The job market has changed dramatically in recent years. The gig economy and the digital revolution are replacing the traditional employment model. Now, you can be your own boss working with companies on the other side of the world — without ever leaving your computer!
Are you interested in becoming self-employed but want to know more about what it’s like being a freelancer? Here’s a rundown of what it means to be a freelancer and some professional advice to kickstart your new, independent career.
What is Freelancing?
Being a freelancer means you earn money based on specific tasks or projects you complete rather than from a set annual salary or hourly wage. Multiple companies can hire you to perform short-term work for them. Rather than entering an employment contract with one business at a time, you work independently and can juggle multiple gigs at once.
What is the difference between a freelancer and an employee? A freelancer is self-employed rather than employed by a company. This involves a different compensation model than hired employment does. Plus, it doesn’t require a long-term commitment or exclusivity.
Freelancers are often contracted by small businesses that can’t hire enough part-time or full-time employees to perform the work internally. Instead, they outsource tasks to external contributors.
What skills do you need to become a freelancer?
To succeed as a freelancer, you’ll need to be:
Flexible: You need to be available at short notice to complete tasks in a tight turnaround time, adjusting work hours as needed.
Self-motivated: When you’re your own boss, it’s your responsibility to stay on-task and avoid distractions and procrastination. Exercise good time management.
Good communication: You need clarity and precision when communicating with company representatives. Ask questions to clear up confusion and understand their expectations, because making assumptions is one of freelancers’ most common mistakes.
Project management: You are responsible for dividing big jobs into bite-sized steps that you can handle. Being detail-oriented is important.
Negotiation: You have to stand up for yourself when forming and following a contract. It’s up to you to set boundaries, advocate for yourself, and argue for a fair pay rate that reflects your skills and expertise. There are ways to make these tough talks easier to have.
Well-informed: Hired employees often receive on-the-job training to complete their work, but you won’t receive training as a freelancer. It’s up to you to know your industry and become an expert in your field.
Important Freelancing Terms
The freelance market has its own vocabulary. Thriving as a self-employed person requires an understanding of key terminology, such as these words:
Independent contractor
This designation is typically used interchangeably with “freelancer.” For the most part, freelancers and contractors are the same — especially from a tax or legal perspective. The only difference is that ICs often work on one big project at a time, while freelancers work on multiple small jobs simultaneously.
Gig economy
This term refers to the abundance of independent contractors on the job market. Each item or instance of work is a “gig.” The market now relies heavily on temporary, external workers to complete jobs.
Contract work
The tasks performed by freelance workers rather than employed staff. These are the specific assignments you’re commissioned that you’ll invoice the company for at your freelance rate. These may also be called the deliverables.
Freelance rates
The amount of money you charge a company for the work you complete for them. You and your client must agree on a rate based on your experience, skills, and the project you’re doing. You may charge based on:
Hours worked
Projects completed
Rates specific to your job, e.g., cents per word, if you’re a writer
Sole proprietorship
This business distinction categorizes your paid operations for legal and tax purposes. A sole proprietorship does not distinguish between you as an individual and your business as separate entities. This means you are personally liable for your company, including lawsuits, asset possessions, financial accountability, etc. Freelancers are a sole proprietorship by default.
Limited Liability Company (LLC)
This is another type of business entity that’s common among independent contractors. The LLC category distinguishes you from your business’ legal existence. This allows you to manage company finances and operate without being held personally responsible for the outcome. Many freelancers are single-member LLCs.
Pros of Freelancing
Interested in becoming a freelancer? Independence and flexibility are definitely the biggest perks of being self-employed. But that’s not all there is to it.
What are the benefits of being a freelancer? Some of the many advantages of being a freelance worker include:
Being your own boss. You won’t have a supervisor looming over your shoulder and inspecting your timecard. You can decide when you take lunch breaks and what time of day you work. You determine your clients, the size of your workload, and how healthy the environment is.
Working anywhere you want. Remote work gives you the freedom to work from home, at a coffee shop, when you’re visiting extended family, or from the balcony of a beach resort.
Potential to make more money. You’re not limited to a set salary when you’re a freelancer. You can simply take on extra work or negotiate better pay to get more cash, which isn’t common in full-time employment. The average hourly wage of a freelancer is between $20-35. That rate depends on your know-how, industry, and reputation.
Frequent change. Full-time freelancing is great for people who get bored with the monotony of an office job. Switch up your location, hours, projects, and even your industry. No two days have to be identical!
A promising future. Cultivate your skillset by pursuing professional growth opportunities as you desire. Your growth isn’t limited by the corporate ladder or bureaucratic restrictions. You can broaden your skills over time instead of restricting them to the areas your manager prefers.
Financial independence. You have more control over your financial future, as you can have multiple sources of income. Your financial security and healthcare coverage aren’t contingent on one employer.
Cons of Freelancing
We should note that freelancing is not for everyone. As many benefits as there are to being a freelancer, there are some drawbacks:
More tax responsibilities. Freelancers must pay self-employment tax to cover contributions normally made by the employer. Plus, you’ll have to make quarterly payments throughout the year.
Lack of paid time off. This means no paid holidays, sick leave, or vacation days. If you want to take time off for your brother’s wedding, you may need to work some overtime beforehand.
No company-provided benefits. You won’t get a 401k with matching contributions, health insurance, or other medical benefits. It’s up to you to make retirement plans and obtain healthcare.
Self-purchased equipment. You have to obtain your own tools to perform your work; you’re not given a desk, computer, software, office supplies, or anything else to do your job.
Inconsistent income. Work can be unpredictable, with no long-term security of consistent income.
Extra effort. Freelancing isn’t a cake walk. It requires building a client base, habitually searching for more work, and earning a solid reputation. The cool pictures of people working on resort balconies don’t show the blood, sweat, and tears it takes to get there.
Encroaches on work-life balance. Because you need flexible availability to meet deadlines, you sometimes have to sacrifice your personal time to finish projects.
Isolation. It can feel lonely when you’re self-employed and not part of a team.
There are solutions to these downsides. They just require a little extra work. If it looks like too much to handle, you may want to consider sticking to standard employment instead of freelancing.
Common Freelance Jobs
So what’s an example of a freelance job? One examples is a freelance writer. A company pays someone to perform a few copywriting tasks for them, and that’s it. The writer is compensated for each piece they complete and moves on to the next gig.
Other common freelance jobs include:
Independent writer roles in journalism or content marketing
Graphic designer
Translator or transcriber
Financial consultant, tax advisor, or accountant
HR consultant
Social media manager
Photographer or videographer
Setting Up Shop as a Freelancer
Before quitting your day job to start your freelance business, take the following steps to ensure success as a self-employed individual.
Consider Registering Your Business
If you’re serious about becoming your own boss and running your own business, you should register as an LLC instead of the default sole proprietorship. Each state or country has its own process for registering your business, so investigate the government’s procedure where you live. If you don’t register as an LLC right away, you can do so at any time in the future if you change your mind.
Get to Know Your Tax Obligations
When you transition from a full-time employee to an independent contractor, your tax situation will change — especially if you register your business as an LLC. It’s your responsibility to determine what your new tax situation is. The best way to understand your obligations is to meet with a tax consultant specializing in freelancing and self-employment.
Check Out Insurance Options
You won’t be receiving benefits from an employer anymore. You’ll need to shop around and find a health insurance provider and a retirement investment plan that suits your needs. Freelancers can also benefit from having insurance that protects their income and business for added assurance.
Open a Business Account
Establish a financial arrangement that separates your business transactions from your personal transactions. For most freelancers, this involves opening a bank account specifically for their contract work. This makes bookkeeping and filing your taxes much easier.
Draft Some Contracts
What terms do you want to have established when you begin working with companies? Explore the basics of building a freelance contract and how to incorporate elements like project scope, ownership rights, a kill fee, the freelance rate, and preferred payment methods.
Build a Client List
Get the ball rolling by building a list of new clients you can service. Referrals are a great way to find potential clients. Former coworkers or fellow freelancers who know your skills and value your work can recommend you to business owners and potential clients. And don’t be shy — make connections on social media.
Give it a Trial Run
Many employed workers take on extra jobs on the side. If you have the time and the skill set, it might be worth being a part-time freelancer. This is a great way to start building a professional network before taking the leap and becoming a full-time freelancer.
Finding Freelance Work
The freelance marketplace can be overwhelming if you’re just starting out. But once you know the ropes, it shouldn’t be difficult to find work.
What is the best way to find freelance jobs? Seek out freelancing websites that offer client networking services — like MVP Match. We want to jumpstart your freelancing career by connecting you with companies that are hiring freelancers. Join the MVP Match network today!
MVP Match also helps companies hire skilled freelancers that can perform a variety of IT, marketing, or design tasks. Contact us to find the experts you’ve been looking for.
