Whether it’s building your own tech-consultant business, freelance writing, contractor work or anything else which enables you the freedom to be your own boss, there are certain tips which apply across all areas, and it’s important to consider all of them to work better (and more protected) as a freelancer.
1. Don’t Discount Business Insurance
If your freelance works sees you working from home or taking casual contracts with no official premises, the thought of a business insurance policy may never have crossed your mind. Although it’s not a legal requirement to have business insurance as a freelancer, it’s important to consider an adequate policy if your circumstances deem it necessary, in order to protect yourself. For example, if you are a freelance contractor who visits clients in person, there is, therefore, a risk of accident or injury – and in this case, it’s a good idea to be covered by public liability insurance, as provided by Hiscox, should the worst happen.
2. You’re in Charge of Filing Taxes
It may seem like an obvious thing, but it’s still a difficult concept for those who are quite liberal with their income and can be disorganized when it comes to finances. Working freelance can often be difficult for those who have little self-restraint, as when you get paid, you will be paid a tax-free amount and may feel as though you can easily spend the entire income without a thought for tax. Unfortunately, this isn’t the case – you want to be fully prepared to understand that a large amount needs to be set aside for self-employment tax purposes. You should prepare your finances for tax amounts to be worked out properly for every income amount, and immediately removed from your personal account, in order to better separate your taxes and avoid the risk of forgetting about them!
3. You Don’t Receive Vacation Pay or Sick Pay
If you’re used to working for another employer, and therefore have always been covered if you’re off sick or take a two-week vacation, it may be a shock to the system working freelance when you realize that a two-week vacation means a loss of two-week income. It’s important to remember that any time you take off, for whatever reason, will result in a loss of money. Hence why it’s a good idea to set up a savings or emergency fund for times when your usual income isn’t being supplied. For instance, if you had to take time off work for a month due to a personal injury, you need to ensure that all your bills are still being paid for that month.
Once you fall behind, it can be difficult to get back on track, so extra savings are key.
Working as a freelancer is, of course, great in terms of the freedom and opportunities it offers you to be in control of your own work and working schedule. However, being responsible for each and every element also has its downsides, so ensure that you’re protected with insurance cover where necessary, a stable financial plan, and extra savings to spare.