As the recession forces businesses across the country to trim their labor force and cut expenses, many will undoubtedly turn to freelancers and independent contractors to accomplish those tasks formerly completed by full time employees. If you’re interested in learning how to make extra money or even in replacing your income, freelancing may be the way to go for you, but it is a different world in many different areas.
Freelancers and independent contractors are generally responsible for their own taxes. Once you take the plunge into freelancing, you’re now responsible to pay both your portion and the employer’s portion of all taxes, including Social Security and Medicare.
When it comes to time management, your time is your own. As an independent contractor, you and you alone dictate when and where you perform the work you’ve been contracted to perform. The IRS calls this the “right of control over contractors.” As a freelancer or independent contractor, the business cannot demand that you work certain hours, in certain places, under supervision, or with certain tools or equipment. Certain exclusions may apply under some conditions (it’s hard to evaluate accounts receivable if they won’t email their data to you or allow you to remove their files from the office), so it’s best to be flexible where it’s prudent.
Total Amount of Work
The beauty of using an independent contractor or freelance worker for the business reaches far beyond not having to worry about taxes. When the work is done, the work is DONE. A business doesn’t have to continue to pay you like they would a regular employee. No work means no pay, so you’ll spend a significant amount of time finding clients. Plan to reduce this time by securing referrals from existing or former clients and NEVER be afraid to ask for a good reference. If you can get this reference in writing, ask if you can post it on your website so potential clients can see what a great job you’ve done for others.
Working as an independent contractor or freelancer can cause you to experience large swings in income, depending on how well you prospect for new clients. It’s important to set a realistic budget and to have a very well funded emergency fund.
What’s your experience?
Have you ever performed any freelance or independent contracting work before? What happened? What lessons did you learn?
Would you like to start doing some freelance work? Why? What are your aspirations?