steps
Once you’ve interviewed your candidates and decided who you’d like to offer the role to, as an employee you’ll need to do the following things as advised by HMRC
- Decide how much to pay them, ensuring you’re paying at least the minimum wage.
- Check they can legally work in the UK.
- Check if you need to apply for a DBS check. Perhaps unlikely for a role in a creative studio, but this may be necessary if your firm works in-house with clients such as schools or colleges.
- Get employers liability insurance.
- Give your new employee a written statement of employment, which includes the terms and conditions of the role you are providing.
- Register as an employer with HMRC and set up PAYE. Again, it is advisable to discuss this with your accountants, who will offer payroll services.
- Check if you need to automatically enrol your staff into a workplace pension scheme.
Hiring staff on different contracts: What’s the difference?
When you take on additional staff, you may choose to work with freelancers, agency staff, or offer part-time or full-time contracts.
If you hire a freelancer they are classified as self-employed and will take care of their own National Insurance and tax contributions. Freelancers may be suitable for short periods, such as a few days to a few months, and they differ from Agency staff.
You are still responsible for their health and safety if they are working on your premises.
If you hire staff through a recruitment agency, you will pay the agency, rather than the staff member, which includes their National Insurance Contributions and Statutory Sick Pay. As with freelancers, you are responsible for their health and safety.
The advantage of working with recruitment agencies is they will often match your role requirements with suitable candidates, helping ensure you bring people on board with the correct skills.
Part-time and full-time contracts
You’ll want to ensure you have enough work to keep your contracted staff busy, and you may have to consider training to bring them up to speed on any software you use.
As an employer, you have a host of responsibilities to part-time and full-time contracted staff. These include:
- A written statement of employment.
- The statutory minimum level of paid holiday.
- A payslip showing the deductions such as National Insurance.
- Rest breaks.
- Sick pay.
- Maternity, paternity and adoption paid leave.
As an employer you must also:
- Register with HMRC.
- Pay at least the minimum wage.
- Do not allow your workers to work more than the maximum hours allowed.
- Have sufficient Employers Liability Insurance.
- Provide a safe working environment and make any reasonable adjustments if your employee is disabled.
There is obviously a huge amount of things to consider when employing staff on part-time or full-time contracts, especially compared to the relative ease of taking on freelancers. Naturally small creative businesses will generally start with taking on freelancers to cope with additional work-loads before they move on to agency staff, and then part or full-time staff. The HMRC website has a huge resource of information on the topic of employing people in your business, which is broken down into clear sections.
At AO Accountants we can help you navigate this area, and naturally, help with setting up accounts, payroll, and cash forecasts while ensuring you are compliant with HMRC when it comes to taking on your first staff members.
To discuss how we can help you in more detail get in touch with us via our website here.