• N I K A N I K A •

PERSONAL BLOG OF A CREATIVE FREELANCER

LONDON - Night Tales Bar

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NT's

Night Tales or NT's is a new neighbourhood bar and cafe in London Fields, Hackney. NT’s is an impressive, open plan New York loft style warehouse with gritty urban views looking out onto the railway tracks. The interior is cosy and I love the massive amounts of plants inside the space. The food is done by Morty & Bobs, who serve delicious grilled cheese toasties and salads for lunch. This is an excellent hangout in the center of Hackney and with a bit of luck, you will be treated on a spectacular sunset.

LONDON - Flat Planet

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Flat Planet

I found myself super early on a Monday in Soho, London, waiting for an appointment at 10.30.. so I was looking for a place to work. Luckily coffee shop Flat Planet opens its doors at 8am. The interior is cosy and the atmosphere is relaxed and laid back. Downstairs they have more spaces where you can work quietly and the staff will just leave you be. I didn't have any of their flatbread, since I was there only for breakfast, but I might go back sometime and try it out. 

LIMITED, SOLE TRADE OR UMBRELLA? WHAT TO know WHEN GOING FREELANCE.

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In the UK there are three different ways to work as a freelancer or contractor; As a Sole Trader, through an Umbrella Company or as a Limited Company. What the best option for you is, depends on your situation. In this blog post I will try to explain in a simple way the differences between them. I also made a list of the Pros and Cons on each one of them. 

Sole Trader

This is a small business owned by one person. A Sole Trader takes on all the responsibility for running the business and is allowed to keep the profits after Tax is paid, but... she is also fully liable for any losses the business makes! Setting yourself up as a Sole Trader is very simple, you only have to register your company and you can start trading straight away. Being a Sole Trader also allows you to hire staff, because even though it is run by one individual, it doesn't mean that you have to work alone. 

Umbrella company

An Umbrella Company basically acts as your employer. You submit the amount of hours you worked online and they handle the rest. They invoice the client and pay you after the deduction of Tax, National Insurance, any expenses you made and of course.. their own fee. This way you don't have to deal with the paperwork. You enjoy the freelance lifestyle, but technically you are an employee of the Umbrella Company.

Limited company

When you set up a Limited Company you become the Director of your own business. You can also set up a company with multiple people / shareholders. There is quite a bit of paper work that goes into it, but in this way your company is responsible for its own legal and financial decisions. It's finances are separated from your personal finances and your company pays you a salary. Any profit that you make is owned by the company and Corporation Tax has to be paid on this. Whatever is left can be withdrawn from the business by the Director as Dividends. And this is more tax-efficient! 


pros and cons


SOLE TRADE

Pros

  • Any profit after tax is yours to keep
  • You have control over your own business
  • Less paperwork
  • Accountants charge less for sole traders
  • Maximum privacy

Cons

  • You are fully liable for any debt or losses
  • No distinction between private and business assets
  • Scalability is limited
  • Difficult to get large contracts as it has less professional credibility 
  • Limited lifespan 

UMBRELLA

Pros

  • Very easy to use
  • No paperwork or dealing with HMRC
  • Ideal for when you are in between permanent jobs or unsure if freelancing is for you
  • The ability to claim back expenses such as travel, meals, tools etc.

Cons 

  • You take less money home as there are greater tax charges
  • Low status. Clients might think you are not as established or experienced
  • Less control

LIMITED

Pros

  • Most tax-efficient
  • Claim a wide range of expenses
  • No personal risk
  • High status 
  • Able to set up a pension scheme
  • Complete control of your business
  • Protection of company name

Cons

  • The paperwork and administration
  • Less privacy. Accounts and other details are held on public records 
  • Accountancy fees are high
  • Paying Corporation Tax

When I started working as a contractor and freelancer, I was advised to set up as a Limited Company. It is a bit more paperwork and it took me some time to get my head around dividends, taxes and expenses. But once I had it all going, it is easy! Also being the 'Director' of my your company made me feel great and it gave me a confidence boost. It separated me as a person from my work and it became easier to negotiate with clients. Because now the decisions I was making, wouldn't impact just me but also my business! 

Freelancer, Contractor or Consultant. What is the difference?

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Before I moved to London 5 years ago I wasn't familiar with the terms 'Contractor' or 'Recruiter'. In the Netherlands we only use the words 'Freelancer' or 'ZZP-er' for someone that works for herself and as far as I know there are not that many recruiting agencies in Amsterdam. But also in London I sometimes have to explain the differences between being a Freelancer, Contractor or Consultant. Because even though the term 'Freelancer' is commonly used for all three, the way of working is quite different. 

FREELANCER

Freelancers are people who have their own client base and most of the time they charge by the hour. They usually work from home or from a rented desk somewhere in a hip co-working space. A Freelancer is very flexible and works for multiple clients at the same time. They are personally responsible for getting in enough business to pay the bills, so they have to be good at managing client relationships (and chase payments!).

CONTRACTOR

A Contractor works for one client at the time and usually at the client's office on a fixed-term contract. These clients are the bigger advertising, branding or design agencies. Contractors usually charges per day and have good over-time payment rules set up. Contractors work directly with the client or they get hired via recruitment agencies. A Recruiter is a person or an organisation that links Contractors to their Clients. The Recruiter handles the contract between the two and also deals with the payments.

CONSULTANT

A Consultant is a more 'experienced professional' and is specialised in a certain subject. Where the Freelancer and the Contractor are executers of a set out job with a clear result, the Consultant has a more conceptual and theory based approach. They work on an advisory level and are usually not accountable for the outcome. Because of their years of experiences and their knowledge of their field, they can charge a very high fee.


At this moment I'm combining contracting jobs with personal freelance jobs. Because contracting is my bread and butter, I'm able to work for friends and family for free or a very low fee (a bottle of wine mostly :). In the future I would love to work as a design consultant, but I feel that I need to have a few more years of experience, before I would feel comfortable offering this service. Also teacher is something that I would definitely want to be doing in the future!

MY Future Is Freelance

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'I'll work full-time for an agency for five years and then I'll go freelance.' That is what I told myself when I got a job as a designer at an advertising agency in London. But it took me less then a year to realise that I wasn't even going to last two. It just felt unnatural to me to be inside an office, day in day out, to give up evenings and weekends and then only be allowed to have a maximum 28 days off a year. So after only 18 months I quit my job and went freelance. And I am not the only one that is making this decision.

MORE THEN 40% OF THE WORKFORCE IN THE CREATIVE INDUSTRY IS FREELANCE.

The percentage of self-employment will only continue to grow in the next years as we, the so called Millennials or Generation Y, will take up 75% of the workforce by 2025. Our generation wants more out of their life than a steady income or long-term career! We want freedom, experiences, creativity and collaboration. Nowadays people are not loyal to a company any more, but instead they are loyal to their own art en skill. And with todays society and the technology at hand, it is easier then ever to start working for yourself or create your own business.

But even though it might be easier, it is still a scary thing to do. How to set up your own business is something we never learned in art school. No lessons were given in handling clients, paying taxes or how to make sure you end up with a pension. So when I went freelance, I did a lot of research and it wasn't easy to find trustworthy information. There are blogs and websites out there that give information on these topics, but none that spoke to me as a creative person. So then I got the idea.. why don't I start the blogging about my experiences? Share the things I have learned along the way and hopefully be helpful to other creatives out there.