How to Protect Yourself Legally and Financially as a Freelancer
Millions of citizens across the globe have found purpose and fulfillment via freelancing or self-employment. In the UK, more than 15% of the workforce is considered self-employed, equalling roughly 5 million people. Freelance workers are drawn to the industry for a number of reasons, from creative flexibility to the opportunity to cultivate their own business and to be their own boss, and they’re a diverse bunch. The most coveted freelance skills across the globe include article writing, data entry, and video creation.
Of course, self-employment isn’t without struggle, and the COVID-19 pandemic has further compounded the issue of income instability among freelancers. During times of national emergency as well as on average days, it’s imperative to recognize the limitations you may face as a freelancer and plan accordingly. For starters, self-employment differs considerably from traditional employment, including the methods in which you get paid and the legal resources at your disposal.
Whether you’re interested in starting your own freelance journey or you’ve been in the game for a while, there are several ways in which you can protect yourself, both financially and legally. In the wake of COVID-19 and the unprecedented national unemployment rate increase, freelance work can be a lifeline towards continued self-sufficiency and a steady income. Protecting yourself is a crucial piece of the puzzle, especially in these uncertain times.
Financial Considerations for Freelancers
Self-employment affords self-starters the opportunity to be their own boss, but that role comes with plenty of responsibility that you may not be prepared for. When you take on freelance work, you’re responsible for nearly every aspect of the work process, from booking gigs to submitting invoices, promoting your company and services, and creating an expense budget.
For many freelancers, the financial aspects of self-employment can be challenging. The good news is that it’s relatively easy to manage your finances and adhere to tax guidelines. A large portion of freelancers pay estimated taxes on a quarterly basis, and if tax law isn’t your forte, you can always hire a tax professional to sort things out.
Along those same lines, having a set financial plan in place prior to embarking on your freelance journey can keep you protected down the line. Your financial plan should be comprehensive and realistic so you can develop and stick to your expense budget while also protecting your assets. Thoughtful financial planning can also help you understand your business’s “breakeven point,” where income finally begins to convert into revenue.
Building Your Professional Network
Once you have a set plan in place, it’s time to grow your business.
For freelancers, that concept could mean attracting more clients or expanding services offered. In the bulk of situations, however, building your professional network is a key piece of the puzzle.
But in the era of social distancing, where should you start? We don’t have much opportunity to meet new colleagues when home-based confinement is the new norm.
Even though “word of mouth” has taken on a new meaning in 2020, networking remains a crucial component of business success. By solidifying a professional network that you can turn to in the event of client loss or an economic downturn, you’re better off financially. Your professional network can be composed of numerous individuals from undergraduate classmates to former employers and beyond. The larger your professional network’s reach, the better protected you are in the freelancing world.
Your professional network doesn’t exist in a vacuum. The frontrunner of your freelance career is, of course, you. You need to cultivate your own success and legal protection, even if having a lawyer on retainer isn’t in your budget.
For starters, it’s in your best interest to conduct thorough client research before moving ahead with a project, especially one with a large profit margin. You should also avoid working without a contract in place. No matter the services you provide or the duration of the contract, it should be phrased in a way that’s easy to understand. Avoid excessive legalese and be sure to clearly outline the rights and responsibilities of both yourself and your client. Ensure that deadline expectations are clear including when client payment is due. If you require a deposit, put it in writing to ensure that your client understands your terms.
Expanding Your Global Reach
We’re all in this together, as they say, and your personal efforts during this time may positively impact the global community. It’s the perfect time to take your business online, especially if the internet is the backbone of your career.
Within a single month, COVID-19 wiped out years of continuous job growth in the UK. In April 2020, the national unemployment rate sat at 5.2% with no end in sight. Yet there may be hope on the horizon. For many workers in the gig economy, freelance work has become a saving grace. The world of self-employment offers a myriad of opportunities for innovative self-starters to make money, even as the traditional job market seems to be falling apart.