No matter what their field, many small business owners utilize freelancers. Businesses in practically every industry are looking for writers, marketers, programmers, designers, accountants, lawyers and more — all of whom they intend to hire on a contractual basis.
The freelance economy is not a niche market, either. According to the Freelancers Union, 54 million Americans work as freelancers in fields such as writing, graphic design and consulting. That's approximately one-quarter of the entire U.S. workforce. The freelance economy has created opportunities for people who want to make a living freelancing in their chosen field, and it's an especially attractive opportunity for people who work in more competitive fields.
The freedom and flexibility of full-time freelancing are huge draws for people who choose this career path, but these benefits also come with downsides. There are a few challenges that any potential freelancer should be prepared to face. Freelance workforce experts shared their thoughts on what every professional freelancer and independent contractor should know.
What to expect as a full-time freelancer
The costs of building a business
When you become a professional freelancer, you're actually starting your own one-person business. You are responsible for not only building up your own client base, but also covering all of the costs that come with business ownership. These include home office equipment, website design, marketing, accounting and more. Depending on your field of work, the prices could vary.
While you can certainly save money by taking care of certain business tasks yourself, doing so sucks up valuable time that could be better spent working and earning money. You also don't get paid for vacation days or sick days, so managing your time becomes even more important when you're freelancing for a living.
Other employment-related costs
Many new freelancers celebrate their first check from a client. Unlike an employer paycheck, freelance payments arrive without any taxes deducted, so it's easy to spend your hard-earned cash once it arrives.
Once tax season approaches, the 1099 form your client sends to the IRS means you need to cough up your unpaid taxes in full. Employers cover half of the Federal Insurance Contributions Act (FICA) taxes, but when you're self-employed, the full tax rate is on you, according to the IRS. Throughout the entire year, you'll have to account for these expenses in your bookkeeping. [See Related Story: Self-Employed? Everything You Need to Know About Taxes]
Additionally, freelancers must secure their own health insurance. The Freelancers Union offers health insurance through its annual membership fees. Additionally, the Affordable Care Act offers insurance on a sliding scale based on your annual income. Prices vary by state, but expect to pay somewhere around $300 or more per month for individual coverage. This Money article breaks down some of the specifics about healthcare costs, deadlines and coverage considerations for freelancers.
For more information on obtaining employment benefits as a freelancer, visit this Business News Daily guide.
Tips for success as a professional freelancer
Despite the difficulties of working as a full-time freelancer, it's no more or less challenging than any other entrepreneurial venture. You need to know how to successfully market yourself and grow your client base. Here are a few tips for how to do so:
Build your online presence. When you apply for a freelance position, the first thing potential clients will do is research your past work. Make sure they find something worthwhile by maintaining a strong online presence.
The most important of all platforms is your own website. Freelance content marketer and blogger Ryan Robinson recommended including examples of your previous work, contact information and testimonials to get started. Depending on your field, it also might be beneficial to be active on social media platforms, such as Instagram’s business option and Facebook pages.
Focus on your best clients. When you're first starting out as a freelancer, it's not a bad idea to take on as many jobs as you can to build up your portfolio and potential referral network. But once you've established yourself, you can afford to be a little more selective about the clients you take on.
That's why it's incredibly important to embrace anchor clients, or those that assign steady, regular work. Contently reports that anchor clients are a crucial part of growing and expanding your income as a freelancer.
Network and maintain relationships. In any business, word-of-mouth referrals are often the best way to generate new leads. When your working relationship with a client ends, keep in touch and reach out from time to time.
If you're in some form of media freelance trade, it's important to recognize that your clients can easily switch jobs. For instance, if you're a freelance writer, editors frequently switch over to new publications. Freelancing gives you the opportunity to work directly with a person, rather than a business, throughout his or her career.
Additional reporting by Nicole Taylor.