Maybe you’ve dabbled in freelancing and thought, “I could get used to being the boss.” Or you’re sick of your current career, dread the 9-to-5 slog, and would love to set your own hours doing something you love.
Choosing to freelance is more than setting your hours and raking in cash. There are many aspects that aspiring freelancers (or those just dreaming about it) don’t think about.
And there are plenty of aspects that freelancers never even realized were part of the gig.
That’s why we’ve put together this guide to help you find freelance success.
Becoming a Successful Freelancer
Don’t Quit Your Day Job
It’s easy to wake up one day and think “Done!” and quit your job that same day (in an epic fashion, no less). But that may not be wise, no matter how satisfying. Being an employee does have its advantages (like health insurance and a paycheck).
Instead of quitting your job, try taking on a freelance side project or two. Any successful freelancer will tell you that it’s best to keep your day job while you give freelancing a test run. It gives you time to learn about the life of an independent contractor, adjust your long-term plans, and prepare yourself for the full-time freelancer life.
During your test run, it’s a good idea to save your freelance earnings until you have an amount that equals at least three months of your day job’s salary. That gives you a safety net to tap while you build your client base.
Build a Fellow Freelancer Network
While building your freelance business, you may find yourself lonely at times. Gone are the daily chats and lunches with coworkers, meetings with your team, and other social events that you are accustomed to.
One of the quickest ways to foil a new venture is to get depressed because you’re suddenly alone all the time. Find freelancers or small businesses that offer similar or complementary services or products to what you offer.
Not only does this give you “colleagues” you can bounce ideas off of, but also a much-needed social boost when you need it. Many freelancers don’t realize how isolating solopreneur life can be until they are on their own.
Fortunately, with the rise of coworking spaces, the freelancing doesn’t have to resemble a lone person stranded on an island. Even one or two days a month at a coworking space can help ease the solitude that can accompany freelancer life.
Chief Cook and Bottle Washer
One thing that many freelancers overlook is that running your own business doesn’t just mean you’re the boss. It also means you’re the director of new business, account manager, customer service rep, bookkeeper, accountant, IT department, social media manager, and janitor.
If you want to be a successful freelancer, you can’t just provide a great service or create the next big thing and expect to become an overnight success. You also have to find the customers that want your product or service. That means you’ve got to prospect, cold-call, market, and, yes, network.
Even if you do find yourself rolling in dough, that money isn’t free. Uncle Sam wants his share, and he wants it every couple of months. You need to make sure you’re paying the right amount of taxes on the right day. Otherwise, you may be in for an audit one day.
You can outsource these jobs. You can hire a marketing company to help you find clients, and you can always hire a bookkeeper and accountant to help with financial tasks. But, before you start freelancing, you need to know what your strengths and weaknesses are and how you will deal with all the situations that will inevitably arise.
Tax Tips for Freelancers
When you’re a freelancer, you no longer get one W-2 from one employer. Working for yourself means multiple streams of income, multiple streams of paperwork, and staying on top of taxes.
Beyond the advice of “get and stay organized,” you need to be aware of a few crucial things about freelancers and taxes.
Save it all.
The last thing you want to do is declutter all of your receipts. Save everything. It doesn’t matter if it’s in a shoebox or a fancy online system, keep them for at least seven years. Why seven? The IRS has six years to start an audit after you file a tax return and you’ll need those receipts to back you up. And yes, you need the actual receipt, not a copy of the receipt or a line in your ledger.
Track your income.
Just like you’ll want to keep track of all your expenses, you’ll need to keep track of all your income.
Because multiple clients pay you (instead of one employer), you need a way to make sure everything is reported correctly to Uncle Sam. Any company that pays you more than $600 is required to send you a 1099 form.
To ensure you receive 1099, send a W-9 form to each of your clients. The W-9 form has your name (or business name), your tax ID number, and some information about your tax rate.
Pay those taxes.
Seeing all those zeros at the end of a check is great—until you realize that in addition to your regular income taxes, you also have to pay the self-employment tax. Successful freelancers know this.
The self-employment tax is what your former employer took out of your paycheck to cover Social Security and Medicare taxes. Since you’re now the employer and employee, it’s up to you to pay it regularly.
And what is “regularly paying your taxes”? Well, that means quarterly, although “quarterly” doesn’t mean “every three months.” Sigh. Bureaucracy.
Estimated tax payments are due to the IRS on April 15, June 15, September 15, and January 15. Each due date covers a specific calendar period. For example, June 15 covers the months of April 1 through May 31. And don’t forget that you also have to file your regular tax return on April 15.
But taxes aren’t exact.
The taxes you pay aren’t the final word on your tax payments. These quarterly payments are “estimated payments.”
You estimate what you’re going to owe the government this year based on what you paid in income taxes last year. That number is divided by four, and that’s what you pay to the government on the due dates.
On April 15, you complete your tax return and figure out if you over- or underpaid, then proceed accordingly. The tax you pay that year is used to estimate your payments for the next year.
Watch the deductions.
While we’re talking taxes, freelancers can deduct things they can’t deduct as W-2 employees. However, those deductions are subject to many rules.
For example, as a freelancer, you can claim the home office deduction. However, that home office has to be used exclusively for your work. So, if your “office” is the kitchen table and that’s where people eat breakfast, you can’t deduct that space as your home office.
You can deduct things like travel, meals, certification classes, and even some office supplies. But, the IRS has some strict (and odd) rules. Make sure you talk to a trusted accountant before you deduct anything from your taxes.
Health Insurance
Health insurance is a “must-have” item for every freelancer. However, getting it isn’t always easy.
If you’ve got a spouse, you can likely get your health insurance through their plan. But, if you’re single, you’ve got to find health insurance as a freelancer somewhere else
No matter where you buy your health insurance, as a freelancer, you are allowed to deduct your healthcare premiums for medical, dental, and some long-term care insurance. However, you cannot deduct the full amount for all of your different types of insurance, and, again, the IRS has many rules and regulations regarding the deductions.
Getting Paid
One important but often overlooked tip includes sending all of your clients a contract or other type of formal, written agreement before you start work. And that includes receiving signed copies back from your client. If your client doesn’t offer a contract upfront, you should request one (or have a contract ready to go).
Reputable clients will have no problems signing or providing a contract. Less than reputable clients may balk. Regardless, successful freelancers will be prepared whether a potential client has a contract or not. A contract protects both you and your client, so anyone not willing to sign one is a client you should consider walking away from. It’s better to leave potential money on the table than do all the work and never get paid.
Invoicing clients is the best way to make sure you get paid. And using invoicing software can make your life easy. Most programs let you upload a custom logo and even create multiple templates. You can also set up recurring billing for clients that pay for the same thing every month.
These programs also make it easy to resend invoices, cancel them, and remind your clients that they need to pay. Each program has pros and cons, but these programs can be business savers, helping you keep track of who owes what and when.
You’ve Got to Network
Many freelancers and self-employed workers rely on one big core client or “anchor client” to provide the bulk of their income. But contract-based gig work is notorious for income instability. You may have money rolling in one month, and the next month finds yourself wondering how you’ll pay the bills.
By depending too much on one cow to supply most or all of the milk, you could suddenly find yourself left high and dry, with no go-to source to replace your lost income stream. This can be hard to remember during the freelancer feast phase when you have more projects than you can reasonably manage.
But since most every feast will eventually come to an end, you’ll want to be prepared for your current heavy workload to fluctuate—possibly sooner than you think. Instead of resting on your laurels during a feast phase, this is the time to keep pushing to identify potential contract jobs and land new customers.
And that means networking.
Connect with your contacts.
A successful freelancer knows that a strong business is built on not only what you know, but who you know. And one of the best sources of finding fresh clients is by starting with those you already know.
So reach out to former bosses and colleagues—or even friends and family—to let them know that you’re freelancing. After all, the people who like you can be your biggest (and most enthusiastic!) advocates and spread the word about your business.
Get social.
In today’s marketplace, it’s important to make your presence—and your business—known. That’s why the best starting place is online, optimizing your social media profiles for freelance work.
Update your LinkedIn profile with your new freelancing status, and establish a Twitter account and Facebook page for your business, too. Depending on the type of work you do, it may make sense to have a Pinterest page and Instagram account as well.
Once you’ve established your online presence, you need to update your accounts—and often. Potential clients will gauge how serious you are as a freelancer—and if they are going to hire you or not—by how often you update. So make sure that you post frequently and that what you put online is informative and engaging to land clients.
Attend local events.
Local events are a great way for freelancers to network and build up a contact list. Check for meetups in your area. For example, there are many user groups related to popular platforms like Salesforce, WordPress, HubSpot, and others. Find meetings that have something to do with your business and could connect you to people that need your services.
Also, consider using Eventbrite or Meetup. Both of these have searchable databases that let you find events in your area and connect with a broad range of people.
To mix things up, try attending trade shows. Sure, it may be harder to forge personal connections in a noisy exhibit hall, but who can pass up all that swag? Plus, it’s a good way to keep connected (and updated) to your industry.
And, don’t rule out other social events. Pottery class, volunteer work, and anywhere you can meet with other people face-to-face are opportunities to network.
But I really hate networking.
Many people hate networking. They either feel weird prospecting every person they meet, or they aren’t “people” people.
Well, here’s the thing. If you’re going to be a successful freelancer, you’ve got to network. Fortunately, the Internet allows you to network.
Try answering questions on Quora or Twitter. This can help establish you as a “thought leader” and is a passive and low-risk way of getting your name out there and building your reputation.
Ready to Find Your Freelance Success?
Freelancing has a lot of benefits. But, it could also have a lot of headaches. That said, if you start slowly and have a plan, you might find yourself CEO, chief bottle washer, and, above all, successful freelancer.
Want some additional help? Check out our guide to freelancing. Or, use FlexJobs to locate high-quality freelance jobs and test out the waters. FlexJobs partners with more than 5,000 companies to offer jobs in more than 50 categories.
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