Tips to Help You Start Freelancing
Freelancing can give you the opportunity to work from home full-time or to provide an additional source of income. Freelancing is different from owning your own business; because you are usually providing services instead of products and do not often hire other people to work for you. The overhead of freelancing can be much lower, and your initial start-up costs may be lower depending on the field that you are going into.
Freelance in an Area of Expertise
If you are considering freelancing, you should choose an area that allows you to utilize your skill set. For example, if you work in the Public Relations department for your business, you could become a PR consultant or write press releases for smaller companies that do not have their own PR department. If you work in the film or TV industry, you can freelance for that. A teacher can freelance as a tutor. There are a variety of fields and opportunities that you can do as a freelancer. Look in your field to see if there is a way to freelance in what you are already familiar doing.
Once you begin freelancing you will need to advertise. You may want to start with word of mouth and apply for freelance jobs that you see on various online sites. Several industries take an insider contact to begin working, and it may take awhile for your work to build up to a good point. Successful freelancers are the ones that are able to sell themselves. Depending on your line of work, you should find the online organizations where you can advertise your services. You can set up an online portfolio to show your work and make connections online. Many freelancers will work primarily with clients that they meet online.
Set Up an Accounting System
Once you have work you will need to create an accounting system that tracks your invoices, and when you have been paid. You should also keep track of your expenses so that you can deduct them at the end of the year. This can save you on your taxes, and a good system will help you when it comes to tax time. You also need to set up a system so you can manage your irregular income. This means saving for leaner months, and making a solid financial plan so you can still reach your financial goals. Once you have worked for a year or two, you should be able to identify the times of year when you are busy and times when the work slows down, until you do this, you should budget carefully and save as much as possible.
Consider the Tax Implications
Additionally, you will need to consider the tax implications that making the extra money will give you. You should be setting aside estimated taxes your first year, and if you have switched to working full-time you will need to pay your taxes quarterly. If you are doing this part time you may be able to decrease the number of withholdings and cover yourself that way. However, once the business begins to make a lot of money, you will need to pay your taxes quarterly.
Finally, consider any insurance or other things you may need to protect yourself. Some cities and states require you to purchase a business license even if you are just freelancing. You should check your local laws to make sure that you are covered. As a freelancer, you need to take the time to take care of your long-term needs. If you are doing this full-time, you will need to plan for retirement, health insurance, and all tax implications. You may want to talk to your accountant to plan for your financial success over time.
Plan for Slow Work Times
When you are a freelancer, you should be sure to diversify your income. You will not qualify for unemployment if a client suddenly shuts down or stops paying you. It is important to have multiple income streams or clients that you are doing work for on a regular basis. Sometimes work will dry up in one area, and you will need to be able to find work in a similar area. It is important that you do not work yourself too much into one niche so that you find it difficult to branch out to a new area. Being proactive and looking for clients constantly is part of being a successful long-term freelancer. Many people can become burned out doing this, and it is one of the biggest struggles of freelancing.