Is freelancing for me?
On the face of it, being a freelancer seems like a great idea. You are your own boss, you can work when you want, where you want and even wearing what you want – what could be better?
The reality, of course, is never quite that simple. As a self-employed freelancer the final responsibility rests with you to actually make sure you earn enough money to make a living and keep your business going. Self-employment carries a whole many more responsibilities than you usually encounter as a member of staff working for a company. Though it does carry many great benefits and for some it can be a dream move but it is not necessarily the best option for everybody. We’ve put together this Q&A on some of the most common issues facing freelancers to help you decide whether or not the freelance life is for you.
What does it actually mean to be a freelancer?
A freelancer is a person who is self-employed and who sells a service, for example marketing, copywriting, photography or web development. Most freelancers usually sell their services to multiple clients, although some work primarily for just one client. Once that particular client project ends, they then look for another project to work on. The majority of freelancers tend to have a wider client base and carry out a number of projects simultaneously. With either option the freelancer usually operates on an hourly rate or a day rate basis, agreed with the client in advance.
This infographic compares self-employment to permanent employment. (Source: ons.gov.uk)
There can be many advantages for companies to work with freelance professionals, for example:
Why do other businesses work with freelancers?
- Freelancers can offer a greater degree of flexibility than permanent staff.
- Freelancers do not represent the same long term commitment as permanent staff.
- A freelancer can offer specialist skills or expertise that existing employees might not have.
- Freelancers can be used for one-off projects or smaller tasks that don’t necessarily need the expense of a full time member of staff.
- Most importantly, the client saves money as they are not responsible for paying the freelancer when they are sick or on holiday, aren’t liable for national insurance and won’t get hit with a redundancy bill when the freelancer’s project is finished. They also often don’t have to provide you with a desk, IT equipment and other facilities.
What are the main reasons that people choose to go freelance?
The reasons for choosing to freelance can vary from person to person, but some common motivations are:
- Freedom to be your own boss. This can be a very satisfying way to make a living when done effectively.
- Earning a higher income. Freelancers can usually charge a higher rate of pay than in-house staff doing similar tasks.
- Enjoying the flexibility of managing your own schedule. To a certain extent you get the freedom to choose when you want to work and choose where to work.
- Experiencing more variety to your work. Being involved in different projects means freelance staff can boost their skills in different areas and pick up a wider variety of experience, something which always helps to enhance the CV.
- • Lower tax bills. Freelancers who make the most of advice from professional accountants can take professional advice can save a lot of money and pay much less tax than they would otherwise.
Do I need an office to be a freelancer?
Whether to have a permanent office base is a personal choice that depends on your own working habits and your own individual circumstances. Some freelancers will often end up working on site with a client due to the nature of their work, but this is not always possible or practical and would not usually be the case if you are a freelancer dealing with multiple projects at a time.
However many clients and projects you do have, the reality is that you will need some sort of dedicated space in which to do your work. For many people working for themselves, this can often be a spare bedroom, home office or even the dining room table.
In order to boost your own productivity and help you maintain a healthy work/life balance, it is important that you try and make this as professional an environment as possible. The bare minimum is that you will need the necessary equipment to be able to communicate with clients and get your job done, so this means a decent internet connection and access to a phone line, whether a mobile or a landline.
You will need somewhere to store paperwork, especially as you have a legal responsibility to keep paperwork relating to your professional finances and
Your personal working habits wilearnings. You will also need enough space to be able to work distraction-free and in relative comfort, so a proper desk and a comfortable office chair can really help. Depending on your profession, additional space may be required, such as a darkroom for photographers or enough space for a studio desk for graphics professionals.
How many clients should I take on at a time?l play a big part in choosing where to work. Some need that separation from home to be able to work effectively, so hiring a desk or a small office somewhere can be beneficial, as can working on site with a client. Others like to work in the relative peace and quiet of home, getting away from the daily distractions of a busy office.
There is no simple answer to this question, but the key thing to bear in mind is that you are taking on enough work to be able to make a living, but not taking on too much that it affects the quality of your work.
It may be unsuitable for some lines of work to take on multiple jobs at the same time. For example, a project manager may be contracted for the duration of a project to work for just that client, whereas a freelance designer or copywriter may be balancing work for numerous different clients at once.
Your organisational skills will also come into play here. Some people are better suited to multitasking than others. Relying on one client can cause you problems if the work suddenly dries up, whereas a larger client base means you will usually have work to take on. If you do have more than one client, it is essential that you have a system for staying organised and keeping track of your workload and deadlines.
How do I work out what to charge?
Most freelancers will have a standard hourly rate or a daily rate that is presented to clients in advance, although some may work on a per-project basis whereby a quote is drawn up based on the scale of the project. This can often be preferable for clients as it gives them an upfront fixed fee, rather than being presented with a bill at the end of the project based on time tracked by the freelancer.
How much to charge will depend on your level of skills and experience and is also affected by the market value – finding out what fellow professionals in your field are charging will give you a good idea of what fees you may be able to command.
For setting an hourly rate or a day rate, some relatively simple calculations can help give you a baseline figure to start with as well, estimating how much money you need to earn in a year and then dividing that by the number of chargeable working hours or days you could expect to be doing during that year.
Can I be a freelancer and still keep hold of my day job?
It is a common step for many freelancers to start off freelancing part time. It is a good way to ‘test the water’ to see if there is a demand for your skills and services, without the risk of giving up your regular salary to begin with. There are downsides to this of course, for example clients may not consider you as a serious professional if they cannot get hold of you during normal working hours. You also need to be careful that you are not in breach of the terms of your employment with your day job or you can risk serious sanctions and may even get sacked and lose any goodwill and potential references. Freelancing in your spare time can be done though and it is a common way to start, but there are risks that you need to bear in mind.
If you are serious about making a living as a freelancer then it is important to be honest and upfront about any disadvantages that you could face and give these serious consideration before deciding whether to pursue the freelance life. Here are some common areas of concern:
- Final responsibility for finding work and making sure you have enough of it to earn a living rests with you.
- It is up to you to set your own rates, give quotes and negotiate fees, an area that many freelancers do not have previous experience of doing themselves.
- You have to manage your own finances, including making sure you meet all your legal obligations for taxes, VAT and National Insurance. If moving from an in-house position it is likely that you’ve been able to avoid dealing directly with these issues before.
- Freelancing doesn’t offer the same security as a permanent job. Even if you are very in-demand, there is always a level of uncertainty as to where your next paid assignment is coming from.
- Freelancers will not have the same benefits that you come to expect as an employee, such as holiday pay, sick pay and having your taxes and national insurance paid for you. This means you will need to manage your finances to be able to cover time off when you’re not working and perhaps arrange insurance for times when you may be unable to earn through illness or injury.
- It can be a lonely life if you are working from home or in a one-person office without the company of colleagues, while some people may miss the daily personal contact and hustle and bustle of a traditional workplace.
- It is up to you to make sure that necessary paperwork is filled out correctly and that you pay your taxes correctly and on time. This is where choosing a reliable accountant is a real benefit as they can help you meet your legal responsibilities and help you with the complexities of taxation.
What are the advantages of becoming a freelancer?
There are, of course, plenty of positives to becoming a freelancer and many reasons why people choose this route. Here are some of the most common advantages that you will have working as a freelancer:
- On average, it is not unusual for a freelance worker to be able to charge rates that are more than double what you would earn as a permanent employee. Freelancers charge higher rates because many projects are short term and they have a more flexible work schedule than permanent employees.
- Some freelance workers can command very high rates of pay, especially if they are in demand and have built up a good reputation and offer some specialist skills.
- If you track your time properly then you should be able to get paid for every hour that you work. If you can find the work, then you can also choose to work additional hours to make extra money as and when you need to.
- Often you are able to balance more than one client at the same time, meaning you can increase your income by managing multiple projects.
- There are plenty of tax savings to be made and efficiencies that you can take advantage of, especially if you take professional advice.
- There are further savings to be made on your tax liabilities if you can correctly offset any business expenses, ranging from computer equipment to travel costs.
- Being a freelancer means being able to manage our own time and work schedule. You are effectively your own boss, which can be a fantastic position to be in.
- You have a greater level of independence than employees so it can be more satisfying than working for a company.
- So long as you can find a choice of available work then you have the flexibility to choose your own hours and where to work from.
- You can take extra satisfaction from knowing that your efforts are directly reflected in the amount of money you earn, often not the case when employed directly.
- There are no bosses to check with before booking holiday time. So long as you’ve managed your time and earnings properly, you are free to take as much or as little holiday as you want.
- The freelancer-client relationship is different to that of an employer and employee, you will may well feel like you are given more respect and responsibility.
- Taking on individual projects gives you more scope to agree more favourable conditions and terms that suit you.
- You should also be free to negotiate payment terms that suit you and your own position.
- Successful freelancers can pick and choose their projects, which means you can develop your career in a way that suits you and in a direction in which you would like to go.
Developing your talents
- Flexibility is a key tool for freelancers so the ability to be able to deviate and offer expertise in a range of different areas is something that many freelance workers develop.
- You will most likely work for a range of different clients and companies in different industries, tackling a rich variety of tasks and boosting your unique experience and skills that you can offer.
- You can ‘dip your toe in’ to a range of different sectors and industries to broaden your own knowledge and see if there are any specialisms that you particularly enjoy.
- You will gain a varied insight into different working processes, company structures, workplace cultures and methods.
- As you move from project to project, your base of contacts and your CV are constantly expanding.
- You will have the opportunity to develop a well-known reputation across your own industry, raising your professional profile and helping you to attract future work.
- Being involved in a variety of projects gives you the chance to improve the skills you already have but also to develop new ones.
- You will encounter an interesting range of people, personalities and working styles, aiding your personal as well as professional development.
- You are not limited by a specific company’s approach to work but you have the freedom to develop your career in the way in which you want.
What do I need to become a successful freelancer?
- Be clear on your goals. Set out why you wanted to become a freelancer and what you want to achieve from your new career path, including giving yourself targets and objectives to help you measure your success.
- Leadership skills. You are your own boss but also need the confidence in your abilities to be able to guide your clients and help them make the most of your own skills and experience.
- Decisiveness. You have to make big decisions such as what projects to take on, when to say yes or no to a client and be able to take control of things such as paperwork and chasing clients for overdue payment.
- Motivation. Freelancing is not easy and you need to stay disciplined to be able to manage your time, stay on top of admin and earn enough money. Being able to motivate yourself to find work, complete projects and get work done on time is essential.
What are the next steps to becoming a freelancer?
Once you’ve taken everything into consideration, if you are still keen to start a freelance career then here are some things you should do:
- Ensure there is enough demand for your particular abilities and talents and ideally set up some work before you give up your day job.
- Get advice from specialist agencies and register your details with agencies in your industry who may be able to match you up to available projects.
- Do your sums and ensure you know how much money you need to earn before setting your rates.
- Get professional advice from an accountant who specialises in dealing with freelancers and make sure you are clear on what your responsibilities are for tax and maintaining your accounts and paperwork.
We hope the above information has been useful. For more information Easy Accountancy’s services or to speak to an accountant about your business please call us on 0500 234111 / 01442 275767 or email email@example.com.
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