Pros & Cons Of Being A Freelancer – Tips To Succeed

Freelance work has recently become a popular career choice for many people rather than working for one employer they’re becoming self-employed and working with various clients, but like any job, there are Pros and Cons: Pro: There’s more time flexibility, which may help you to maintain a healthy or work-life balance. Con: Your workload may be inconsistent, you could be overloaded with projects one month and then have trouble finding work in the next. Pro: You can work from anywhere coffee shops, your couch, you name it. There’s less of a commute, and you don’t have to get dressed up. Con: You have to do your taxes. When you’re working for someone else, taxes are deducted from your paycheck, but when you’re a freelancer, you’ll need to keep detailed tabs on all of your income expenses and other finances. Pro: You have more control over the type of work you do. At first, you probably can’t be too picky, but if you become more successful, you can be more flexible and deciding which projects and clients to take on. Con: as a freelancer, you don’t receive benefits. You’ll have to pay for your insurance and save up for retirement all on your own. Pro: Pay rates are sometimes higher than permanent employment, and the amount you make depends on how much work you’re willing to commit to. Some Freelancers love the lifestyle that comes with their work while others have found that it’s not quite for them. 

Some Tips To Succeed 

A Freelancer (independent contractor) is someone who works for a business on a contract basis so rather than being a W-2 employee who shows up every day at a certain time you’re your own boss, and you get to manage your own projects. The ability to selectively choose your projects, choose when and how you work, and manage your own workday. If you’re going to be self-employed, there are some risks and challenges you have to deal with. One of the first ones is that there’s uncertainty with projects and the amount of work that you’ll have so you’ll have to figure out how to continue to market your business and grow it as you add new projects. Another challenge that comes with being your own boss is the added administrative burden, so now you’ve got business income expense that you have to track so that you know how much money you’re making and how much tax are going to owe. As an independent contractor, you don’t get any paid time off, so vacation and sick time that comes with being employees are not available to an independent contractor work if you don’t come to work money is not coming in. If you’re going to start your own business, one of the first things you are going to want to do is incorporate it. Separate your personal assets from your business assets and provide you with protection. You want to make sure you write a business plan to figure out what type of service that you’re going to offer, what you’re going to charge for the service and how you’ll grow that business. Another thing that you’ll want to consider is obtaining professional liability insurance at this point one of the tools you can use to track how much money you’re making and how much tax your best choice is an accounting software, and you may even want to hire an accountant to help keep everything straight. Some things to consider are that you want to make sure you budget for tax so plans for 15.4% self-employment tax plus any additional income tax that you owe. You’ll want to make sure that you’re making quarterly estimated tax payments as the year goes on and make sure to separate your personal finances from your business finances as this will make it easy to calculate what your business income is and how much tax you owe. Finally consider opening an IRA so that you can save for retirement and also save on your taxes. Hopefully, this is giving you a better idea of whether or not it’s right for you.

4 thoughts on “Pros & Cons Of Being A Freelancer – Tips To Succeed”

  1. Thank you for those great freelance tips. I’m building my career both as professional and freelancer, so knowing these tips are useful. So we should prepare for administration as soon as possible such as incorporation and having accounting software. Do they still needed if I running the freelancer as just myself, and I run it as service type freelancer? Thank you in advance for your information.

    Reply
    • Incorporating your business as LLC is a popular option for sole individuals or sole proprietors since it separates your personal  assets from the business assets.

      The member or members of an LLC are not personally held responsible for any debts or legal liabilities incurred by the business.

      This is not a hundred percent necessary right off the bat when starting your online business but I believe it can give some motivation to treat your passion as an actual business which in turn will make you money.

      Another compelling reason to set up an LLC as a freelancer: An LLC gives your business the appearance of credibility and of being more established than it may actually be.

       

      Reply
  2. I just started freelancing a month ago and it’s harder than I initially thought… But it’s definitely worth the trouble. 

    Thankfully, my father is an accountant and is helping me out with all the bureaucracy and finances which is saving me a lot of time and frustration.

    Anyway, thank you for the tips 🙂

    Reply
  3. Thank you for shining a light on some of the more overlooked areas of freelance work. Far too often I see promotions to “be your own boss” or “work from home” with all the sparkles and dazzling effects highlighting how excellent it is to do your own thing but the backside of the business from a finance and tax viewpoint is rarely talked about.

    Granted when you’re first starting out in your own business, becoming incorporated and getting accounting software or even hiring an accountant are not necessarily needed right from the get go, they are certainly aspects of business that anyone starting out should at least have on their mind and be prepared for as their business grows.

    You mention separating personal and business accounts – this is so important. Far too many do not do this right from the start and doing so after your business has started to grow can turn into a seriously messy and hairy financial situation.

    Thanks so much for the tips! Great advice for anyone considering branching out on their own.

    Reply

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