If you’re currently working for someone else and have a particular expertise, you might be considering a move into freelancing. It’s a popular way to move from being an employee to being your own boss.
But as with starting any business, there are as many downsides as there are benefits. Just have a look through any of the articles here on Bytestart and you’ll see some of the challenges many business owners face.
Before you consider the move, here are some things you should consider before making the leap into freelancing:
Skills Every Freelancer Must Have
The only way to win work is to develop relationships with suppliers. And that means that at a very basic level you need to be a people person. If you’re the kind of person who would rather lock yourself away from human contact, you may struggle as a freelancer.
The freelancer who markets themselves the best tends to win more work. Marketing is about putting yourself in the shoes of potential customers and ensuring your offering is exactly what they want.
It’s likely that an averagely talented freelancer with great marketing skills will beat a superb freelancer with poor marketing skills.
Marketing gets the business in; but you need good money skills to stay in business.
Freelancing isn’t like being employed. There’s no regular pay packet; you will need the ability to be flexible and maintain a positive cash flow. You will also need to manage your bookkeeping and tax affairs.
It’s vital you are organised so you can fulfill all your financial and legal requirements. Most freelancers will use one of the many online accounting systems now available to help do this with as little fuss as possible. ByteStart’s dedicated guide on How to Choose the Best Online Accounting Software for Your Business explains what you should look out for.
Some days as a freelancer you will have no paid work to do. And it will be very tempting to just switch on the TV for an hour… which could easily become a wasted day.
Down time is marketing time when you’re a freelancer. You will need huge reserves of energy and discipline to ensure you use your time productively every day.
A positive outlook
Compared to working for someone else, freelancing can be tough. As with most hard things in life the rewards are better if you approach it with a smile on your face and the ability to shrug off the inevitable stumbles along the way.
The Ups of Being a Freelancer
Don’t want to do a certain piece of work? Want to take a specific week off no matter whose holiday it clashes with? Then go for it!
Freelancers work for themselves and enjoy the freedom that goes with that. The ability to turn down a client because you don’t want to work with them cannot be over estimated. It’s an amazing feeling of control.
Variety of work
You can also pick work that challenges you and gives you a greater variety of things to do. Many an employee has “extended” their career by going freelance and reigniting their passion for their work.
Greater earning potential
Unlike employees, who have to hope they earn their bonus or keep their fingers crossed for a pay rise, as a freelancer, you control your earning potential. If you really need more money and are willing to put in the extra hours, the work is out there.
Pay less tax
As a freelancer you will be in control of your own financial and tax affairs. You will be able to choose the business structure that best suits your situation, meaning you should be able to keep more of your hard-earned money.
A good accountant will help you reduce your tax bill to less than you pay as an employee. However, you should factor in the loss of income for periods when you’re not working, and the lack of ‘perks’ provided to permanent staff members, such as paid holiday.
As a contractor you also will need to familiarise yourself with IR35 legislation. IR35 rules are designed to determine whether you are a true freelancer – or a “disguised employee”. Getting it wrong could land you with a nasty tax bill.
You are your own boss
The number one reason to freelance. You will have a stunning amount of control over your life compared to being an employee. The only way you can really understand this is to do it.
Yes, you will probably work longer and harder than you ever did for someone else, but because you are choosing to do this, you are in control. And wow it feels great.
More from ByteStart
ByteStart is packed with help and tips on all aspects of starting and running your own business. Check out some of our most popular guides;
Tax, Accounts & Book-keeping
- Setting Up Accounts for a Sole Trader – A Beginner’s Guide
- Sole Trader Tax – A Guide for Start-Ups & the Newly Self Employed
- Book-Keeping Basics Every New Business Owner Must Know
Funding Your Business
- How to Choose the Right Business Loan
- How to Get Funding Fast: The Quickest Routes to Finance for Small Businesses
- What to do when the bank says “NO”
- How to set up a limited company
- Which types of insurance must your business have?
- How NOT to Network – 7 Business Networking Mistakes to Avoid