What You Need to Worry about When You Are a FreelancerNov 25, 2017
Being a freelancer comes with numerous benefits, including flexibility, being your own boss and working at your own pace. However, it also brings great challenges and important considerations that you need to have in mind before setting off into the world of freelancing.
You need to know the basics
Before starting your freelance career, you need to learn the basics of the trade. Freelancing can be chaoticat first for a newbie who has just started working on their own. Freelancing market has become fiercely competitive, so entering it prepared is of the utmost importance. The first thing you need to decide is what type of freelancer you want to be. Here’s the most common description of freelancers:
- Independent contractors do contract work per project. When you think of the term “freelancer”, you usually imagine independent contractors.
- Freelance business owners own freelancing businesses and hire other freelancers.
- Moonlighters have full-time jobs and freelance projects on the side.
- Diversified workers have part-time jobs and freelance projects.
- Temporary workers have contracts for a predetermined period of time.
You should consider both benefits and drawbacks
As already mentioned, freelancing comes with both benefits and drawbacks you need to consider carefully to see whether this is the right choice for you. When it comes to benefits, flexible schedule and fewer working hours are some of the main reasons why people decide to become freelancers. You can make your own schedule, decide how much you will work and when you’re ready to take up new projects. You also have an opportunity to choose where you want to work from – a home office, coffee shops and co-working spaces are all viable options. Finally, you can save a lot of money by deducting your additional expenses on your taxes.
As for drawbacks, financial instability and the lack of job security are the major ones. You often don’t know how much work you’ll have the following month. Furthermore, you’ll spend a lot of time searching for jobs and communicating with your clients without being paid for that effort.
You need to set up your business properly
If you’re planning to build a long-term freelancing career, you need to set up your business properly. This typically means formally registering your business and obtaining all the necessary licenses. You should also make sure that you have contracts for each of your projects, stating the general terms of employment and payment. This way, you will ensure that everything regarding the project is clearly specified and compliant with a particular contract. Finally, you can find possible organisations to join, like freelancers’ unions, that might provide you with additional benefits, such as health insurance. Keep in mind that you can get your health insurance through your parents, spouse or full-time job. If none of these options are possible, you should apply for a state health care plan.
You need to learn how to write great proposals
Building your reputation and finding clients will be more challenging at first, so you need to do everything in your power to get the job. Great proposals are one of the crucial factors that will appeal to possible clients. In your proposals, you need to address your clients’ needs and offer possible solutions and ideas. You also need to sell yourself and show that you possess knowledge and skills that will contribute to their business.
You need to price your work appropriately
Pricing considerations are an important concern for freelancers, especially for beginners. Beginners need to set a lower pricing rate at first and then gradually increase it as their reputation grows. When setting your rate, you can either base it on the cost of living, market pricing (how much others in the field price their work) or the value of the work to a client. You also need to decide whether you’ll set up an hourly rate or a project-based price. Both options come with advantages and disadvantages that you need to consider before making the decision.
You must keep your finances in order
Taking care of your finances properly is one of the crucial aspects of being a freelancer. This entails keeping a record of your income and controlling your expenses to fit your budget. You also need to find out what taxes you need to pay.
One of the greatest financial concerns is building up your retirement savings. If you’re working solely as a freelancer, you should determine how much you’ll set aside every month or find an appropriate retirement plan that will meet your needs. You should also take a reliable age pension income test to determine whether you’re eligible for a pension depending on your income and savings. This way, you’ll have a better insight into your financial status and create an appropriate plan that will ensure your financial stability.
By educating yourself about the freelancing market, expanding your knowledge and mastering your skills, you’ll be able to reap all the benefits of being a freelancer and eliminate the risks.
*** This Guest Post was from Isabel William ***
Isabel F. William Body & Mind Balance Consultant. Lover of literature and philosophy, every day runner, and Tai chi master. Believing that to travel sometimes is just enough to enjoy a really good book, smooth jazz and a cup of coffee.
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