You’ve started freelancing, but you need to handle money and get steady clients.
Now that you’ve set your feet on the path toward full-time freelancing, you need to start really building a career. Remember that freelancing is always a hustle and hunting down new clients is a process that never really ends.
Special Financial Concerns
You have to pay your own taxes as a freelancer. This includes a special self-employment tax. This exists to compensate for the fact that your employer is not paying Social Security and Medicare tax on your behalf. The amount varies from year to year, and is calculated in addition to anything paid toward income tax.
Make sure to set aside money from every check to pay taxes in April. While it takes a bit of figuring, you’ll need to know what tax bracket you fall into, and then add ten percent to that percentage to figure out the percentage that you should take out of every check.
A Word About Incorporation
Incorporating is a great idea for freelancers. Not only does it protect your personal assets from debts incurred by your business, but it also saves a bunch of money in taxes. The down side is that incorporation requires a substantial sum up front (hundreds of dollars). You will almost certainly have to hire an accountant, as the corporate tax code is nearly impossible for a non-expert to navigate on his or her own.
Freelancers generally do not receive employer-sponsored health insurance. As such, the IRS makes it easy for freelancers to buy their own health care. Self-employed people are strongly encouraged to buy their own health insurance, which includes a 100 percent, dollar-for-dollar tax deduction for that purchase. There are limits on how much you can spend on health insurance, but if you don’t buy insurance, you are sending money to the IRS every year that you could be spending on yourself and your health.
Locating clients is a constant hustle. You should have business cards on hand, available for anyone who might need or know someone who needs freelancing services similar to yours. Being prepared allows you to make every situation a networking situation. Developing a website is also essential. Feature previous work, and list endorsements and recommendations from previous clients. A website acts as a relatively inexpensive, indispensable marketing tool.
Building a Greater Business Network
Now that you have an idea and a plan for an effective freelancing business, you need to know how to become wildly successful. Our third and final installment covers the ways by which you can turn your freelancing business into a runaway success.