Freelancing is on the rise
Times are changing, and so are the ways we work. With more people working from home than ever before, many professionals have realized that without spending hours each week traveling to work, they have more time to freelance or work as contractors or consultants, whether full-time or part-time.
One of the most common reasons people start a freelancing career is to be their own boss. Since the Covid-19 pandemic began, more workers have found that working for themselves gives them greater personal fulfillment and satisfaction. Additionally, becoming a successful freelancer provides the ability to work to your own schedule and from any location.
Popular freelance industries and sought-after freelance jobs
With more people freelancing on the side, the availability of freelance jobs is rising too. But while many people would enjoy the freedom, perks and flexibility of starting a freelancing career, particular industries, jobs and skill sets lend themselves better to self-employment. Highly skilled and creative industries, like freelance writing for example, offer the most opportunities.
Skills in high demand include graphic design, social media, copywriting, web development and accounting. Each of these jobs can be performed remotely, but some face-to-face contact might be required depending on the client’s requirements.
The ups and downs of freelancing on the side
From the outside, freelancing looks like a lucrative career move, but there’s always a lot to consider before you take the plunge and become a business owner. Some of the main benefits to consider include:
- extra income
- being your own boss
- developing new career options
- working on projects that interest you
It doesn’t matter whether you’re thinking about becoming a freelance writer or accountant, these benefits will be the same. Likewise, some freelancing challenges include:
- meeting deadlines for two jobs
- finding ways to market yourself
- managing client expectations
- filing taxes
- having to turn down work so you can take a holiday
How to freelance as a side hustle
1. Check your primary employer’s policy on freelancing
Most companies understand that employees might take on freelance jobs, especially if you’re in a creative role that lends itself well to freelancing. However, your employer is likely to have policies that restrict you from dealing with a competitor or directly with a client of theirs. This is because there is a conflict of interest. Some companies might even prohibit you from working in the same industry. If you’re unsure what the policy is in your workplace, check your employment contract and ask your boss.
2. Freelance in your own time
No matter how busy you get, only ever freelance in your own time. Your primary employer – and your colleagues – should get the same professionalism from you as they always have. You’ll have to work out how to effectively manage your time outside of your primary work hours.
Perceptions are important, so avoid taking freelance-related calls at your main job. Make it clear to your clients that they’ll have limited access to you during regular office hours. If they’re used to hiring freelancers, they should understand this.
3. Find low-budget ways to attract business
If you want a steady stream of freelance income, you’ll need to market yourself. There are plenty of low-budget ways to promote your services that won’t put too much of a dent in your hourly rate.
Maintain an online portfolio to showcase your work (you can use a free platform like Weebly). Establish a social media presence, particularly on LinkedIn. Gather testimonials from clients and ask for referrals. Write a regular blog to demonstrate your knowledge. You can also consider offering free training or seminars in your field. Volunteer on interesting projects to build up contacts, skills and portfolio pieces. Network with other professionals.
4. Record your time
Always document what you do and when – this is crucial when it comes to creating accurate invoices and charging the client correctly. Even if you’ve agreed on a flat fee or a retainer, time recordings are helpful. They’ll tell you how long a job actually took – as opposed to what you thought it would take. This helps you estimate future jobs more accurately.
5. Deliver what you promise
When first starting your freelance business, it can be tempting to over-promise to win a job. But that can be damaging. Be realistic about what you can deliver and when, then convey that clearly to the client. You both must understand the scope of the job from the beginning and agree on the outputs you’re expected to deliver.
Do your research before agreeing to a budget or timeline, and protect yourself by confirming what you’ve agreed to in writing. If expectations seem vague, make an effort to straighten them out. Question every assumption you made when scoping the project, and document the scope and assumptions in your client agreement. You’ll also need to manage expectations. Stay in touch with your client regularly and tell them if something is taking longer than expected so they can plan accordingly.
6. Avoid burnout
When you’re freelancing on the side, life can get hectic. Even if you’re enjoying the buzz of extra income and exciting projects, it’s important to have realistic expectations of yourself and ensure you don’t overdo it at the expense of your family time or mental health.
Overworking can eventually lead to exhaustion and a dip in productivity which can be detrimental to your side hustle. You can avoid burnout by:
- recognizing when you have too much work and saying no to new projects
- partnering with other freelancers to share the workload
- getting a bookkeeper or accountant to take care of your finances
- taking time off
7. Create a goal to work toward
When you start freelancing, it’s helpful to establish a defined purpose to ensure you have something to work toward. This could be setting up a business or having the opportunity to work on a pet project.
Once you’ve started, revisit your goals and keep reassessing them as your freelance journey continues. Make sure the type of work you’re doing serves those aims and ask yourself the following questions:
- Is it fun?
- Is it profitable?
- Are you attracting the sort of jobs and clients you want to work on?
- Is freelancing still worthwhile for the time you’re putting in? And if not, what needs to change?
8. Know your tax obligations
Freelancers are self-employed in the eyes of the tax department, so your tax obligations will change. You shouldn’t be daunted by it, but you’ll want to consider:
Make sure you know:
- how much of your freelance income to set aside for tax time
- what business expenses you can write off – such as travel, home office and equipment costs
How to freelance in a way that works for you
Though you may have help in your day job, freelancers usually have to take care of everything themselves, whether it’s in their skill set or not. That includes finding prospective clients, estimating jobs, admin, marketing, delivering projects to budget and accurately completing taxes, as well as regulating their workload.
Fortunately, there are plenty of tools out there to help you, whether it’s support with invoicing or marketing. There’s also a huge community of freelancers that you can connect with for support; a simple search on LinkedIn will bring up a variety of groups you can join.
Considerations before freelancing full-time
Freelancing full-time seems like the dream for many, but there’s a lot to consider before you take the plunge and quit your regular job. First, you’ll need to assess your finances and whether you can afford to leave your main job. Online educator Ryan Robinson recommends that you grow your side income to at least between 50% and 75% of your total current income before leaving your full-time job, depending on your risk tolerance. See step 5 of Ryan’s blog How to earn more money freelancing.
While matching or increasing your regular income is an important consideration, there are others too. For example, you’re likely to be working alone for most of the week – is this something you can cope with? You’ll also need to have self-discipline and hold yourself accountable: there’s no one to organize your workload. Can you be sure you’ll regulate the time and effort you put in to avoid burnout and deliver what your clients expect?
Becoming a full-time freelancer can give you a better work-life balance and provide a greater sense of achievement, but only if you’ve considered all the implications first.
Frequently asked questions about freelancing
Can I freelance with no experience?
If you have no experience, first consider what you’d like to do. Some of the most in-demand jobs for freelancers include copywriters, graphic designers, accountants, bookkeepers, web designers, coders and digital marketers. Once you’ve decided on a job, you can start learning and gaining experience in this field.
How can beginners start freelancing?
When starting a small business and looking for your first client, first establish what kind of work you’d like to sell and then make sure your skill set is relevant. Once you know what you’ll be doing and how much you’re going to charge, you’ll need to market your business and build a portfolio that showcases relevant and high-quality work.
What are the most important skills for a freelancer?
No matter what your speciality is, whether you’re a writer, accountant, or HR professional, as a freelancer, certain attributes and skills are essential. They include having confidence, being able to work autonomously and problem solve, having organization and project management skills, and the ability to manage time while juggling multiple projects.
What are the best ways to find freelance work?
Social media, particularly LinkedIn, is a great platform for finding freelance gigs and connecting with other freelancers who can give referrals and help you discover freelancing opportunities. Networking, searching job sites, posting on job boards, using freelance websites such as Upwork, and attending industry events are also great ways to find freelance work.
How do I market myself as a freelancer?
To establish a successful freelancing career and win new clients, marketing is essential. You could establish yourself on social media, use digital marketing, deliver leaflets or business cards to local businesses, and/or create a portfolio. Your marketing methods will depend on your business goals and who you’re targeting; always consider where your audience is and how your business will benefit potential clients. The best way to win new jobs is to do a great job and encourage word of mouth referrals from current or past clients.
How do freelancers get paid?
You can get paid in several different ways, depending on what you have agreed with the client. Most freelancers are paid via bank transfer but some clients might prefer to pay by cheque or secure payment portals like PayPal.
As a freelancer, you have flexibility with how you’re paid and how often. You’ll need to establish your payment terms – will you work on a project basis or a retainer? When will you send invoices, and when is payment required? Include this information in the contract you send to your client.
How do I accept freelance payments?
If you’re starting your freelance journey and need a way to accept payments from clients, it’s worth considering a payment processing solution. Solutions like the option to accept payments online in Xero enable you to send your invoice with a ‘Pay now’ button to make it easier for your clients.
Is freelancing a good career?
Freelancing can be a great option, with the opportunity to earn more than you would in employment. You’ll also be your own boss, manage your own time, and have more control over your work-life balance. But income isn’t always guaranteed. So while freelancing can be a good career move, it takes a lot of time and hard work to become a successful freelancer.
Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.