Welcome to the realm of the solopreneur! Whether you're fueled by the aspiration to be your own boss or the yearning for greater flexibility, it's important to bear in mind that freelancing brings with it incredible perks (hello, #breakfastinbed) as well as a few challenges. Keep reading to discover everything you need to know about diving into the world of freelancing and what awaits you after taking the plunge.
Freelancing is a form of self-employment where individuals offer their services on a project or contract basis instead of being employed by a company. It provides the flexibility to work independently and handle personal contributions such as taxes, health insurance, and pension. Freelancers can choose to work remotely or from their clients' offices.
Freelancers are highly skilled knowledge workers who excel in specific areas such as design, writing, programming, translation, and project management. They primarily rely on the internet to deliver their work.
First of all, let's get to the point: what exactly is freelancing?
It's a form of self-employment where individuals work independently, offering their services on a contract or project basis, rather than being employed by a company. Freelancers can be hired by companies of any size to complete specific projects or tasks. However, freelancers are responsible for handling their own taxes, health insurance, pension, and other personal contributions. Alongside these responsibilities, freelancers are also in charge of covering their own holiday costs and sick pay.
On the bright side, being self-employed grants them the flexibility to set their own working hours and make arrangements that suit their lifestyle, whether that means working remotely or from their clients' offices. Freelancers come in various forms, usually as knowledgeable professionals who excel in specific areas like design, writing, programming, translation, project management, and more.
It's worth noting that there is another group of self-employed individuals often referred to as 'gig workers' or 'contractors'. This group includes handymen, cleaners, construction workers, drivers, and the like. The primary difference between freelancers and gig workers lies in the former's reliance on the internet to deliver their work.
Wondering how freelancing works?
Establishing yourself as a freelancer is akin to launching your own enterprise. Every country has its own laws and business structures for freelancers. However, the important factors to consider remain the same regardless of your location or work style.
So, are you genuinely interested in pursuing freelancing? If so, here are some critical aspects to ponder upon when establishing yourself as a freelancer:
Opt for an appropriate legal entity. Registering your business with the local government is crucial to commence your freelancing journey officially. Choose your legal entity carefully as it will affect your taxes, personal liability, and paperwork. Don't make this decision lightly.
Manage tax obligations effectively. Once you register your business, you have a legal obligation to file tax returns and pay taxes accordingly. Having a strong invoicing and expense tracking system from the beginning can prevent problems at the end of the fiscal year.
Consider insurance coverage. Freelancers, like employees, deserve the peace of mind that comes with adequate security. It's worth considering investing in health, business, or income insurance specifically designed for freelancers to protect yourself from unforeseen circumstances.
Open a dedicated business account. Although not legally mandatory in many cases, experts often recommend freelancers to open a separate bank account. Separating personal and business finances significantly simplifies expense claims and facilitates profit calculations at year-end.
Cultivate a client base. Establishing a client list before entering the freelance realm ensures a steady flow of work, even during quieter periods. Additionally, word-of-mouth referrals from satisfied clients can be an excellent way to advertise your services.
Create a freelance contract. A freelance contract is an important legal document that you and your clients should sign before starting any new project. Though it may seem mundane at first, this contract serves as your protection against non-payment, liability, and potential legal issues. You can find numerous freelance contract templates online for free, and you can customize them to suit your business needs.
What are the benefits of being a freelancer?
With the increasing number of freelancers every year, many describe the choice to go freelance as a life-altering decision. Here are some commonly mentioned advantages of leaving the typical 9-to-5 job and becoming a freelancer.
As your own boss, you have the freedom to decide when, where, and how you work. You don't require anyone's approval to operate from home, commence work late, or work during travel. You set your own business hours and choose your workspace. You can have the freedom to take time off or work late and sleep in, giving you flexibility in your schedule.
When your enterprise is operating efficiently, you gain the liberty to select the customers you wish to collaborate with. It's an incredible feeling! If you don't connect with a client's personality or dislike their attitude or payment terms, you can prioritize finding new opportunities. This way, you won't always have to deal with challenging clients.
Direct profit retention
Working as a freelancer allows you to directly see the correlation between hard work and your bank account balance. Since you keep all the profits after taxes, it's up to you to decide how to allocate and spend your money.
What are the downsides of being a freelancer?
How do freelancers handle unexpected situations? This brings us to the hurdles of running a freelance business. As a freelancer, it is crucial to be aware of the potential challenges you may encounter. This will allow you to prepare yourself and prevent any disruptions to your freelance work.
You're pretty much on your own
When facing problems with clients, complaints, or unpaid bills, there is no legal or HR assistance available. Handling these issues alone can be exhausting. To minimize the impact of these issues, experts recommend signing a freelance contract with clients or considering freelancer insurance. Joining a freelancers' union can also provide external support and valuable resources.
It can be a lonely journey
Constantly working from home with limited interaction with the outside world can lead to loneliness. Freelancers often find it challenging when facing business obstacles and carrying the burden alone.
To deal with negative feelings, freelancers are choosing co-working spaces with cheap shared workspaces. This helps them avoid feeling alone and keeps their personal and work lives separate. Networking groups help freelancers connect with others, learn, share ideas, and build new business relationships with people of different expertise levels.
Securing consistent monthly income can be difficult unless you secure recurring revenue. Your monthly earnings will depend solely on the amount of work you can complete and the cooperation of your clients!
Freelancing, much like mastering chess or painting, is a skill that improves with practice and refined techniques. If the idea of venturing into freelancing feels intimidating, rest assured, it's a common sentiment.
Instead of waiting for the right moment, prepare well and organize the important steps for a successful start. This includes finding clients, getting insurance, opening a business account, and embracing freelancing. Hard work is necessary to succeed, but once you achieve it, the rewards will be very satisfying!