Are you tired of spending long hours on someone else’s business? You can build your own business as a freelancer. You won’t have to clock in and out anymore or depend on others for a regular salary. There are a few major differences between self-employment and employment, but they’re not all positive. Take a look at some of the major disadvantages to self-employment, and learn how you can overcome these.
The Key Takeaways
- Freelancers do not receive employee benefits like health insurance, paid leave, or a retirement account.
- The income from self-employment can be unpredictable and inconsistent.
- It can be hard to find clients when you are a freelancer.
- The freelancer is responsible for all business expenses.
- Freelancing is running your business without much interaction with others.
Employee Benefits are not available to freelancers
It is possible to work for yourself and choose your clients. It does not offer the benefits of employees, like paid time off, health insurance, or a 401(k). You’ll need to pay for any of these perks yourself.
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The income from self-employment can be inconsistent
Self-employment income fluctuates a lot. You could find yourself drowning in clients one month and then wondering where they went the next. Your income may not be enough to cover expenses, unlike the pay you receive every two weeks. It can be difficult to cover your expenses if you do not have a large financial cushion.
Consider payment structures to prevent financial shortages. For example, split payments of 50% upfront and 50% when the job is completed.
It is important to build name recognition and experience
When you start out, freelancing may seem like a steep climb. No one knows you, your work, or whether they can trust. You’ll have to dust off those sales and marketing abilities and find someone who will give you a shot. You could offer a great deal to a friend, family member or a business owner who is open-minded. It’s possible to give your first client free work to gain experience.
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Create your brand to help build awareness, gain trust and get more work.
You pay for equipment and repairs
You are responsible for your own business expenses when you are self-employed. No employer will cover these costs. You are responsible for all costs, including equipment, software, tools and repairs.
You will have to buy a new computer if you spill coffee and it ruins your keyboard. This can be a costly expense for a freelancer.
You could lose your business if you are unable to cover these unexpected costs. Prepare by setting up an emergency fund, and factoring in these costs when determining your pricing. It can be difficult to estimate the costs in the first year. However, in subsequent years you will have a much better idea.
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Document your expenses so that you can claim them as tax deductions.
The Freelance Worker Takes Up Space in the Home
Self-employment often requires that you create your own workspace. This can be done by designating a part of your house as your workspace or renting a space outside your home. Rent, furniture, supplies, internet, and other costs can be associated with both options. You can deduct many of your office expenses from your taxes. This includes a home-based office, as long as the space is used solely for business. 5
The social aspect of work is lost
You may find that you miss the coworkers. You are the only one working for yourself. You are responsible for your own successes and failures. It is up to you to stay motivated and productive. This may work for some people, but those who thrive on social interaction will struggle.
You can still build social connections as a free-lancer with some effort. You can find many groups online on LinkedIn, Facebook and Slack where you can connect with other freelancers and build a community. You can reach out to business owners in your local community through events, chambers of commerce meetings and professional associations related to your industry.
FAQs (Frequently Asked Questions)
How do I get started as a freelancer?
Start freelancing with a list of services and clients you would like to offer. Decide how you will structure your business. Most freelancers begin as sole proprietors. You can legally separate your business from you with an S corp or LLC.
How can I find freelance work?
freelance sites like Upwork and Fiverr are a great way to start. Upwork offers clients that are looking to hire contractors. It also provides additional security by escrowing payments for some contracts. The downside is that it can be difficult to get work because of the competition and platforms will take a percentage of your earnings. You can also go it alone, but you will need a marketing strategy, project contracts and a payment system.
What are the skills needed to be a successful free-lancer?
Skills required for a successful freelancing career will depend on what business that you are planning to start. All freelancers must have knowledge in sales, marketing and time management. They should also be familiar with customer service, accounting issues, legal matters, networking and interpersonal communication.
