The modern work environment is encouraging millions of workers to migrate from steady jobs to freelancing.
For instance, the UK Labor Case Study from 2016 showed that about 6% of the British working people were registered freelancers in 2015. In the USA, that percentage is much higher; about 34% of US workers operate in the gig economy.
Moreover, the fast development of the Internet incentivizes a large number of people in developing countries to start working online, as presented in the report issued by the World Bank.
All these stats sound like great business opportunities, but leaving a steady job for a freelance career includes some serious thinking and practical steps. We’ve analyzed these steps in order to help new freelancers launch their careers.
1. Building your portfolio
When you’re a company employee, you might be inventive and successful, but you’re only a cog in a large machine. As such, you can’t achieve too much without those other cogs.
Still, you make your individual contributions to every project you work on. These individual efforts need to be collected in your professional portfolio.
The more features you add to your portfolio, the better chances you have to score well-paid jobs in the online work market.
As for the form of that portfolio, it will depend on your profession. That way, Web designers and programmers can easily launch a personal website and place all their works there.
While any professional can create such a website, not all of them will be able to present their work in the best light possible. For instance, an accountant or a translator can create such a website, but it will be more difficult for them to place their works there.
In that case, the references from your previous employers will have a great value. Populating this personal website with the list of those renowned employees and their recommendations is a great beginning for a new freelancer. As you keep adding new details here as a freelancer, this might be a great starting point for the genuine corporate website of your freelancing effort.
Of course, creating a profile on LinkedIn or some niche-specific online platforms will improve your chances of landing freelance jobs.
2. Entrepreneur’s mindset instead of employee’s one
Depending on the period of time you’ve spent working as a company employee, you’ve developed certain characteristic typical for that form of employment. You probably don’t know how to deal with certain business management features, as well as some accounting procedures.
What’s more, long-term employees have got accustomed to an uninterrupted daily routine and schedule. They usually go to work at the same time and get back home in the same part of the day.
However, this changes as you start your freelance career. Instead of being a mere employee, now you’re becoming an entrepreneur. You need to develop the drive for multitasking communication with your clients. Also, you’re in charge of your cash flow, as well.
One way to simplify the process is to use modern business banking alternatives like Novo. This platform offers tailored solutions to keep your finances organized and make it easier to efficiently manage your cash flow. Things like direct deposits, invoicing tools, and budget tracking capabilities can make running your business simpler and give you more peace of mind while still being affordable and while multitasking.
To cut a long story short, new freelancers need to possess a productive mindset if they want to become successful entrepreneurs.
3. Forming an emergency fund
A rule of thumb is that online freelancers don’t need to have any substantial assets to start working on the Web. A decent computer and the proper software for their field will do.
What you need to prepare in advance is the money you’re going to live on until you start making enough money for a living.
Most financial experts suggest putting aside enough money that will cover all your living expenses for the period from 3 to 6 months, i.e. to form an emergency fund.
In order to make such savings, you should plan your career shift in advance. For some employees, a few months will be enough time to save the assets in question and find a freelance job that will meet their demands.
As opposed to that, some other workers might spend a year or so saving their money for the initial freelance period and looking for the right freelance job.
What’s crucial here is not to make any hasty decisions. Take your time and plan every single element of this big leap into the world of freelancing.
Also, try freelancing in addition to your steady job for a few months, to weigh all the pros and cons of these two forms of work in real time.
4. Finding the best tax options
When you’re an employee in a company, you get your gross income and then you the money needed for your tax return and the retirement plan is taken away from it. It’s quite a straightforward procedure, equal for most company employees.
However, a self-employed freelancer is on their own when it comes to those two important aspects of work. So, you’ll have to expand your knowledge of taxes and accounting to get things done.
First of all, keep your private cash and your business cash on separate accounts. That’s how you’ll easily track your freelance income and expenditure.
If you keep an eye on your income all year long, you’ll be able to forecast your tax obligations before the tax season. It’s extremely important so as not to omit any details on your tax return. Also, it’s wise to contact an accountant even before you register your own business, to learn your tax liabilities from day one.
Some online work platforms ask online freelancers to fill out their tax data online, on that very website. That way, Upwork will send you a form 1099-K if you’re a US citizen and make more than $20,000 on Upwork. However, they won’t send tax forms to every US citizen on Upwork anymore like they used to.
No matter if you work via freelance websites or collaborate with clients outside these platforms, make sure you learn all the hacks for freelance taxes.
5. Ensuring swift payments
We don’t have too much time to deal with freelancer time management here. That might be the topic of another article. What we want to emphasize now is the importance of fast and secure payments for freelancers.
This needs to be the business principle without any exceptions, because you don’t have a steady income anymore. Every client who doesn’t pay you on time puts your career in danger.
Therefore, limit the payment period to 15 days, starting with the invoice date. Also, you need to equip yourself with handy HTML invoice templates. Just adapt them to your payment needs and send them immediately after the work has been done.
Additionally, online freelancers often work with international clients, as well. In that case, offer them a plethora of payment options. The most popular solutions are credit cards, PayPal, Skrill and Payoneer. Of course, you can add more payment options to your payment crew and cover as many bases as possible.
Freelancing will open a whole new world of business possibilities. You might discover some new affinities and interests. What’s more, you might even pursue some of your old professional dreams. Still, stay cautious in everything you do as a freelancer and always give priority to the financial aspect of work. This approach to freelancing will ensure both smooth professional development and a lucrative freelance career.
About the author:
Mark is a biz-dev hero at Invoicebus — a simple invoicing service that gets your invoices paid faster. He passionately blogs on topics that help small biz owners succeed in their business. He is also a lifelong learner who practices mindfulness and enjoys long walks in nature more than anything else.