Benefits of Freelancing

Graphic Design Technology

Deciding to become a freelancer is quite a bold and scary move for anybody, but there are a number of benefits which make it a really excellent choice for a lot of people. Here are just a few reasons why you should consider handing in your notice and becoming your own boss.

Scheduling

- when you are a freelancer, you have more control over your own schedules. If you are working on projects that don't require you to progress with them at particular times, you can work at any time of the day that suits you, so if you have friends visiting for the weekend, or a social evening planned, or even just the desire to stay in bed a little longer every day, you can model your schedule around your personal needs. Just make sure you actually put aside some time to actually work though!

Creative work

- there is an increasing demand for creative work, and quite often in fields that are highly studied in college and university but with not much success of companies hiring on a standard hourly contract. Freelancing is a world where you can focus on your creative skills, such as writing, photography, graphic design, content producing and website creating which you thought you would never get paid for, and so you can work in a field that better suits your personality and allows you to express yourself a little more. You are also able to gain experience in fields that are traditionally difficult to get your foot in the door of, and so you can use a freelancing experience as a way to establish yourself and to work towards a big career move.

Working from home

- depending on the type of freelance work you can do, you may never actually have to leave your house, which eliminates the commute to work every day (unless you still count the distance between your desk and your computer inside your house). In fact, as long as you have a laptop computer and a strong internet connection, you can work from anywhere, including your favourite cafe, the library or even from a bench in town, and if you have a portable internet modem, you can actually work from anywhere with a signal. So, when the sun is out and you don't want to be stuck inside all day, you can set up a picnic blanket in the park and enjoy the good weather.

Money

- while it is very difficult to start out as a freelancer, when you become established, there is not limit to how much you can earn. You become your own boss, so you can push yourself to improve and work your way into a better position, which of course can have very positive effects on your income. For those months when you are struggling to pay the bills, you have the flexibility to work as much or as little as you need. You also have the ability to negotiate your own rates, which can work both in favour or against you depending on your haggling skills.

Choosing your clients

- as you are in control of your work, you can be flexible with who you choose to work with. It does help to say yes a lot to begin with, but over time you can refine who you are working for and you can control your working relationships to create a nicer and more personalised professional world for you to make your money in.

There are, of course, some disadvantages to freelance work that shouldn't be overlooked when deciding to switch. Money can be difficult, and with no minimum wage, you have to be motivated and determined to start earning enough money to survive. There are also no traditional employment contracts, so when you become sick there is not likely to be sickness pay, there are not likely to be unions that support you, and there is of course no sympathy when it's your computer that is playing up. There is no steady income, as you are in control of this, and there is a lot less stability and rules like there are in a normal work contract, however, if you are willing to take a few risks, and to jump into the unknown, the rewards are there to be reaped.

Self-Employed, Not Alone

tax

Whether you're a sole trader or a limited or public company, if you are self-employed you need to be an on the ball person. Juggling jobs and organising your own finances and tax payments can be more stressful and time consuming than you imagine, and it certainly isn't for everyone.

Below are some UK based guidelines to give you an idea of what's required if you want to set up your own business. But tax is a complex area, so you should always seek professional advice before you begin trading.

Running a business

As a self-employed person, you will receive gross earnings from your customers on which you pay tax through a self-assessment tax return. You must complete your tax return each year, doing so as promptly as possible so that you can begin to plan for your tax payments. It is essential that you keep proper records of all your business income and expenses, including copies of invoices to customers and receipts for purchases (especially if you are VAT registered). A bookkeeping software package is good for this, but a simple ledger will be fine. And although not essential, it might be an idea to hold a separate business bank account to keep your business affairs apart from your personal finances.

Inland Revenue, Customs and Excise and VAT

You must tell the Inland Revenue (IR) that you are trading within three months of starting the business or else you will be liable for a penalty. If your turnover exceeds £83,000 in any 12-month period, you must register for VAT, informing Customs and Excise within 30 days of your turnover reaching this level. You can also register for VAT if you have a smaller turnover, and this allows you to reclaim the VAT element of all of your costs. Unlike income tax, VAT relates to single transactions so the VAT invoice or receipt must be kept for every transaction related to the business.

National Insurance

You pay National Insurance contributions to qualify for certain benefits including the State Pension.

You pay National Insurance if you're 16 or over and either:

- an employee earning above £157 a week

- self-employed and making a profit of £6,025 or more a year

You need a National Insurance number before you can start paying National Insurance contributions.

If you earn between £113 and £157 a week, your contributions are treated as having been paid to protect your National Insurance record.

Limited company

Trading as a limited company gives you a measure of protection against commercial creditors. As a sole trader or partner, you are fully liable for any business debts and may be made bankrupt if the business fails. If you are a limited company, however, you are usually only liable for debts to the extent of your share capital in the company, except in cases of fraudulent trading.

Pay your Self Assessment tax bill

The deadlines for paying your tax bill are:

- 31 January - for any tax you owe for the previous tax year (known as a balancing payment) and your first payment on account

- 31 July for your second payment on account

If you prefer to pay regularly throughout the year, you can use a budget payment plan.

You can get help if you can't pay your tax bill on time.

Ways to pay. Make sure you pay HM Revenue and Customs (HMRC) by the deadline. You'll be charged interest and may have to pay a penalty if your payment is late. The time you need to allow depends on how you pay.

Tax investigation

The self-assessment tax procedure is accompanied by random tax audits to monitor the system. The Inland Revenue can investigate your business affairs at any time and without reason. In fact, it conducts 750,000 investigations each year, about 8.5% of all tax returns, which means that anyone may find himself being investigated without knowing why or what the IR is looking for.

If handled correctly, an investigation may not be so daunting. Remember three important tips:

Keep accurate records. Records are the evidential backbone of your business. The more accurate and detailed they are the stronger your case.

Deal with enquiries promptly and efficiently. From your first response to an inspector's query, he will be building up a picture not only of your business but how responsibly you take your tax affairs.

Negotiation. An inspector has the power to negotiate on penalties and will take into account factors such as how you help with the enquiry and what course of action you offer to put matters right.

Employment status

Although there are no definitive rules as to a person's employment status in the UK, the distinction is usually whether you are working under a contract of service (employment) or a contract for services (self-employment). The IR will usually look at the following factors.

You are employed if:

You yourself do the work rather than hire someone else to do it for you

Someone can tell you at any time what to do or when and how to do it

You work at the premises of the person you work for or at a place he/she decides

You are paid by the hour, week or month and often for overtime

You work set hours or a given number of hours a week or month

You are self-employed if:

You have the final say in how the business is run

You risk your own money in the business

You are responsible for meeting the losses as well as taking the profits

You provide the main items of equipment you need to do your job, not just the small tools many employees provide for themselves

You are free to hire other people on your own terms to do the work you have taken on and you pay them out of your own pocket

You have to correct unsatisfactory work in your own time and at your own expense

Occasional earnings

Do not confuse occasional income with seasonal income, which is always classed as self-employment. Occasional or intermittent earnings may not be classed as self-employment, but each case will be taken on its own merits. Occasional earnings must be disclosed on a self-assessment tax return and tax paid at the normal time.

Find out more

The people who deal with your tax payments are not the enemy you might think they are. In fact, of all the customer service personnel you will ever deal with, they rank among the friendliest and most efficient.

- For Inland Revenue, visit

https://www.gov.uk/government/organisations/hm-revenue-customs

- For Customs and Excise, visit

https://www.gov.uk/government/organisations/hm-revenue-customs

- For details about Record keeping and simpler Income Tax applications/software, go to

https://www.gov.uk/government/collections/record-keeping-and-simpler-income-tax-applicationssoftware

- For information about employment status, go to

https://www.gov.uk/guidance/check-employment-status-for-tax

Meet Your Future Partners

meetings

Your fabulous new embossed business cards have arrived. You've groomed your personal profile online. And you've just gone broadband bananas so you can be sure not to miss out when you're busy online and all those telephone calls, begging for your services, come flooding in.

Brilliant. Time to sit back and wait. Right? Wrong. However great you are at whatever it is that you do, business won't gravitate towards you by the sheer forces of nature. You have to go out and get it.

The offline net

As an independent consultant, or freelancer of any sort, there is always more you can be doing towards ensuring the flow of future work.

Networking is one crucial and ongoing activity that every self-employed person must do to find business, bring it in and keep it coming. And one cornerstone of networking is the referral meeting.

A referral meeting can be any kind of contact with someone in a position to refer business to you. Whether it's a formal office appointment or a brief chat at a social do, the aim is the same. To let other people know what you have to offer, while learning from them about contacts and connections that could help your business to grow.

Network means legwork

Rather than meeting with people who can hire you directly, referral meetings tend to be with those who have leads to the people or organisations that might hire you.

This can be more time efficient than your trying to pursue individual potential clients, as referral sources can spread the word about you to more potential clients than you could get to meet by yourself. It expands your business effort without the effort. Also, they will hopefully know the right people to target with their referral. (Something you can't always gage before you've wasted time and energy traipsing across town, or towns, to meet someone who turns out to be a non-potential client after all.) It's like having a sales rep promoting you while you concentrate on the creative side of business.

Saying that, referral meetings can still be a toil. The success rate they produce is often a mere fraction of the legwork you have to do to achieve it. Several dozen meetings might yield just one or two potential jobs. And even then, it could be a long time before those briefs actually come in.

Everyone knows that freelance is famine or feast. What's important is that you use your famine times to get out there meeting potential referral sources and working to bring the next feast to your table.

Relate yourself

Before any referral meeting, you of course have to prepare. If you don't know the person well, you must get to know them through a little research. Consider their line of work so you can talk about your own business in a way that is meaningful to them. Bear in mind their level of knowledge in your area. Don't use jargon that they won't understand and don't over explain something that they will.

The sales pitch

You are in this meeting to promote yourself, so be articulate about what you have to offer. Focus on selling the benefits of your service, not the features. Instead of describing what you do and the skills and tools you use to do it, talk about the end results of your work: how your service can improve people's businesses, increase their profits and encourage repeat custom. There's time later to get into the details of how you operate.

Present yourself in stereo

Good presentations combine both words and props. And people will want to see evidence that you can actually deliver. So take to the meeting something visual to back up what you say. A portfolio is a must, whether it's a hard copy or online. Brochures and flyers also convey a professional image, although you don't want to overwhelm someone with reams of paper. Equally, involved laptop presentations are a bit much for a one-to-one meeting. Simply take along enough to present yourself as a polished package.

It's an idea to follow up the meeting by sending any additional material that you didn't give in person. Not only does it add to an otherwise brief thank you note or email but it makes a good indication that you intend to deliver (to future clients) everything you spoke about.

If your work doesn't involve any tangible product that you can take to a referral meeting, then you'll have to rely on description. Talk about previous projects you've worked on, real stories of accomplishments. Written case studies or client testimonials would be your best bet in this case.

Make it work both ways

Much as you are a creative rather than salesy person, this is still a mild game of PR you're playing here, and there are certain rules you should follow if you want to stay in it. We're not talking blatant schmoozing. Rather a simple case of running a two-way street.

Cultivating a relationship with your new ‘friend' demands a genuine effort to stay in touch. True networking is give and take, so don't even think about developing a professional rapport unless you're willing to give as much as you get.

It's a partnership

Every so often, remind them who you are and what you offer, remembering to find out how you can be of assistance to them. Tell your referral source about a feature that might be of use or of personal interest to them, be it a book or article you've read, a website you think is relevant or an event they might want to attend. Send them updates on your services and successes, an email newsletter or a pointer to developments on your website.

Where appropriate, you might even give a professional courtesy discount, offering your products or services at a reduced rate to the people who are particularly supportive of your business. And always show your appreciation for any referrals they do send your way, especially if they result in business for you. Send a small gift or take your referral source out for lunch or drinks.

Okay, so this last one is slight schmoozing. But we're all only human.

Putting Up Prices Not Fences

fee negotiation

Money is one of the reasons why people freelance. When the work is there, the rates can be excellent. So money is going to be a prime concern when it comes to renewing contracts with clients.

New terms time

It's always slightly awkward to renegotiate a contract with an existing client. It's particularly difficult when this is your biggest and oldest client. The client that's so lasting, in fact, that the rates you've been charging him all this time are now well out of date. You'd never dream of charging so little to new clients these days. But how do you tell him that you're raising your fee by what might seem to him a huge and perhaps cheeky leap?

Business is business

You don't want to offend or alienate your most loyal source of business. Your personal relationship with him is important and it's largely this rapport that's kept the partnership going so long. But, while good personal relations are a valuable element of any consulting arrangement, the health and prosperity of your business must be your bottom line.

If you're the kind of person who's afraid to even barter at a rip-off tourist flea market while holidaying where haggling is quite the custom, you might have some trouble asking a long time supplier of work for more of his cash.

So how to renew a contract without squirming in your skin or burning bridges you can't afford to char?

For starters, you don't simply ask for more money without good reason. You need to give a rationale for increasing your fee.

You're underrated

Higher expenses and overheads are perfectly good grounds. You could be renting extra office space, hiring new personnel or undergoing the latest training course in order to develop your own professional skills, all of which directly or indirectly help to improve the service you are offering your client.

Rather than simply increase your daily or per project rate, however, you could restructure your charges. This might mean asking for mileage reimbursement, if a client requires you to travel to his office, or charging for time spent at client meetings, if you didn't do so before.

Intellectually speaking

Aside from increasing your price for actual hours devoted to a client or project, you can sometimes renegotiate your intellectual capital rights. Quite often, freelancers, either knowingly or unknowingly, sign an agreement to give away all rights to the intellectual assets they create. Looking back, this might be imprudent, but it's by no means irreversible. Consider renegotiating the intellectual property terms of your agreement.

Whether it's a clever software code, a slick art design or a brilliant copy line, you might produce work for a client that you recognise to have commercial value beyond the company's specific needs. It's worth asking the client to deed that intellectual property back to you, especially if it's something he will never use in the future. Satisfied with the results of the project at hand, he may not want to go to the trouble of realising the additional value you have created.

You may also think about asking for royalties on uses of future works created while you're under contract.

Intellectual rights are a complex issue so, if you're unsure about the ins and outs, consult a lawyer before approaching your client.

Speak up

At the end of the day, when it comes to wanting more money, you've simply got to ask. You never know, your client might be anticipating your broaching the subject, bemused that he's still enjoying your services for what he knows are sub-market rates and wondering why it's taken you so long to get around to the question.