Going from me plus two subcontractors to an actual payroll, and I keep stalling

Carla Vasquez· Freelance WordPress developer turning into a three-person web agency· Open, Tech & IT Services·Jul 21

I have two subcontractors who between them are close to full time on my work, and I have been telling myself for eight months that this is a flexible arrangement. It is not. One of them asked me in September whether she should take a salaried role somewhere else, which is a fair question and also the sound of a deadline.

What is stopping me is nerve rather than math. The math I have done: her invoices come to about $5,100 a month, and my accountant walked me through payroll taxes, unemployment and a small benefits allowance on top, so call it meaningfully more than what I pay now. I have roughly four months of that in the business account, and two of my five clients are on retainers, which is not the same as guaranteed.

Classification is the other piece. She works the hours I set, on my tooling, only for me. My CPA said the more I control the how and the when, the harder it is to call her a contractor, and that the rules differ by state so I should ask locally.

Do I hire her, or find more work first so she is busy enough to matter?
Did anyone here set a revenue trigger before their first employee, or did you just jump?

Half of me thinks I am ready and half of me thinks I am about to buy myself a boss.

3 replies

Ravi Sharma· Registered·Jul 21

The question you asked at the end is the one I would sit with. You have one person nearly full time and five clients, two on retainer. If she leaves, do you lose delivery capacity you have already sold? If yes, she is not a hiring decision, she is already load-bearing and you are only deciding whether to formalise it.

I am not there yet, but I set myself a rule before I started: I hire when I have turned down work twice for lack of hands, not when I feel busy. Feeling busy is a scheduling problem. Turning down money is a capacity problem.

Carla Vasquez· Open·Jul 22

Load-bearing is the right word and I did not want to use it. I have turned down two site builds since July, one of them a referral from a good client, which is the part that actually stings. So by your rule I am past the trigger and I am just scared of the payroll button.

My real fear is the month a retainer cancels and I still owe someone a salary. Four months of runway sounds fine until it is somebody mortgage money. Did you pick a number of months you wanted in the bank before you would hire?

Dana Kowalski· Open·Jul 22

HR consultant here, so this is my whole day. Two practical things. Write the job before you write the offer - three or four sentences about what she owns and what success looks like in ninety days. People who move from contractor to employee often quietly keep behaving like a contractor because nobody ever told them the scope changed.

Second, run a real payroll system from the first check rather than paying by transfer and sorting it later. Gusto or whatever your accountant likes, it does not matter, but the cleanup on informal first payrolls is expensive and grim. And do give her a date. She asked you a question in September and silence is its own answer.

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