Considering Full-Time Freelancing? 15 Important Financial Tips To Remember

 


The gig economy is growing as more skilled professionals opt for the flexibility that comes with freelancing. The ability to work where, when, and how often you choose—as well as the freedom to turn down projects that don’t interest you—can be very appealing.

However, there are additional responsibilities as well, including everything from tax filing to being your own PR rep. Being aware of and prepared for these responsibilities can ensure you’re able to focus on the work you’re happiest doing. Here, a panel of Forbes Finance Council members shares financial tips anyone considering a full-time freelancing career should follow.

1. Save Money For Self-Employment Taxes

Regularly set aside funds for your self-employment taxes. That first tax filing can be a shock if you have never been a freelancer before. - Cynthia Hemingway, Fourlane, Inc.

2. Work On Building Your Brand

Learn how to market yourself and build a brand. In the world of freelancing, the more well-known you are and the more you stand out, the more you can charge. - Farhan Naqvi, iLearningEngines

Forbes Finance Council is an invitation-only organization for executives in successful accounting, financial planning, and wealth management firms. Do I qualify?

3. Make A Thorough Business And Financial Plan

Think through all of the unknowns and contingencies that may arise very carefully, and plan how you will address them if they do arise. In this way, you’ll be as prepared as possible for your journey. You’ll still experience unanticipated outcomes, without a doubt, but you will be better prepared to negotiate your journey successfully. - Jennifer Eubanks, CPA Department

4. Choose Your Location Carefully

In the gig economy, it’s all about location, location, location. Choose an environment where you will not only be able to access and interact with your target demographic but also be able to keep as much of what you make as possible as opposed to shelling out a ton of money in finder’s fees, taxes, and so on. These are key details to consider when deciding how to position a full-time freelancing career. - Julio Gonzalez, Engineered Tax Services Inc.

5. Consider Starting With An Agency

Don’t ignore agency work. Many of my most successful freelancer friends started out getting steady work through agencies. After building up their confidence within the agency model, they negotiated to work with top-tier accounts within the agencies. Then, they left the agencies altogether and used their résumés to attract high-paying freelance clients on their own, without a middleman. - Tyler Gallagher, Regal Assets

6. Run It Like A Business

Set it up and run it like a distinct business—after all, it is. Planning for the ebb and flow of cash, estimations, paying taxes, determining a fair and profitable price point, managing deliverables, self-marketing, balancing priorities—all of this is important if you’re going to avoid surprises. Allow for these administrative tasks in your scheduling to build a sustainable career. - David Kelley, Mailprotector

7. Consider All Indirect Costs

Take all of your indirect costs into account before offering a rate to a potential customer. These costs might include taxes, office expenses, and anticipated travel. To ensure they don’t come off your bottom line, generate an indirect percentage that includes all of these costs and add it to your hourly rate to ensure you are profitable. - Kelly Shores, GCubed, Inc.

8. Set Aside 18- To 24-Months’ Living Expenses 

I would not enter into full-time freelancing without 18 to 24 months of living expenses saved in the bank. As you grow your freelance contracts, you can adjust your hours and the number of jobs you accept to meet your needs and replace funds if you have needed to dip into your savings. I would suggest a different approach if you are not at a break-even point after the first six months of investing your time. - Anthony Holder, C&H Financial Services, Inc.

9. Be Aware Of All Your Skills And Strengths

Be hyper-aware of the skills and strengths that you can offer to multiple clients. Always keep searching for your next opportunities, and leverage technology to market your talents. Build your credibility and reputation to win more opportunities. Develop or enhance a positive mindset to help you through challenging times. Strengthen your mind like you would your muscles. Take positive actions. - Dave Sackett, Visibility Corporation

10. Understand The Value Of Your Time

Yes, you can add up the parts that go into your finished goods. Yes, you can take an hourly worker and bill out their time at a margin. Do the math: How much do you pay yourself in payroll or distributions divided by the number of hours you work? In the beginning, that number may be low, but you should see it increasing over time. - Marjorie Adams, Fourlane

11. Be Prepared For Feast Or Famine 

All business has some sort of seasonality to its income, and this is no different for freelancers. Budgeting properly, keeping fixed expenses to a minimum, and being frugal with personal spending can help you navigate through the transition and become a successful freelancer. Be creative with your brand channels and monetize them. - Joseph Orseno, Tiltify

12. Keep Separate Books

Keeping separate books will make tax planning and preparation a much simpler process. I often suggest having a professional account for your business and a personal account for your personal finances. Never mingle the two, and be prepared for incurring a self-employment tax. - Justin Goodbread, Heritage Investors

13. Leverage Online Accounting Software

Use any of the several online accounting software options for small businesses that will generate invoices and allow your clients to pay online. It makes all the difference when you are on the customer side. - Snezana Obradovic, Outsource Insurance Professionals

14. Have A Secure Payment Structure

Make sure you get paid. People stiff or flex their vendors all the time. Align on the work product beforehand, and ensure you have a payment structure that protects you. Many people negotiate after the fact. Never be afraid to go pencils-down for a non-payer. Just because you are a vendor, it doesn’t mean you shouldn’t be afforded the same respect as a payroll employee. - Aaron Spool, Eventus Advisory Group, LLC

15. Don’t Overlook Health Coverage

Don’t forget to factor in how benefits play into the freelancing equation. Most often, you’ll be on your own when securing the benefits you need. When it comes to health insurance, taking advantage of a high-deductible health plan paired with a health savings account is a savvy way to save money in premiums and taxes and set yourself up for better overall financial health. - Tom TorreBend Financial

Check out my website

Post a Comment

0 Comments