Disadvantages of becoming a Freelancer
If you are considering becoming a freelancer, then you already know there are a few slight risks in being your own boss and having your own business. Even though the advantages of becoming a Freelancer out way the disadvantages of freelancing its best to know early on in your career some of the obstacles you may be faced with in order not to feel as if the wool has been pulled over your eyes:
- Freelancers are responsible for finding their own work and making sure that the money keeps coming in. Don't panic, we have a great page to help those who are just starting out which details handy hints and tips on finding work, many of which you will have already considered. However, with any luck you will find one or two that will prove useful.
- You will also be responsible for negotiating your own hourly or day rates, which is something that you may not be familiar with in the early days.
- Freelancers are responsible for managing their own finances - for example things like tax, VAT and national insurance contributions - which can be a daunting prospect (obviously a good accountant will take the majority of work off your shoulders - choosing an accountant).
- There is of course less security that you would have as a permanent employee as some people find this difficult to handle until they become established as a freelancer.
- Even on a buoyant market, there is always a level of uncertainty about where the next project is coming from.
- At some point you will have to decide whether to set up a limited company and this can be confusing. To find out more about the pros and cons of each visit: sole trader or limited company - what's best for you.
- There will be paperwork to do and forms to fill in. This can be daunting until you know what you are doing and can find a specialist accountant to help you.
- You will be ultimately responsible for filling out all the paperwork and paying your taxes on time, every time, including self-employment taxes – and you’ll need an accountant to help you sort out your accounts and deal with the tax system.
- Freelancer's don't get the same benefits and ‘perks’ that permanent employees receive.
- There is no sick pay and no holiday pay, so it’s vital you manage your finances to cover for these times.
- Not having traditional ‘colleagues’ can be lonely if you are used to this environment. There are a lot of things you will have to deal with alone, which is why it is important to build up a good support network of experts around you who can help you to manage all aspects of your business effectively.
- ‘Test the water’ before taking the plunge- If you are not sure about becoming a full time freelancer consider becoming a part time freelancer whilst still in a permanent role to decide whether becoming a full time freelancer or sole trader is for you.
- Setting up as a freelancer might seem scary, but it’s actually not that bad and takes a short amount of time! Find out more here at our Setting up as a Sole Trader Freelancer page.
- How will I get consistent work? The truth is, although some recruitment sites can be helpful in finding you quick temporary work, the only person who can find that next job and gain strong future contacts is you. Our Finding Freelance Work section offers handy hints about things like marketing, advertising and networking yourself. Whilst our Industry Advice section also offers guidance on our most popular industry sectors, how to find work and the typical rates of pay.
- Another daunting prospect - VAT and National Insurance. Find out here how they affect you as a freelancer and what you can do to ensure it’s as stress-free as possible: VAT and NI.
- It's true that Freelancer's are responsible for handling their own paperwork and in the first few months you will have numerous questions, but choosing the right accountant means you can have all questions answered the same day with some of the paperwork burden taken away from you. Our clients tell us that once you know how your paperwork should be handled it can then take as little as 15-20 minutes a month to sort out. Click the following link for your free quote if you were to hire Easy Accountancy.
If there is anything else we’ve not covered, you can find it here in our handy Freelancer FAQs section, or for more information or a general chat about your business plans call us on 0500 234111.