Working freelance as your own boss offers wonderful benefits that you can’t get from a typical 9-to-5 job. You set your own schedule, which gives you an astounding amount of flexibility and creative space; you also get to choose the projects you work on. And don’t forget the latitude to work in your pajamas or other casual and comfortable attire! Yet the field also has disadvantages, some of which are well-known enough to discourage people from freelancing in the business.
The truth is, as tough as freelancing can seem, it is absolutely the right choice for some. And those people need guidance as they get started. Many business-related hurdles look huge from a distance, but once you know more about what you’re in for, you’ll find those disadvantages easier to surmount than you’d imagined. At that point, the sky’s the limit! So on your way up, here are five issues to consider when starting your own business.
Overhead Costs and Responsibility
Freelance work is a business. Your business. Which means that in addition to the actual work you’re producing, you also have to run the business — attract clients, schedule projects, procure supplies, track the accounting and bookkeeping, acquire and maintain licenses, and more. The good news is, business licenses are easy to apply for. That’s Step 1.
You can keep your business low-key at first and work from home to reduce administrative costs, which will let you decide just how fancy you want to get with workspace and furnishings. It’s a great opportunity to make a fresh start, too; if you need to go so far as renting a dumpster to undertake a massive cleanout before setting up your office, then get into it! It can feel so good to start your work with a blank slate. Just take it step by step, and you can get the initial setup logistics squared away in no time.
But running the entire show also means not having supervisors or human resources reps around to handle problems for you. If you’re lucky, you might have a client contact or project manager you can confer with on a particular job, but either way, you’re going to take on a lot of responsibilities that you didn’t have before. The solution here is to become more picky about clients and projects you accept as you gain experience — and always, always, create a detailed and specific contract for your projects.
Income, Benefits, and Retirement
Taking the leap from a secure job with benefits, retirement savings, and stable income is among the top concerns for all freelancers. When you write freelance, income can come in varying amounts and at varying times, and health insurance and retirement funds are not automatically provided; you have to seek them out. The good news is that, with the availability of health insurance exchanges, subsidies, and self-employed retirement funds like solo 401(k)s, you have options. You also can seek out private insurance for disability.
As for the income, the place to start is in getting familiar with your own credit record. Once you know where you stand credit-wise, then you can move forward. Revamp your budgeting methods to account for the fact that you’re no longer receiving a weekly or semi-monthly paycheck. And as soon as you can establish one, an emergency fund will provide a cushion and help you feel a lot calmer about the ups and downs of freelancing.
Along with revamping your monthly budget, you’ll have to learn to handle self-employment taxes. Tax software provides options for self-employment, and you can use accounting services, too; the actual preparation isn’t that tough. What you need to really pay attention to are estimated taxes and setting aside money from each payment.
When you get paid, move a certain percentage of the pay into a separate account. Four times a year, before specific deadlines, send the money to the IRS and your state’s tax agency. Try not to fall behind on estimated taxes because it can be difficult to catch up. As long as you get those estimated taxes in, however, you should be fine when the April deadline rolls around. See? That’s a lot easier than people realize.
Sensitive Info and Cybersecurity
You’ll be using your own equipment for the work, so any computers you use will need antivirus programs, firewalls, and the like. Be very careful about opening attachments from new clients until you’re sure the new client is real, and not a scam artist phishing for personal information.
You can also outsource security, so to speak, by using a cloud storage service for business documents, past and present projects, and client information. This offers the added benefits of keeping your files safe and secure while also making them accessible to anyone you choose.
You may also want to get a post office box and a “burner” phone with a number designated for business and client intake. Use the burner phone number on your resumé so that you’re not making your personal phone number available to everyone on the planet. You can give clients your “real” number once you verify that they are who they say they are.
Every freelancer knows that working on your own can be socially isolating, especially if you tend to work odd hours (and don’t we all?). For the very introverted, this can be heaven, but sometimes those who go freelance eventually miss the social aspect of “regular” jobs. The jokes about not leaving the house for days on end have a basis in reality.
Even this problem has a solution, however. Consider utilizing a co-working space; this gives you a ready-made community with networking opportunities built in. Also, consider joining local professional organizations and attending their meetings; anyone can benefit from meeting and conversing with others in their field or a similar situation. Even if you never meet these people outside the meetings, you’ll at least have regular contact with peers at events for the organization.
Working on your own can take getting used to — the instability, the isolation, the responsibility for everything resting on your shoulders. But there are solutions for every problem in the trade. And once you hit your stride, you may find that moving to freelance work is one of the best moves you’ve ever made.