Freelancers are becoming an important part of the business world as data from a Labour Force Survey estimates that there are more than 1.91 million freelance workers in the UK alone. In fact, it’s estimated that the number of people switching to self-employment is so big that half of the working population in the UK will be a freelancer by 2020.
With the recent growth in new technology, it is now easier more than ever to become a freelance worker. As Xenios Thrasyvoulou, the founder of PeoplePerHour, says: ‘While freelancing and self-employment used to be an intimidating prospect for many people, offering uncertainty over income and the prospect of a hand-to-mouth existence, this is no longer the case, thanks to changing working patterns and new technologies.’
What is a freelancer, though? A freelancer is someone who is self-employed and offers their services to numerous clients, simultaneously. They are responsible for setting their prices and choosing their target market; essentially, they are their own boss. And even though the word ‘free’ forms part of their name, don’t be fooled into thinking that they provide their services for free – the most successful freelancers can actually earn a lot more than their full-time counterparts.
Freelancers set their own working hours and work on projects of their choice, just like independent contractors. But even though working as a freelancer has several advantages, there are also a number of downsides to being self-employed, too.
So, here’s everything you need to know before you decide to build your own freelance business.
Independent Contractors Agreement for Accountants and Bookeepers
An agreement used by the firm when hiring an independent accountant or bookkeeper.
The Advantages of Freelancing
#1 Create Your Own Schedule
This is definitely one of the best things about being self-employed – other than the pay, of course – especially if you’re not a morning person, for example, and you struggle to wake up early and full of energy. As a freelancer, you’ll be able to skip the panicked morning ritual of getting ready and hopping onto a packed train to travel to work. Instead, you’ll simply be able to create and customise your own schedule and work at the hours you prefer rather than those of a traditional 9-to-5 job. Simply put: you can do whatever works for you!
#2 Work from Anywhere You Are in the World
Do we really need to tell you just how amazing this benefit is? You can work from any country in the entire world or even just stay in your city and still benefit from the freedom of working remotely. Just think: you could reply to emails while sitting at a cosy café or write an article in the park if the weather is nice or even work on some cool designs in a modern co-working space – whatever makes you productive!
#3 Better Earning Potential
Being your own boss, you will have the chance to set and negotiate your own rates with individuals or companies who are interested in hiring your services. Bear in mind that several companies will be willing to offer you a bigger salary for your services than they normally would offer their employees since they won’t also have to pay for your sick days or offer you any other employee perks and benefits. Finally, the more experience and the more updated portfolio you have, the more money you will be able to make.
#4 Choose Your Projects
As a freelancer, you will be able to do only the work that you want to do, which means you will be happier and more satisfied, and this, in turn, will lead to greater results and bigger projects for your professional portfolio. Even though it will be very hard to reject a client or a project, especially at the beginning, whether because they don’t align with your interests or for whatever other reason, you will eventually be in a position to accept the projects that make you feel motivated or you want to be known for. All you need to do is make sure that you are financially able to make these choices before you start declining offers with fat pay checks.
#5 Lower Taxes
It is known that self-employed people tend to pay fewer taxes than employees with the same income, even though at first it might look like freelancers pay more. For example, freelancers have to pay twice as much as employees do for Medicare and Social Security taxes. However, there are several tax benefits available to freelancers, too. For example, if you’re working out of your home office, you will be able to deduct expenses that other employees wouldn’t normally be able to.
Invoice by Independent Contractor
A document used by the independent contractor listing the cost of services, materials and expenses.
The Disadvantages of Freelancing
#1 Managing Your Money
Remember that you won’t have a regular salary to help you with your everyday expenses and that you’ll also have to fill out all the tax and national insurance papers – something that employers would normally do for you. It is also crucial to learn how to manage your savings because in the event you get sick, for example, there’ll be no sick leave benefits for you to enjoy. You yourself will be solely responsible for your expenses as well as your income.
In addition, you need to take care of all your bookkeeping duties. You have to keep track of everything: planning your work and time, billing your clients, paying your phone bills, ordering office supplies and even claiming your tax deductions on time. It can be a time-consuming process – thankfully, however, there are several professional companies offering professional and expert advice on all your financial issues.
#2 Your Work-Life Balance Can Suffer
When you’re working for yourself and at your home office, it is often hard to distinguish a clear line between your personal life and work, and this can definitely affect your overall happiness and wellbeing. As a successful freelancer, you need to be able to draw a line between the two and not let work take over your life and sanity.
#3 A Never-Ending Race to the Next Job
You never have the time to rest. From the time you land your first big gig until you deliver the finished product to the client, you’ll feel like you’re on top of the world. However, this feeling can easily fade away when you find yourself out of work and fruitlessly looking for your next client. You have to network, market yourself and make useful contacts in your industry, and this can become emotionally and physically exhausting, especially as you grow older and have more responsibilities.
#4 No Health or Retirement Benefits
If you decide to work on your own, remember that you won’t get any health insurance or retirement contributions. However, before you start panicking, take a second and run the numbers to see how much it would actually cost you to replace existing benefits. Freelancers tend to earn more money for a project than they would if they were a full-time employee. So, yes, maybe you won’t have an employer paying for your benefits but how much will you have to pay for your own health insurance coverage? Are these benefits so valuable that you are willing to give up working for yourself?
#5 It Can Get Lonely
Being a freelancer can be very rewarding as well as mentally challenging at times. If you decide to work from home without interacting with people for 8 to 10 hours straight, it can get a little lonely. This is especially true if you are used to working in a busy office setting. However, you can avoid this by visiting a co-working space or a local café where freelancers hang out from time to time – you will be in the company of like-minded individuals who share the same issues and goals with you. And who knows? You might even end up collaborating or working with others at the end of the day and produce great projects.
Independent Contractor Agreement for Programming Services
An Agreement made between a Programmer (the Independent Contractor) and a Developer (the client) that sets out the terms and conditions of their relationship including ownership and use of proprietary property.
Long-Term vs Short-Term Contracts
One of the biggest challenges all freelancers may face is deciding between short-term and long-term contracts. Here are just a couple things you should be aware of before deciding on the length of your contract.
Short-term contracts are very common for most freelancers. However, the problem with these contracts is that they usually last for just a day or week – and as soon as you’ve completed your work, you’ll have to start looking for your next gig. This means that there is usually some downtime between projects – without pay – and you could end up spending a lot of time searching for new clients. Therefore, it would be wise to request a better payment for these projects to make up for your ‘expenses’.
Even though long-term contracts are rarer, they are usually more desirable for most freelancers. However, a freelancer must always be extremely careful when considering a long-term project because if a client is telling you exactly how they want their task accomplished, you could easily be categorised as an employee instead of a freelancer (independent contractor).
Here is everything you need to know about freelancing and how to succeed as your own boss. Even though this industry may sound a bit intimidating at first, with hard work and a determined mind set, you can become a successful self-employed professional and enjoy a great work-life balance – and get paid for doing something you love.
Use this guide as your starting point toward making your dull routine into a fulfilling and exciting life and career. Meanwhile, if you’ve got anything you’d like to add, let us know in the comments section below!