Freelancing is a lifestyle many aspiring writers dream of. They envision ditching the 9-to-5 slog, working wherever there’s a power outlet and good WiFi connection and sipping margaritas between client emails.
However, freelance comes with its own set of challenges and responsibilities that need to be managed effectively. To start, it’s essential to have the right mindset.
Finding Clients
When clients are looking for freelancers to work on a project, they often turn to social media. It’s easy, free, and they can use it from anywhere. Creating a professional profile on a network like LinkedIn is a great way to showcase your work, add testimonials from previous clients, and establish trust with potential new leads. Providing a link to your website is also helpful. If you have a portfolio site that is optimized for your niche, clients are more likely to click on it and see what you have to offer.
You’ll also want to make sure your personal social media accounts don’t have anything embarrassing or objectionable that could prevent a potential client from hiring you. Many clients are notoriously choosy about who they hire, and they may be turned off by a careless post or risque photo. Creating a separate account with your name as “business” can also help you keep your business and personal accounts separate, which is important for tax purposes.
One of the biggest mistakes freelancers make is waiting for their first client to come to them. Getting the word out that you’re available for freelance work is essential. Let your family and friends know you’re looking for work, and ask them to spread the word. They might know of a company that needs a freelance writing or design expert, or they might be able to put you in touch with someone who does.
Consider joining an industry association or other professional group to connect with potential clients. Many people find their first freelance jobs through connections they’ve made in these groups. These organizations can also be a good source of information on current and emerging trends in your niche.
If you’re starting to get serious about freelancing, invest in yourself by taking courses or attending conferences. This will give you an edge over other freelancers who aren’t continuing to learn and improve their skills. It will also help you set yourself up for long-term success by establishing your brand as an expert in your field.
Invoicing
Invoicing is a vital part of any freelance job. It ensures that you are paid for the work that you have completed. It also helps prevent misunderstandings or disputes about the scope of the project and the total cost. In addition to indicating the amount due, your invoice should include a notes section where you can write important information about the payment process. For example, you might need to provide instructions on how to make a wire transfer or a credit card payment.
Freelancers can also use an online invoicing tool to make the process easier. These tools often have many useful features, including recurring invoices, automated late payment reminders, and customizable templates. Some even offer a free trial period, which can help you decide whether the product is right for you.
Using an online invoicing platform can also save you time and money. These platforms allow you to create and send professional-looking invoices in seconds. In addition, they can track payments and record them in your account. Some also automatically add tax to your invoices. This can be helpful for freelancers who work with clients in different states or countries.
Another way to streamline the invoicing process is to set up a payment schedule with each client. This can be done on a biweekly or monthly basis, before the work begins, or after completing certain milestones. This will help you get paid more quickly.
The last thing you want as a freelancer is to wait months to be paid for your services. Unfortunately, this happens quite often. In fact, a study by a major U.S. bank found that only 71% of freelancers are paid promptly and on time. The reason behind this is inefficient invoicing processes.
To avoid this, you should specify a due date at the bottom of your freelance invoice. In addition, you should include a list of all the payment methods that you accept, such as wire transfers, credit cards, and PayPal. You should also provide detailed instructions and a link to a website where the client can pay you.
Taxes
Taxes can be one of the most challenging aspects of freelancing. Since freelancers are considered self-employed, they must pay both income and Social Security taxes, which is different from the way W-2 employees are paid. Freelancers also have to keep careful records of their expenses and income so they can file accurate taxes each year.
Federal income and self-employment taxes make up the majority of the tax burden for freelancers. They must report their earnings on IRS Form 1040 and keep detailed records of their business expenses to determine how much they owe in taxes.
There are a few freelancer tax deductions that can help them reduce their tax bill. For example, they can deduct the cost of their home office. However, they must deduct only the proportion of their home’s utilities that are used for business purposes. Internet services and other business-related costs can also be deducted. Freelancers can also deduct travel expenses. This includes airfare, taxis, car rental fees, hotel rooms and up to 50% of meals. They can also deduct the cost of education that is related to their business, such as a class on gardening skills or a software program that will improve their freelance writing skills.
Another tax deduction that freelancers should consider is the health care cost they pay as individuals. It is important to have a high-quality health insurance plan because it can protect them from unexpected medical bills and other expenses. Fortunately, the Affordable Care Act has made it more affordable for freelancers to get coverage.
Lastly, freelancers should consider setting aside money from every check to cover their estimated taxes. This will prevent them from being hit with a large tax bill at the end of the year. Ideally, freelancers should set aside between 25 and 30% of each of their paychecks.
All of the tips above are essential for freelancers to follow if they want to maximize their income. By following these best practices, they can be sure to be paying the correct amount of taxes and taking advantage of all the tax deductions they are entitled to.
Insurance
While freelancing offers freedom and flexibility, there are a few things that all freelancers should be sure to take care of. One of those is insurance.
The type of insurance you’ll need will depend on your industry and profession, but there are a few policies that are essential for most:
General liability insurance — this can help protect against accidents that may happen in the course of working with clients. It can also help with legal fees if a client sues over a project-related issue.
Business auto insurance — this is important for anyone who uses a vehicle in their work. It covers you against damage to others’ property if you are at fault, and helps cover medical expenses for yourself or your passengers if you’re at fault.
Commercial property insurance — this is another policy that’s important for freelancers, as it can cover any equipment you use for your work. This includes laptops, cameras, tools and more. Personal home or renters insurance may not cover these items, so getting a separate policy is a good idea.
Professional liability insurance — this type of policy is important for freelancers who are providing services like programming, design, writing and accounting. It can help cover any lawsuits you might face over mistakes that cause financial harm to your clients.
Health insurance — if you’re transitioning to freelance from a full-time job, it’s worth checking into whether or not you can stay on your spouse’s current health coverage through COBRA (the Consolidated Omnibus Budget Reconciliation Act) for up to 18 months. If that’s not possible, consider looking into individual plans that cover individuals under their own name.
Some industries or local groups might offer group health insurance, such as a chamber of commerce or a professional organization. These can often be much cheaper than individual plans, and you might be able to choose a plan that’s tailored to your specific needs. Next Insurance, for example, offers plans to fit a variety of different classes of business, including freelancers. Their website also makes it easy to access free certificates of insurance (which can be useful if your clients ask for proof of your coverage), add additional insureds, and file a claim.