How to Become a Freelancer

 How To Become A Freelancer

Being a freelancer is often idealised as ‘being your own boss’. And while there are many perks to the freelancer lifestyle, such as flexible schedules and being able to work from trendy cafes (or from home in your pyjamas), freelancing is definitely not a walk in the park. Challenges can include finding a reliable client base, building up your reputation, and dealing with an ever-fluctuating income. It can be a massive adjustment, especially for someone who has worked a ‘regular’ job for many years.The COVID-19 pandemic has increased the number of freelancers and remote workers that we see in the UK, and this way of working is becoming far more popular and attainable for the average person.Before you hand in your resignation and decide to become a freelancer, ensure that you educate yourself about all of the possible challenges and regulations surrounding freelance work to ensure that this decision is a good fit for you. Can anyone be a freelancer? The great thing about freelancing is that most of the time, the work is done remotely, so you can work from any time and from anywhere and offer your services to international clients.Technically speaking, anyone can become a freelancer as there are no prerequisites for becoming a freelancer. 

All you need is the equipment and tools required to offer your services effectively. That being said, freelancing is not particularly suited to every profession or individual situation, and certain people may face many struggles along their freelancer journey.If you need a steady monthly income every month to pay certain bills, freelancing may not be the best option for you, as it can take a while to build a client base. 

And even when you have a steady stream of clients, you can never rely on an exact figure. What you could do is freelance on the side while still keeping your regular job and only hand in your resignation once you have built up a loyal list of customers. There are many people that work as both employees and freelancers for numerous different reasons, and having freelancing as your side-hustle may suit you better than freelancing on a full-time basis.If you really want to be a freelancer, there are many ways that you can make this a reality. How do I start freelancing? Are you ready and excited to start your freelancing journey? Starting freelancing can be explained in six easy steps.

Decide what type of services you want to offer

What skills, knowledge, expertise, and experience do you have behind you? Thinking about this should help you decide what type of freelance services you could successfully offer. If you are just coming out of high school, you could look at doing a short online course that will help equip you with some basic skills to assist you with starting freelancing.Popular freelance services include digital services such as copywriting, graphic design and web development, as well as teaching classes and skills online.Get creative when you think about your service offering, and come up with something that not everyone is doing. It’s advisable to do some market research and ensure that there is at least some sort of demand for what you plan to offer.

Register yourself as self-employed

It’s recommended that you register yourself as self-employed as soon as you begin working as a freelancer. You’ll need to register with the HMRC, and from now on, you’ll also be responsible for your own taxes!Most freelancers are considered sole traders, although you could open up a limited company and offer your services as a business if you so wished. As a sole trader or a limited company, you’ll now need to submit your taxes yearly, and you’ll also need to pay NIC. It may seem intimidating at first, but the processes are fairly straightforward and can all be done online.

Decide where you are going to work

Don’t fall into the trap of doing everything from your bed. If you want to work efficiently and effectively, you will need a dedicated workspace. If you have room in your home, set up a desk workspace for yourself in a quiet area where you’ll be able to work without interruption.Alternatively, if you’ll need to be meeting with clients on a regular basis and don’t have any room to work in your home, you could also look at renting an office space. Office rentals can be very pricey and are often not worth the expense. In the UK, there are many ‘hot seat’ options available where you can pay per day or per hour to work at a desk, thus not being tied down to any lease agreements. These co-working spaces also often offer boardroom rentals which you could use for meeting with clients.

Get all of the equipment/ tools you need

The type of equipment you’ll need will depend on what type of services you’ll be offering. If you’re baking cakes for weddings, you’d probably want to invest in some quality baking equipment and so forth.You don’t need top of the range from the get-go, especially if you don’t have a customer base yet. Make do with what you have, but also make sure that you have everything you need to offer your services in a professional manner. No matter what route you decide to go, you’ll most likely need a good internet connection and a decent laptop. As a freelancer, you are in no way obliged to take out insurance of any kind, but you’ll definitely thank yourself for doing so should you run into any issues down the line. Professional indemnity is always recommended if you have complications with clients. It’s also a good idea to take out insurance for any assets that you have for your service offering, such as vehicles, electrical equipment etc. Do a bit of research into the insurance recommendations for freelancers, or alternatively ensure that you’re putting a bit of money aside each month to cover yourself in case of emergencies. You’ll thank yourself for creating a safety net! Now that you have fully prepared yourself, it is time to start looking for work and advertising your services. Be confident in your offering, and don’t hesitate to speak to other freelancers to ask for advice. Listening to their personal experiences could give you great insight into the world of freelancing. How can I do freelance work successfully? While you may have followed all the steps in getting yourself set up for freelance work, you may still find yourself battling when it comes to freelance work.One of the first things you’ll need to do to have a chance at success is to research the market very carefully. Go and have a look at what your competitors are doing, assess average industry rates, and look for ways in which you can fill niche gaps in the market. While there is a huge demand for freelancers, the freelancer industry can be very cutthroat, and it may be hard to land your first job. The more you know, the better!You’ll also need to practice patience. The chances are that the jobs won’t all come flooding in as soon as you start advertising your services, but stick at it and be consistent, and you’re bound to land some great clients eventually.Get your branding on point! In this day and age, aesthetics is very important, so ensure your branding is eye-catching and accurately represents what you do. Investing in professional branding will definitely not be a waste of money. How do I manage my money as a freelancer? As a freelancer, you are responsible for all the money that you make. Unlike a normal job, you won’t be receiving weekly wages or a monthly salary and will most likely be paid per job you do or project you work on. You’ll have to be smart about your money and do industry research to set fair rates. Some clients may want to negotiate your rates, and you’ll need to make sure that they aren’t working too far below the industry standard.You’ll also have to ensure that you pay your own taxes and budget accordingly. It will be very important to keep track of all your finances and follow up with clients to make sure that they pay you on time.Invoicing is also a very important aspect of managing your money as a freelancer. 

 Discuss with your clients when you will invoice them and when the invoice should be paid by. Make sure your invoice looks professional. There are many tools and templates available online to help you with your invoicing system. What are the most important traits of a successful freelancer? As a freelancer, there are certain traits that will greatly benefit you. Even if you feel like some of these traits don’t come naturally to you, you can always work on them and develop them:

Self-discipline – self-discipline is probably one of the most important skills you can have as a freelancer. As you’ll be managing your own time, it’s important to be strict with yourself when it comes to staying on schedule.

Motivation – motivation is also another key factor for successful freelancing. Having the motivation to get up and promote yourself and work on projects can be tough to maintain, but it is possible, especially if you’re passionate about what you’re doing.

Good communication – as you’ll be dealing with clients remotely, it’s integral that you have good communication skills.

Organisational skills – being a freelancer requires organisation. Keep your workspace clean and ensure you have a way of effectively keeping track of everything you need to get done.

Time management- time can really run away from you as a freelancer. While you can have a flexible schedule, it’s important to maintain some sort of structure to ensure that deadlines are met.

How do I promote myself as a freelancer? One of the most important things about being a freelancer is getting your name out there so that people know about you, and you can find ideal clients who you want to work with! Luckily, in this modern-day and age, there are so many ways that you can promote yourself.You should let your friends and family know about your new career path so that your services can be spread by word of mouth. You should definitely look into creating dedicated social media pages that advertise your services and perhaps even a website.You could also look at advertising your services on dedicated freelancer platforms such as fiver.com and freelancer.com. If there are any businesses that you’d like to work with and that you feel could benefit from your services, you could always get in touch with them directly and promote your service offering. Do I have to register as self-employed if I am working as a freelancer in the UK? You may find yourself in a heap of trouble if you don’t register with the HMRC as self-employed when you begin freelancing. You’ll need to register even if you maintain your regular job and only freelance on a part-time basis. 

 Registering online is easy, so there is no excuse to delay registering as self-employed. Will I make more money as a freelancer than I would at a regular job? This is a very tricky question to deal with. While most freelancers report that they are making more money than they did at their regular jobs, the thing you need to remember about freelancing is that there is no guarantee when it comes to money. While you may have the opportunity to make more money than you would at a ‘normal’ job, that doesn’t mean you will.Having to pay your own taxes and NIC, as well as fluctuating monthly incomes, are just some of the financial challenges that freelancers have to face and employees don’t.The goal of making more money should probably not be the only reason for you becoming a freelancer.

How Freelance Consultants Can Scale Earnings Without Burning Out

How Freelance Consultants Can Scale Earnings Without Burning Out

Freelancers are as busy and as profitable as they make themselves. For instance, expert freelancers that have had more experience can make more than novice freelancers for the same job. If you feel like you can be doing more and are looking to scale your business sustainably to avoid burnout, we have some great advice for you.

Increase Your Rates

A quick way to scale your business is to either improve or lean on your expertise. If you are good at your job and have any tangible way to prove it whether it be a degree or a certification, leverage that to earn more for the same work. In the same way, you can leverage your previous work to help you charge higher rates. Your time is as valuable as you make it.

For instance, if you are a freelance writer that has a degree in writing or have certifications for specific types of writing then you can showcase your skills to charge a more competitive rate. By increasing your rates you will be in a better position to spend money on other projects and initiatives to better scale your business as well.

Table Comparing Writer Salaries

Narrow Your Niche

If you are having trouble increasing your rates or justifying a rate increase, try to narrow your niche. The product or service you are providing should be narrowed down to a specific group or subject. This helps you narrow down the type of work and research you will need to do for your work and will help the right clients find you. This can also help you find the industry or sector you may want to specialize and receive certifications in. After finding your niche, you will have the ability to grow within the industry or sector.

Graph showing Prices Charged by Freelancers on Upwork

For example, if you are a freelance writer that caters to everyone this could be very limiting. However, it might be more profitable if you pivot and become a writer who is more focused on an industry that aligns with your interests. If you are interested in the tech industry, then clients who need work in that industry will know where to go. You can go even further and highlight certain sectors like software as a service (saas), semiconductors, and environmental technology. This can help you increase rates.

Story continues

Form a Team

In essence, you are looking to scale your business to make more and take on more work. To avoid burnout you might have to be open to having other people with you. This can help you offer up better deliverables for your clientele. As a result, you will have faster sustainable growth in the long-run. You can set it up as equal team members or have these new hires work under you. Whichever route you decide to take, remember that you have to be able to justify the amount of work you allocate to them and the percentage they will make from the project.

For example, if you are a freelance graphic designer and you are helping with a project or presentation, you can take on more of the project if there is another person working with you. If that person has a different specialization than you, then you can offer to take two parts of the whole project and charge much more. If you are looking to form a team, it may be smart to take out a small business loan to help you get started.

Outsource Your Work to Others

If you are not looking to take on a team, then why not just outsource the work to other capable freelancers that you trust? If clients have very large projects that you find very attractive and can make a solid amount of money from, then you might as well be transparent and tell the clients your plan of outsourcing the work. We also recommend that you are upfront with the other freelancers. Then you can pay them the market rates for the specific work that they are doing.

By doing this you are establishing your credibility as a freelancer and leader with clients as well as increasing your network with other freelancers. This is a great way to scale your business up. Once your part is done, you can work on different projects with other clients as your outsourced work is getting complete.

This also helps you avoid burnout as you aren't taking on more than you can handle at once. It is important to note that you will be responsible for the work that the other freelancers produce. Therefore, you will have to ensure that their work is on par with expectations.

The article How Freelance Consultants Can Scale Earnings Without Burning Out originally appeared on ValueChampion's blog.

ValueChampion helps you find the most relevant information to optimise your personal finances. Like us on our Facebook page to keep up to date with our latest news and articles.

A freelancer's guide to income taxes

Managing your work as a self-employed person can be hectic. You have to market yourself, deliver a product or service and handle dozens of other tasks. Because they’re so busy, many freelancers don’t invest the time to understand how to pay taxes. If you’re uninformed, you may end up paying penalties, fees and interest on your tax return. Use these tips to plan for income taxes on your freelance business earnings.

How freelancers pay their taxes

To understand how freelancers should plan for taxes, consider how employees make their tax payments. Keep in mind, however, that all both employees and freelancers pay income tax using the same tax tables. Also, both types of workers pay the same rate of tax on FICA and Medicare. The primary difference is that employees pay taxes passively (funds are withheld from checks) and independent workers pay actively (they estimate and pay taxes quarterly).

Assume that Angie is a video producer for Gateway Financial, and she earns $60,000 per year. Angie fills out an IRS W-4 form to determine her federal income tax withholdings. She also completes a state income tax withholding form and signs a document to withhold her share of health insurance premiums from her pay.

Based on her withholding documents, Gateway withholds 25% of her gross pay ($60,000) for federal taxes, 5% for state taxes and 5% for health insurance premiums.

Gateway submits the tax amounts withheld to the IRS and Angie’s state department of revenue.

At year-end, Gateway issues Angie a W-2 form, which includes the total amounts withheld for taxes.

Once Angie decides on her withholdings, the employer submits the withheld amounts and completes the tax reporting. She doesn’t need to initiate anything else to get her tax payments in. Angie may or may not have an additional amount due when she files her personal tax return.

How to calculate income tax when you’re self-employed

After five years at Gateway, Angie decides to leave the firm and work as a freelance video producer. The majority of freelancers are considered to be sole proprietors for tax purposes. Angie’s CPA explains that she should report her business income and expenses on Schedule C of her personal tax return (Form 1040).

Now comes the hard part: Angie must estimate her annual earnings and plan tax withholdings based on the earnings estimate. Every freelancer should consider working with a CPA and using a cloud-based accounting software to get this process in place.

Estimate and make your quarterly tax payments

To succeed as a freelancer, you have to be proactive. Freelancers have to take the initiative to find business, and you need that same mindset to plan for your tax payments. If you don’t plan ahead, you may end up paying penalties, fees and interest on your tax underpayments. The process is completely in your hands.

Angie thinks that she can earn $50,000 in her first year as a freelancer. Her CPA estimates that she should pay 20% of her earnings for federal taxes and 5% for her state tax liability. Angie must make estimated tax payments based on this schedule:

For the Period: Payment Due: January 1st to March 31st April 15th April 1st to May 31st June 17th June 1st to August 31 September 16th September 1st to December 31 January 15th (2020)

Many self-employed people see large fluctuations in their income from one month to the next. Each month, Angie needs to total her income for the current quarter so far, and her year-to-date income. Once she has those numbers, she should estimate her income for the remainder of the year and determine if her estimated taxes will be enough to pay the tax liability.

Say, for example, that Angie’s results are better than expected. By June, she increases her estimated annual income to be $70,000. She needs to meet with her CPA to plan for higher estimated taxes. Her 20% federal withholdings may not be high enough, because the increased income may put her into a higher tax bracket.

Take FICA and medicare taxes into account

Employers also withhold each worker’s share of FICA and Medicare taxes from gross pay. Freelancers, on the other hand, must pay those taxes using Schedule SE (Self-Employment Tax). Currently, freelancers pay a 15.3% tax rate for FICA and Medicare taxes, with one-half of those taxes posted as a business expense on Schedule C.

Reduce your taxable income as much as possible

The tax laws for business expenses are complicated and can change frequently. Some expenses require extensive documentation, and those records need to be monitored throughout the year. Here are some common business expenses for freelancers:

Retirement accounts: Freelancers have several types of retirement accounts that can be set up and funded, but the rules are complex. Fortunately, some of your retirement plan contributions may be tax deductible on your Schedule C.

Health insurance: The premiums you pay for health insurance are also deductible. Many freelancers find that paying for their own health insurance is far more expensive than the cost they pay as an employee. This additional cost should be considered when you price your services for clients.

Home office expenses: Be careful here, because the IRS may closely review any deduction you take for a home office. Using this deduction requires careful record-keeping.

Once Angie completes her Schedule C, she will include it with the other documentation in her Form 1040 personal tax return. The net profit on Schedule C is added to any other income on her 1040 form, and she will file her personal return by April 15th of each year.

Plan, document and thrive

A career as a freelancer offers you flexibility and a chance to focus on work that you enjoy. If you choose to work as a freelancer, invest the time to plan for your taxes and submit estimated payments on time. Ask a CPA for help, get yourself setup with a professional tool and you’ll be able to file an accurate tax return and focus on growing your business.

                     Thank you😍😍😍

                 நன்றி வணக்கம்🙏🙏🙏