Navigating the Freelance Economy

A Guide for Small Business Owners on Hiring Skilled Freelancers

The rise of remote work, nomad culture and various technological advancements have made the life of a freelancer as appealing as its ever been to many people. Consequently the pool of talent from which to pick up skilled specialists to support businesses on projects, long or short term, has never been greater. This has meant that small business owners in the UK are increasingly turning to freelancers and contractors to fulfil various office functions.

Hiring freelancers or fixed term contractors not only offers flexibility but also allows businesses to efficiently manage short to medium-term projects without the commitment of full-time employees. By embracing this trend, SMEs can harness the power of outsourcing to tackle complex problems and meet business goals more effectively whilst delivering greater value for money.

This guide will explore the types of work best suited for freelancers, the advantages of hiring freelancers in the UK and provide practical advice on finding the right professionals. Additionally, we’ll delve into the legal implications, tax obligations and essential considerations for small business owners to ensure a seamless integration of freelance talent into their operations.

Understanding the Freelance Economy

Benefits of Hiring Freelancers

Hiring freelancers offers a range of advantages for small businesses, especially in the context of flexibility and cost-effectiveness. Freelancers of all flavours can provide specialised skills that can be leveraged for specific projects or tasks without the need for long-term commitments. This means businesses can access expert knowledge without the overheads associated with permanent employees, such as pension contributions, National Insurance and any company perks such as healthcare provision, employee discounts and paid leave. In fact the demand for freelancers will likely increase only further as employer’s National Insurance contributions increase next year.

Typically, freelancers can adapt quickly to changing workloads, making them ideal for periods of high demand without the complications of hiring full-time staff or temp workers. Their ability to work remotely also eliminates the need for additional office space, resources and equipment. Furthermore, freelancers can bring fresh perspectives and innovative ideas, having worked across various industries and projects.

This diversity of experience can lead to creative solutions that drive business success. It’s always handy to get an outside perspective on your business’ ways of working and adherence to long term goals, which permanent staff may be more reluctant to share, or simply won’t have the range of experience against which to measure your business’s working practices.

So there’s cost savings, access to specialist expertise and in most cases, significantly less need to invest time in training to understand your business. Once you’ve found the right freelancer for your needs and you’re comfortable working together, you can essentially “set and forget”, leaving them to do what they do best and deliver on the tasks you set them. This is why embracing the right freelancers can help SMEs achieve their business goals efficiently while maintaining agility in an ever-evolving market landscape.

Ideal Roles for Contractors

Freelancers and external contractors excel in roles requiring specialised knowledge or to provide support during temporary demand spikes. Ideal positions for contractors often include IT development, marketing campaigns, web design, graphic design and content creation. These roles typically require expertise that may not be available in-house but are crucial for project success. For instance, a small business embarking on a rebranding initiative might hire a contractor with a unique skill set in graphic design to ensure high-quality outcomes.

Similarly, digital marketing efforts, including SEO and social media strategy, benefit from contractors who bring targeted skills and up-to-date industry insights. Temporary contractors can also be invaluable for IT and software development projects, providing technical solutions without the need to maintain a permanent tech team.

In many cases a good freelancer, or even team of freelancers, can deliver the work you might otherwise outsource to a specialist agency, for a lower cost, whilst dedicating more time to your needs. Every business needs a website, but only the largest businesses require an in house team dedicated to its design and ongoing maintenance. If we consider that the average lifespan of a UK business website is somewhere between three and five years, it’s easy to see why SMEs don’t typically have their own in-house teams dedicated to web design and development. Instead it’s common practice to call in an external agency or specialist freelancer at the point at which a website needs updating.

With a web design and development agency you can expect to lay down anywhere from around £4,000 to £15,000+ to build a new website, depending on your specific requirements, whereas a freelancer will almost always quote you considerably less, without being any less qualified to carry out the work. And nine times out of ten when you work with a freelancer on a major project you are a priority for them so will get attentive, dedicated service, which can’t always be said for working with larger agencies who may have higher priorities and therefore assign an inexperienced account manager to your project, less able to effectively understand and convey your vision to the team working on your site.

Finding and Selecting Skilled Freelancers

Where to Find Top Talent

Locating top freelance talent can be streamlined by using various online platforms and networks. Websites like Upwork, Freelancer, Fiverr and PeoplePerHour connect businesses with a vast pool of professionals across different fields. These platforms offer search and filter options to help you identify freelancers with the requisite skills and experience. Though be aware the quality on offer can vary considerably and as ever the old adage that if something looks too good to be true it probably is certainly holds true. If a freelancer on the platform promises to deliver everything you’re looking for, at a fraction of the price you’d expect to pay, it’s 99% likely to be substandard.

That’s not to say that you can’t find good value on these platforms. By hiring remote workers in countries with a far lower cost of living, whether that’s a web developer in Eastern Europe or a graphic designer in the Philippines, means you can be paying a good rate for good work, that’s considerably less than the equivalent contractor in the UK would need to charge.

Another powerful tool for finding freelancers is the Facebook of the corporate world, LinkedIn, as it allows you to view portfolios and skillsets. You can also reach out to your existing network for possible recommendations as well as join different groups and communities specific to your industry or to the skills you are seeking on the search for excellent candidates.

Attending local business events or virtual meet-ups will also provide opportunities to connect with freelancers face-to-face or online. If you’re a Sussex based business we previously wrote about the best networking groups of Brighton and Sussex so you may find some inspiration here.

Finally, specialist recruitment agencies can assist in sourcing high-calibre freelancers, often with pre-vetted credentials. These agencies minimise the risk in hiring by ensuring compliance with legal and tax obligations. One example is the online platform Passionfruit, which specialises in working with experts across marketing functions, allowing businesses to be matched with trusted skilled freelancers who’ve already proved their value in their own onboarding process. This saves the potential gamble of working with somebody who talks a good game but perhaps doesn’t have the quality of skills you’d expected.

By leveraging these resources, the process of finding and hiring skilled freelancers who align with your specific project needs and business goals becomes a great deal easier. And of course if things don’t work out, it’s very easy to part ways and go in a different direction. After all no commitment is required unless you request it.

Key Criteria for Selection

Selecting the right freelancer requires attention to several key criteria to ensure they meet your business’s needs. You’re obviously going to want to evaluate the freelancer’s experience and expertise in the specific areas you require. Reviewing their portfolio can provide insights into their previous work quality and versatility, as well as the sectors they’ve worked within and whether that’s helpful to you.

Check for client testimonials or references to gauge reliability and professionalism. Communication skills are obviously going to be crucial, as clear and timely interactions can significantly impact project success. Different businesses have different ways of working so you need to know the freelancer or freelancers you select are going to be onboard with your preferred communication channels. Do you expect them to be available on the end of a phone within your business hours? Would you require frequent or ad-hoc online catchup calls with them at set times? Should they be expected to join and be available to answer queries within your company Slack channels? Make sure you discuss these things before pressing ahead.

Additionally it’s important to consider their availability and flexibility in order to match your project’s timeline and demands. Unlike full time staff you can’t expect a freelancer to be available to dedicate all hours of the working week to your project. And if you’re working with someone further afield, or even just someone in the UK who has a non-standard working pattern, make sure you understand the times they will and won’t be able to carry out work and be available for any necessary discussions.

Perhaps most crucial of all, do not neglect discussing and agreeing upon deliverables, deadlines and payment terms upfront. A smooth project is a clearly defined and well planned out project. If you’re not currently utilising project management tools to keep track of progress against targets and goals, why not take a look at our recommendations on the top collaboration and project management tools for SMEs.

Don’t forget also to ensure your freelancer has a grasp of any industry-specific regulations or compliance requirements that they may not already be aware of. Furthermore, understanding their approach to problem-solving can provide confidence in their capacity to handle unexpected challenges.

Everybody works differently and many freelancers have specifically chosen that lifestyle to be more flexibly able to work when and where they like, so make sure you understand and appreciate this. The longer you work together the easier it becomes to find a successful flow between your own team and your remote support, but of course if the dynamic isn’t there, don’t be afraid to part ways. The right freelancer to work best with your requirements will be out there, even if you don’t find them the first time you try.

Legal and Financial Considerations

Understanding Your Obligations

Obviously when you’re hiring freelancers one of the main advantages of doing so is that they take care of their own tax affairs and so you simply pay the invoices they send you with no further concerns. That said you do still need to be cautious if relying on the same freelancer or freelancers for the long term and are utilising them for as many hours as you would a full time employee. This could raise suspicion with HMRC who may investigate whether you are trying to use freelancers and contractors as full time staff without being liable for deducting their tax and National Insurance contributions, paying employer’s National Insurance contributions, and adhering to laws on minimum wage and statutory leave requirements. As you might imagine, the tax man is not keen on this.

As well as being compliant with HMRC, it’s crucial to formalise the client/contractor relationship with a contract outlining the scope of work, payment terms and responsibilities. This documentation can help clarify tax positions and protect both parties. For example if your freelancer incurs various expenses in the course of the work they carry out for you, would these expenses be absorbed by them or by you, and how is the VAT on those expenses broken down? When it comes to VAT implications, you need to know whether your freelancer is VAT registered and if they are, would they be declaring VAT on their expenses incurred and then charging you VAT on those same expenses when invoicing you? It’s largely a question of how things are laid out on invoices but well worth being on top of this from the start to avoid confusion further down the line.

Keeping accurate records of all transactions is obviously essential for compliance and can be facilitated by accounting software. We actually broke down some of our top recommended cloud accounting platforms for SMEs in a previous post so do take a look if you’re considering your accounting software options.

Ultimately, as long as you understand your obligations as a business, it is relatively straightforward to seamlessly integrate freelancers while adhering to legal requirements.

Best Practices for Working with Freelancers and Contractors

Ensure Effective Communication

When collaborating with freelancers and contractors, particularly those who are fully remote, communication is key as it directly influences project success. You should start the relationship with a clear briefing that outlines project objectives, timelines and deliverables. Use concise and straightforward language to minimise misunderstandings and establish preferred communication channels. This may be via email, messaging apps like Slack or Teams or project management tools.

You may also wish to schedule regular check in calls though it’s important to be conscious of the fact that if you’re paying a contractor by the hour, they’ll be billing you for each call you request so try not to overdo it. Even if they’re billing a flat fee, they will still be unlikely to take kindly to too many interruptions and being micromanaged, and it will detract from the time they devote to your project. This is why all objectives and deliverables should have been clearly set out at the start, ensuring both parties are comfortable and responsive without the need for frequent calls to check on progress. If the work agreed is not delivered then you have it in writing so there’s no grey area and they’d either need to complete what was agreed before being paid or terminate the contract.

Try and save up non urgent queries you may have for your regularly scheduled check-ins to help track progress and address any issues promptly. It maximises efficiency with the calls and minimises time consuming interruptions in the days between your catchups. You should encourage an open dialogue where freelancers feel comfortable sharing ideas and concerns and setting expectations for feedback and revisions from the outset can prevent frustrations later in the project.

Additionally, documenting key discussions and decisions can provide clarity and reference points. Cultural differences and time zones should also be considered, accommodating flexibility where necessary. If you’ve chosen to take advantage of the cheap rates offered by a freelancer in, say, Indonesia then one of the compromises will be that they’re not always going to be online when you are. Of course this works well for some businesses who can fire off any questions before the end of the day knowing the freelancer will likely have time to read and respond before you’ve returned to work the next day!

Build and Maintain Long Term Relationships

Fostering long-term partnerships with freelancers can be beneficial for both parties, providing consistency and reliability for future projects. Assuming you’ve found someone with whom you’re happy working together, you should recognise their contributions and provide constructive feedback to enhance collaboration. Expressing appreciation for their efforts can build goodwill and encourage continued excellence.

Maintain open communication even after project completion, keeping freelancers informed about future opportunities with your business. You might have a company Slack workspace where they can continue to engage after your initial project with them is completed.

Offering competitive pay and timely payments is also going to help in retaining top talent. If you’ve found a talented hardworking freelancer then the chances are you aren’t the only one, so when their workload becomes such that they can’t take on more work, if you want to be among the clients they choose to continue working with, they’re going to remember when you paid their bill!

Consider creating a roster of preferred freelancers, which can expedite the hiring process and ensure quality work. By involving freelancers in multiple projects, they become more familiar with your business’s culture and expectations, improving efficiency. Additionally, discussing potential skill development opportunities can demonstrate investment in their growth, fostering loyalty, assuming you’re really committed to a long term working relationship. Building these relationships not only ensures access to skilled freelancers but also integrates them more effectively into your business, driving long-term success.

We hope you’ve found this guide useful and if working with freelancers has helped you downsize your in-house workforce, perhaps you’re looking for new serviced offices in Brighton or Shoreham? If so JetSpace are here ready to show you around our currently available suites. Just get in touch to find out more.