When should freelancers and contractors hire their first employee?

Hiring employees

As your freelance business expands, you may reach a point where hiring your first employee becomes a consideration, but determining the right time for this decision can be challenging.

While hiring too early might lead to reduced profits and the new employee little work to complete, waiting too long to hire can cause stress, missed deadlines and a reduction in the quality of your work.

Markel Direct explain when it may be time to bring on an extra pair of hands for your growing business. They also explain the key things to consider if you do decide to hire your first employee.

Seven signs that it’s time to hire your first employee

1. Deadlines are missed

If you're finding it difficult to meet your deadlines, it could be a sign that you have taken on too much work. While other factors like illness, personal issues, holidays, or time management challenges can play a role, consistently missing deadlines often indicates that you're stretched too thin.

2. Your workload is causing the quality of your services to suffer

When you're working with paying clients, it's essential to stay on top of the incoming work, whether that means delivering orders promptly or providing efficient service. However, if you're managing everything on your own, you may find yourself struggling to handle the workload while also managing your business admin. This is a strong sign that you’re ready to hire assistance.

3. It doesn’t feel like there are enough hours in the day

If you find yourself regularly working later and later to get everything done, you likely have too much work on your plate. While working late can sometimes be a personal choice, consistently doing so can lead to burnout and other health issues. If you’re working long hours like this, it's time to consider bringing in help.

4. You don’t have time to take holidays

If you find yourself not taking time off or when you do take time off, you’re still working, it’s likely that you are taking on too much. As a self-employed professional, you don’t have a set number of days you need to take off a year or any manager chasing you to use up holiday. Sometimes, this can be a negative thing as when you’re extremely busy you may find yourself sacrificing annual leave. It’s important to remember that taking time off to relax and recharge is essential for our wellbeing and overall quality of life. After all, we don't live just to work—we work to live.  

5. You’re turning down new business opportunities

As a business owner, you likely depend on repeat business from existing clients, but attracting new customers is just as crucial for ongoing revenue. Bringing new clients on board and providing them with high-quality services can help them become loyal, repeat customers in the future.

If you find yourself declining new business opportunities or unable to manage new clients, it might be time to hire additional help. The positive side to this is that the increase in business should help cover the cost of extra salaries. Bringing in new business is essential if you’d like your business to grow.

6. You’re outsourcing work to other freelancers and contractors

Outsourcing work to freelancers can offer short-term benefits for some businesses, but it may not be the most efficient long-term strategy. Using freelancers can be more expensive than hiring full-time employees, so while it may help you manage a temporary increase in workload, relying on freelancers consistently could become costly for your business. If you find yourself contracting out to freelancers more and more frequently, it may be a sign that hiring a full-time employee to handle the workload is a better option.

7. Your customer service has slipped

When you are working hard to keep up with the workload, customer service can start to decline. The quality of your output might suffer, leading to customer dissatisfaction, and you might find you don't have time to address customer issues effectively. You might be taking longer to get back to customers or missing their emails completely. If you begin to see an increase in complaints about delays or the quality of work, it’s another clear sign to consider hiring additional help.

Things to consider when hiring your first employee

Although hiring staff is a significant investment, it can help you manage your workload and give you the flexibility to take more time off or focus on other aspects of the business that you haven't had the opportunity to explore yet. Here are some factors to consider:


When you first bring someone on board, there will be a learning curve, and you'll need to allocate time to train them. This could take a few weeks or even months depending on the complexity of the tasks and the employee’s level of experience.

The recruitment process

During the recruitment and selection process, it’s important to consider data protection and freedom of information laws. If you’re going to have an employee, you should stay informed about human resources and employment laws.

The Business Hub, which IPSE members can access for free, is an excellent resource for employment-related information. From contract templates to work policy documents and induction checklists, the Business Hub has a vast range of guidance put together by legal experts.

If you’re going to be managing the hiring process yourself, creating a thorough job description is crucial. It should outline both the responsibilities of the role and the qualities of the ideal candidate. In addition to listing the necessary skills, emphasize aspects that make the position appealing to strong candidates, such as benefits and work environment. A well-detailed job ad can also guide you in developing interview questions. Properly planning and structuring the interview ensures that you cover all relevant topics.


Don’t forget that, as soon as you hire your first employee, whether on a full-time or part-time basis, you will need to take out employers’ liability insurance (with at least £5 million of cover) to protect them, and your business, while they’re at work. This is a legal requirement when you’re an employer.

Other considerations

In IPSE’s ‘taking on your first employees when you’re self-employed’ guide, they explain key points you should know when becoming an employer, including:

  • Laws and regulations affecting employers
  • Mandatory requirements when advertising and hiring for a role
  • Helping your new employee start work

Enjoy 15% off your business insurance

As an IPSE member, you can enjoy a 15% discount* on business insurance from Markel Direct until 24th May 2024. Get a quote here.

Markel Direct can provide instant cover for your business over ten interest-free installments, helping you spread the cost while your business grows.

*IPSE member discount terms and conditions

The 15% discount will be applied to the net policy premium before insurance premium tax is applied. All quotations provided will be subject to meeting underwriting and claims criteria acceptance. All cover will be subject to full policy terms and conditions which are available upon request. Offer is valid until 24th May 2024.

Markel Direct

IPSE have partnered with Markel Direct, a specialist insurer of contractors, freelancers, self-employed professionals and micro-businesses to offer a 10% discount* on contractor insurance to IPSE members.

Markel Direct

Business Hub

The Business Hub is a resource for self-employed businesses created and maintained by qualified solicitors and business advice experts, including legal templates and extensive guides available 24/7.

Business Hub


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Markel Direct