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Freelance Business Advice

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Daniel HattonFreelance Business Advice
by on Jun 29, 2015 at 8:21:24 am

Hi all,

For the past year I have been freelancing producing videos for businesses, campaign groups and weddings. I currently operate under my own name as a sole trader.

I am now looking to potentially outsource some of my work to other freelancers and was wondering if it's better to do this sort of thing under a company name? Most of my work comes through websites like PeoplePerHour and Elance so any client through that would obviously be thinking that I'm doing the work personally so I was just wondering if it makes more sense to use a company name as a banner of sorts?

The people that I would outsource to would be on a freelance basis so in theory I would still be able to operate as a sole trader.

Also, if I was to start operating under the banner of a company name, do I need to let HMRC know even though I'm already registered under my own name?

Any help would be gratefully appreciated.

Dan

http://www.danielhatton.co.uk


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Mads Nybo JørgensenRe: Freelance Business Advice
by on Jun 29, 2015 at 10:48:55 am
Last Edited By Mads Nybo Jørgensen on Jun 29, 2015 at 10:51:24 am

Hey Dan,

Tough call. I am currently going through the same considerations myself, based mainly in the UK market.

There is nothing wrong with outsourcing your work. However, do consider the legal frame-work for doing so. As in that you don't want yourself suddenly becoming an employer by default - that is if the "freelancer" working for you, only works for you.

Marketing/image wise:
I would not be concerned about telling client that you are using an extra pair of hands, but that you are taking full responsibility for their product.

Legal / contracts:
Setting aside the agreement with your end client, do consider using the following legal paperwork when using a third-party supplier:
  • NDA: Non-Disclosure agreement - nothing that happens on the production leaves "the room". Could also be of interest if you are using certain processes for producing films - as in that you don't want a freelancer to "offer" your services.
  • Contract for work: If the job is longer than one day make sure to have a signed agreement that states that the supplier is not employed by you, and that they will pay all their own taxes etc. (This does not absolve you from making sure that the supplier is legally allowed to work in the UK).
  • Contract for non-compete: An agreement that ensures that the supplier does not approach your client(s) for a set period of time after the last job that they did through you. Although most suppliers are honorable, the client may not be. And it is tempting "to cut out the middle man" if the middle man is no-where to be seen...


Insurance / Legal entity:
Make sure that you are insured for 3rd party suppliers. I have an insurance that includes public liability, freelancers and/or employees and production costs + equipment.

If your productions starts growing you may want to consider setting up a Limited company to keep everything at an arms length. UK is one the countries in the world where it is very easy to setup a company.

However!: You will be doing a lot more paper-work and everything suddenly become more expensive. So expect the additional costs for a UK limited company to be anywhere from £750/year, but most likely around £2,000/year - this cost should maximum be about 2% of your total costs. If it is higher than that, then only do it if you are concerned about liabilities - which may be more cost effective to mitigate through having the right insurance policy.

Do note that most limited companies in the UK cannot get any loans or credit without the personal guarantee of the company director(s) - so read the small print of any contract you sign on behalf of the company.

With regards to HMRC there is nothing that stops you from continuing as a sole trader, whilst also being an employee of your Limited company - you would need to ask an accountant about the best way of doing this (will cost you).
With my last company I held on to my "Schedule D" registration as I was also working for other people. Not sure that exists anymore.

Hope this helps.

All the Best
Mads

@madsvid, London, UK
Check out my other hangouts:
Twitter: @madsvid
http://mads-thinkingoutloud.blogspot.co.uk


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Daniel HattonRe: Freelance Business Advice
by on Jun 29, 2015 at 11:44:34 am

Thank you for your response Mads, very helpful!

Another quick question, would I be able to advertise as both myself and under a business name without having to register them as separate businesses? Obviously using a business name would potentially help in gaining larger clients so it would be good to have the best of both worlds in theory.

Obviously if it grew larger then I would register the business name as a limited company.

http://www.danielhatton.co.uk


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Mads Nybo JørgensenRe: Freelance Business Advice
by on Jun 29, 2015 at 12:07:43 pm

Hey Dan,

You are very welcome.

[Daniel Hatton] "Another quick question, would I be able to advertise as both myself and under a business name without having to register them as separate businesses? Obviously using a business name would potentially help in gaining larger clients so it would be good to have the best of both worlds in theory."

You can call yourself anything you like. However, the correct legal form could be as an example "Daniel Hatton T/A Hatton Video Productions" in case you need to draw up contracts etc.

You can call yourself anything you like, and in some instances you may want to split out the wedding video services, from that of your activism videos, and those using your corporate video services - as two of those entities will never like the third (Choose any two) :-)

What you may NOT do is to call yourself a company director of, or start trading as a fictive non-registered Limited (or plc) company - that will land you in real hot water. It could even be treated in the criminal courts by the UK Department of Business.

However, if you have a great name go ahead and register the web-domains and secure "space" on Social Media Platforms - perfectly legal and normal.

You are right in observing that some bigger companies will only trade with you if you are registered Limited business. However, tendering for their business also involves a mountain of paperwork that in itself puts their business out of reach from a small upstart company - best way to get in with those companies would be through an already established supplier or word of mouth networking.

All the Best
Mads

@madsvid, London, UK
Check out my other hangouts:
Twitter: @madsvid
http://mads-thinkingoutloud.blogspot.co.uk


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Daniel HattonRe: Freelance Business Advice
by on Jun 29, 2015 at 1:47:40 pm

Thanks again Mads, you've been a great help!

http://www.danielhatton.co.uk


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Mads Nybo JørgensenRe: Freelance Business Advice
by on Jun 29, 2015 at 2:15:19 pm

Hey Dan,

You are very welcome - this is what the COW exist for, to help one another.

Incidentally at same time as your last post, I received this invite from the "Business & IP Centre" at the British Library. If you based in London, then this may be the best two hours you can spend on the subject without having to pay anything (+ good networking ground for potential clients looking for videos for their companies :-)).


http://www.bl.uk/bipc/workevents/companieshouseregister.html

All the Best
Mads

@madsvid, London, UK
Check out my other hangouts:
Twitter: @madsvid
http://mads-thinkingoutloud.blogspot.co.uk


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Daniel HattonRe: Freelance Business Advice
by on Jun 30, 2015 at 8:17:21 pm

Cool! I may have to check that out.

Thanks again!

http://www.danielhatton.co.uk


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