About one-third of U.S. workers are freelancers. Are you ready to join them on the freelance train? There are a few things you should know first.
If you start freelancing, it doesn’t mean you have to quit your day job. It can be a way to supplement your income or invest in your passions without leaving your steady job. However, once you start a freelancing business, it tends to grow. If your client list expands, you might start thinking about going full-time.
Whether you’re just looking for a side gig or hoping to be your own boss permanently, these tips will help you find success and avoid the pitfalls of freelancing.
Your Budget Will Be Tighter
Freelancers don’t necessarily make less money than people in traditional jobs. However, because of the way freelance income works, they often live on tighter budgets for most of the year. Living on a tighter budget doesn’t always mean a lower quality of life. However, it does mean you can no longer spend money as frivolously as you might have before.
You Can Get Insurance
Of course, as most people are aware, you can buy health insurance through the Affordable Care Act, but you can also get life, disability, accident, and other types of insurance, too. The Freelancers Union is a great resource to learn about your options.
Marketing and Development
As a freelancer, your job won’t just involve completing the tasks you accept from clients. You’ll also spend a significant amount of time marketing yourself and developing your skills, so you stay at the top of your game.
Successful freelancers are always thinking about where they can find new clients. They also have backup plans in case a project falls through. They take online classes, design clever business cards, and build a strong online following to better market themselves.
Your Connections Matter
As a freelancer, networking isn’t just a buzzword; it’s a crucial way to find new clients and stay abreast of industry changes.
However, networking doesn’t mean just attending designated events. It can also involve talking to other freelancers at your favorite cafe or telling people at a party a little about what you do. It doesn’t matter where you do it, as long as you make those connections.
You’re Not Limited to One-offs
Freelancing doesn’t always mean working on a single project for each client. Because freelancers have become a more integral part of the workforce, many companies now hire them for ongoing projects.
If you have a handful of clients that offer long-term work, freelancing is much easier because you’re not always searching for that next project. Luckily, those types of clients are quickly becoming more common.
You’ll Pay More Taxes
When you’re self-employed, you have to pay taxes as both an employer and employee. This means nearly one-third of your income might go to taxes. Definitely brush up on estimated quarterly taxes, as you’re likely unfamiliar with these if you’ve always been a W-2 employee prior to freelancing.
As a freelancer, it’s usually wise to set aside at least 30 percent of your annual income for taxes. If your tax bill is lower than expected, the extra funds can serve as a valuable savings account.
Freelancers have to be comfortable sending a contract to any client who doesn’t provide one. Contracts ensure everyone is on the same page, and it gives you something to refer back to if there are any miscommunications.
You can find simple contract templates online for just about any type of project. Make sure you and your client agree on all the terms of the contract before you move forward.
It’s Okay to Fail
Freelancing often sounds like a dream job. You’re your own boss, you set your own schedule, and you choose the projects you want to work on. The truth is, though, it’s not for everyone.
If you give full-time freelancing a try and realize you miss the structure of a regular job, that’s okay! There’s no shame in going back to a regular schedule after spending some time as a freelancer. Any experience you get freelancing will teach you valuable lessons that can help you in a traditional job, too.