Is freelancing for me?

On the face of it, being a freelancer seems like a great idea. Choose your own hours, work in your pyjamas, take long lunches . . . what could be better? But of course, in reality, it’s not quite like that! As a freelancer you are 100% responsible for earning enough money to keep yourself afloat – and for all of the other responsibilities that come with being self employed. Some people find it easy to make the transition, but others do not. This Q&A page will help you to decide where you fit, and whether freelancing is for you.

What exactly is a freelancer?
A freelancer is someone who is self employed and who sells a service – for example marketing, copywriting, photography, web development etc. - usually to multiple clients. Some freelancer's work for just one client, and then when that project ends they look for another, but most tend to have a wider client base and carry out a number of projects simultaneously. With either option the freelancer usual operates on a hourly rate or day rate basis which is agreed upon.

Why do other businesses choose to work with freelancer's?
There are many reasons why companies like to use freelancer's. For example:

• Freelancer's are usually more flexible over hours than permanent staff
• Freelancer's are easier to ‘hire and fire’ and are not a long term commitment
• Freelancer's provide skills that the in-house team may not have
• Freelancer's can complete one-off or small, regular tasks that do not require a full time employee

Most importantly, the client saves money as they do not have to pay sick pay, holiday pay, redundancy pay and employer's national insurance, nor do they necessarily have to provide you with a desk, IT equipment and other facilities.

What are the main reason that people choose to freelance?
Every freelancer has their own reasons for choosing this option. Some of the most common are:

• Being your own boss - which can be extremely enjoyable and satisfying.
• Making more money - freelancers are usually paid a higher rate than full time employees who carry out a similar role.
• Having freedom over working hours - as a freelancer you can, to varying degrees, choose when and where to work, when to take holidays and so on.
• Experiencing a wide variety of work - by moving from project to project or working on multiple projects at the same time, freelancers can develop very varied experience and an impressive CV.
• Paying less tax - freelancers who take professional advice can also greatly reduce the amount of tax they pay.

Do I have to have an office to work as a freelancer?
This is really up to you in terms of how you want to run your business. Some freelancers will always aim to work on customer site – and this usually work best if you are handling one project at a time. However, if you are working for multiple clients, then realistically you will need your own office. This does not have to be anything fancy. Many freelancers operate from a spare bedroom or even the dining table. 

The key thing is that you have the right equipment and the ability to communicate with your clients via phone and email. It is also useful to have enough space to store paperwork and so on properly, as a self employed person will have certain legal requirements in terms of what information they need to retain and have access to. In addition, depending on what services you offer, you may of course need additional space that is relevant – for example a darkroom if you’re a photographer or studio space if you’re a graphic designer.

Personal preference is a big factor here. Some freelancers are more comfortable, and work better, in the familiar environment of an office – and so prefer to work on client site. Others however, are best off working alone and cannot wait to escape the day to day hustle and bustle of an office environment. There are no hard and fast rules either way.

Is it better to work for one client at a time, or many?
Again, this is personal choice. Some people thrive on multi-tasking and some don't. In addition, some jobs naturally lend themselves to this approach – for example a freelance project manager who is working on client site – vs a copywriter who may have 10 or more jobs on the go at once. The upside of having many different clients who use your services at different times is that there is always a back-up should one client ‘go quiet’ or disappear altogether – so having many clients does help you to spread your risk.

How should I charge? And how much?
Generally freelancers operate on a hourly or daily rate and this can be determined by looking at what your competitors are charging, and what you think you’re worth based on your level of skill and experience. As to a charging structure, some freelancers opt for quoting a fixed price for a piece of work – and this is usually the client’s preference – whereas others will track time used over maybe a week or a month and then charge accordingly. This second approach usually works better with clients who know you well and trust you not to do more hours than agreed or inflate the time used to make more money. How and what you charge will also depend on the type of service you are offering, as this varies from industry to industry.

Can I keep my day job to start with?
Many freelancers opt to start out by freelancing part time. This can be a good low-risk route, but there are some downsides. Often a potential client will not take you seriously and will become frustrated if they cannot get hold of you during normal working hours. Bottom line is, yes it can be done, but there are risks.

What are the disadvantages of becoming a freelancer?
There are a few, and only you will know whether these are challenges you can handle. These are some of the most common ones which concern people when thinking about freelancing:

• You will be responsible for finding your own work and making sure that the money keeps coming in.
• You will be responsible for negotiating your own hourly or day rates, which is something that you may not be familiar with in the early days.
• Freelancer's are responsible for managing their own finances - for example things like tax, VAT and national insurance contributions - which can be a daunting prospect.
• There is less security than you would have as a permanent employee.
• 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.
• Even on a buoyant market, there is always a level of uncertainty about where the next project is coming from.
• Not having traditional ‘colleagues’ can be lonely if you are used to this environment. There are other 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.
• 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.

What are the advantages of becoming a freelancer?
On the more positive side, there are many, many advantages to becoming a freelancer – and these are just a few:

Financial

• An average freelancer’s rate can easily be double that of a full time employee, or even more.
• Freelancers are paid higher rates due to the flexible nature of the relationship and the fact that many projects can be relatively short-term, although this isn't always the case, as some contracts/assignments can last for years.
• Depending on your individual skills and on the state of the industry in which you work (or the market in general) you can command very high rates of pay.
• As a freelancer, you are paid for every hour that you work, as well as having the opportunity to work extra hours at very good rates.
• You can also work for multiple clients at the same time, on many different projects, which can also increase your pay.
• If you take professional advice you can, as a freelancer, generally reduce your tax bill significantly.
• You can offset all of your business expenses against your income to further reduce your tax bill.

Flexibility

• As a freelancer you are, in effect, your own boss - something which can be very satisfying and extremely enjoyable!
• Freelancers have the ability to be far more independent than permanent employees.
• You have the freedom to work when you choose, where you choose (depending on available projects of course) and for however long you like.
• There is a direct link between work effort and reward which sometimes doesn't exist as an employee.
• Freelancers can take as much or as little holiday as they prefer - you sign your own holiday form.
• The companies you work for are not your employers, but are instead your clients, which puts a whole different flavour on the relationship - and you will be treated more as an equal and less as a member of staff.
• Freelance projects will give you much more flexibility when it comes to agreeing conditions and terms.
• As a freelancer you also have more flexibility over the payment terms that you negotiate.
• You have the opportunity to develop your career in a way that suits your personal circumstances at any given time.

Skill development

• As a freelancer you will naturally work in different roles and for many different companies, and this will help you build up a unique range of skills and experience.
• Working as a freelancer gives you the opportunity to test out other industry sectors to see if you can widen your experience.
• Freelancers tend to gain a really good insight into different company cultures, processes, operations and structures.
• Working in many different companies gives you the ability to build up a wide-ranging CV and to establish an extensive list of reference contacts.
• A good freelancer will become known within their own field for their excellent work and you may even find that your services become sought-after, rather than you having to pitch for new projects or contracts all the time.
• Carrying out project work in different organisations and environments gives a freelancer the opportunity to develop existing skills and to learn new ones.
• As a freelancer you will be exposed to many different styles of working, not only in relation to your peers, but also in relation to your clients and your suppliers. This helps you to develop as an individual in more ways than just your core skill set.
• Freelancer's often come into new businesses as the ‘industry expert’, which is not only a nice position to be in, it also adds to your credibility as an industry professional and widens your experience further.
• Working for different organisations gives you the ability to advance your career and knowledge without being limited by a single employer’s processes, procedures or business ethos.

What qualities make a successful freelancer?

• Know what you want - a successful freelancer generally knows what they want to achieve from being in business. Whether it is to achieve a certain lifestyle, or hit a certain financial target within a specified time scale, you need to set objectives to help you measure success.

• Be comfortable with leadership - someone who feels comfortable in a leadership role will usually make a good freelancer, as not only will they be their own boss, they may also have to ‘guide and direct’ their clients as and where appropriate.

• Be decisive – as your own boss, it will be down to you to make the decisions to ensure your business is a success. Nobody else will ensure important forms are filled in or that clients are chased for overdue payments.

• Stay self-motivated - with no-one to make you get up in the morning, or stay late to finish a project, it’s very easy to let time scales ‘drift’. In effect, your clients become your bosses and you need to treat them as such.

What next?
If freelancing is still attractive to you, here are some logical ‘next steps’:

• Don't give up your day job until you are sure that there is a market for your skills as a freelancer.
• Talk to specialist freelance agencies in your industry to see what kind of contracts might be available, whether you are suitable for them and, if so, how much you could earn.
• Do the math's and make sure that you can earn enough to live on – based on the number of hours a week you can work and the average rates you can realistically charge.
• Talk to a specialist accountant to find out exactly what your liabilities will be and how much paperwork will be involved.

We hope the above information has been useful. For more information or a general chat about business plans call us on 0500 234111 / 01442 275767.

You may also find our other Free Business Guides useful:

• How to advertise your business
• How to market your company for (almost) free!
• What will an accountant do for me? 
• How to be number one on Google
• Benefits of an Accountant 
• Do I need an accountant as a Freelancer?
• Top Tips to getting more Customers 
• Creating a website for your business
• Choosing and Registering a company name
• Do I need a business plan?
• Choosing a small business accountant