Every eligible individual who is a part of the workforce dreams of having a job matching their passions. However, not everyone can find their dream job that offers monetary and professional satisfaction.
Today, professionals globally opt for freelance jobs/projects to earn money and gain expertise. They do not work full-time for any organization, but instead, they take up short-term or long-term projects from multiple clients. Through freelancing, professionals can work according to their convenience and preference.
Interestingly, freelancers contribute a whopping USD 1.4 trillion to the US economy. After the United States, India hosts the second-largest freelance workforce with over 15 million freelancers.
What is Freelancing?
Freelancing is when individuals utilize their experience, expertise, skills, and abilities to render their services to different clients. Freelancers do not work for one single organization or client.
When freelancing, individuals can work from home (or anywhere) for their chosen companies and at their preferred time. However, there is a stark difference between work-from-home and freelancing.
Often, freelancers may have to work from their client’s office or site whenever required, which means they may not always work from home. They may be paid hourly or monthly.
On the other hand, work-from-home is an employment setting where the individual is bound to a single organization through an employment contract and for which they receive a fixed monthly salary.
Thus, freelance is for self-employed individuals working full-time or part-time. While freelancing, the individual does not necessarily work for themselves. They may work for other companies full-time and undertake self-employed work outside of their working hours.
Who is a Freelancer?
A freelancer is an individual who is self-employed and works for multiple clients or organizations to earn money. This individual is also known as a freelance worker. Freelancers generally use third-party freelance work platforms like Upwork for getting clients. They may also use their network to find work and connect with clients directly. Freelancers can also get jobs via referrals.
Typically, a freelancer may not be an employee of an organization and thus, would be at liberty to work at their own will. A freelancer has the freedom to choose their work, time, place, and clients.
Freelancers are generally independent workers who work without being bound by any contract. However, they may sign individual contracts for a predefined fee based on the efforts and time required for completing the work.
Common Freelancing Jobs
Freelancing is not limited to a single industry or job profile. There are ample freelance opportunities for people who want to work independently. The following are a few examples of the freelance work selected by the freelancers:
Freelancing as a Career
During the pandemic, the skilled workforce came forward to make a living through freelancing.
The flexible lifestyle and the gig-economy benefits are prime motivators in the rise of freelancers. With the halting of the global economy and organizations laying off their employees from their positions, it was important for the individuals to find different ways of earning income from home.
Several reasons contribute to the rise of freelancers, such as -
- The ability of the individual to charge the individuals and firms their rate and earn rewards. If a person is disciplined, is punctual, and knows the technique of sourcing clients can have a very successful career as a freelancer. 2020 Freelance Income Report stated that 4 out of 5 freelancers were satisfied working as full-time freelancers.
- Freelancers could work from home easily during the lockdown and were aware of the importance of open communication. Thus, they were able to survive the layoffs and pay their bills. Freelancers can quickly adopt new technologies, making their job easier.
- Pandemic hit the economy and the work of the freelancers. However, they bounced back and got on track pretty quickly.
- With advancements in technology and market demands, upskilling has become essential. Employees were able to equip themselves with different skillsets outside their workplace, increasing the gig economy.
How to Become a Freelancer?
Freelancing is one of the simplest career options where you get to work on your terms. Freelancing can be part-time along with full-time employment or as a full-time option. Many people would wonder how to become a freelancer?
The answer is simple, follow the below-mentioned steps:
- Get freelancing experience while working full-time for another company. This would not only help an individual try different jobs and clients that they would like to work for, but it would also help them save money to cover at least 3-6 months of expenses and starting costs.
- Once the budding freelancer has a rough idea, it is essential to make a plan to reach those goals. One must consider their skills and market competition while making a plan for the short-term or long-term. It is equally important to estimate the earnings and the taxes for better financial planning. One can begin by determining the target market.
- Set the basis of the rate of your needs and requirements. The clients can be charged at an hourly rate or given a lump sum estimate on a project-to-project basis. It is important to consider benefits, sick time, and office supplies before setting a rate.
- Identify the clients who provide the best work, good pay, flexible schedule, and balanced working style.
- You can start your freelancing career by promoting your freelance services on various social media platforms for generating work opportunities.
- Make acquaintances by joining professional associations in the industry for the latest news, educational opportunities, and projects.
- Finally, evaluate your journey to ensure that you are on track and, if not, what changes you need to make.
Setting Estimates and Rates for Freelancing
It is a task for freelancers to set reasonable rates for their work and projects. Generally, the freelancers charge using two pricing models - charging by the hour and fixed pricing.
Before setting the prices and rates, you must consider the annual salary goal, take weekends, holidays, sick leaves, expenses such as office stationery, internet, insurances, and work hours.
It is also important to know about the market rates for your services and ensure that they are not too high or too low than the general market rates. Additional things to consider while deciding on the freelancer costs and rates are the complexity of the work, education background, geographic location, and the client’s stature.
Since the freelancer cost is not fixed, it can increase or decrease according to the season, work requirement, and time involvement. With more experience and seniority in work, the service’s value and income goals would enhance and become better.
Freelancers and Taxes
Freelancers are tagged under self-employed people by the internal revenue service (IRS) of the United States. Thus, it means, like a self-employed individual, freelancers do not have their taxes withheld with their employers, making them liable to pay their taxes timely. The taxes are to be quarterly by freelancers as there is no tax withholding.
The freelance taxes constitute both income and self-employment taxes if earning more than USD 400 annually. This self-employment tax is attributed towards social security and medicare funds. Additionally, as the freelancers are considered self-employed people - they are the owners of their business. Hence, they are liable to pay the taxes as both the employee and the employer.
As a business owner, you should note that freelancers would also be eligible for tax deductions. These tax deductions are only subjected to ordinary expenses incurred in the business's operations. The freelancer cannot claim tax deductions on the standard expenses. These freelance tax deductions are similar to the tax deduction of self-employed individuals.
Some expenses on which employees can claim the freelance tax deductions are -
- Utility bills - water, gas, electricity
- Entertaining cost of the client
- Traveling cost to the client location
- Cost of upskilling by pursuing certifications and courses
How do Freelancers get Paid?
With the rise of the gig economy, the number of freelancing job opportunities and freelancers is also expected to rise exponentially in the coming years. There are multiple payment options for freelancers.
The following are the payment options for freelancers:
- Cheques are one of the easiest modes of receiving payments as it involves no cost in bank deposits. However, there could be a delay in receiving the payments because of a delay in receiving the cheques.
- Paypal has become the common mode for receiving payments by freelancers. It is free to open a Paypal account. Clients can instantly pay after the job is complete, and it is reflected immediately after the payment is made. However, transferring the same to the bank may be time-consuming and involve additional fees.
- Electronic fund transfer is a quick, easy, and hassle-free mode to get paid. However, funds transfer between the banks may take two to four working days and involve additional costs.
Freelancers are generally not bound by any contract. Hence, they may be susceptible to fraud. Thankfully, the Freelance Isn’t Free Act protects freelance worker rights.
The freelance worker rights protected by the Act are as follows:
- Any freelance work that pays more than USD 800 should have a written contract. This contract should contain the nature of work, the price rate, and the final payment date.
- Freelancers must be paid timely. In the freelancer contract, the client should make the payment within 30 days of completing the project.
- It is illegal for recruiters to blacklist, penalize, and deter freelancers from exercising their rights under the Act.
- Freelancers have the right to file a complaint under the Freelance Isn’t Free Act. The clients will be notified of the complaints and must respond within 20 days of the notification.
- Freelancers also have the right to a safe working environment without discrimination and bullying.
As the gig economy or freelancing is booming, here are a few freelancing tips that would help budding freelancers convert this into full-time, high-earning work.
- Today, freelancing is not about completing one job or a project. The freelance industry has evolved with companies integrating the freelancers for a longer duration of time and making them a part of their contingent workforce.
- Freelancing ensures that you do not lose the opportunity to work because of your location. Freelancer hiring companies can find more talented people beyond their local community. So, the freelancers should also search for clients and companies outside their local area.
- Freelancers should not be disappointed because of rejections and should continue improving with better courses and projects. The quality of work delivered would get them recognition amongst the hiring parties.
- Be part of a freelancing community because, let’s face it, people surrounded by like-minded people are motivated and learn to keep on going despite the rejections or failures. If freelancers cannot join a freelance community, they should build their growth.
- Often, freelancers may have to juggle multiple projects simultaneously. However, they should continue to connect with prospective clients and build their work pipeline to ensure they are never out of work.
- Every freelancer is unique, and many may work in a similar industry or field. However, it should never stop you from highlighting your unique skills and success stories on your resume.
- Always stay organized and document every transaction for paying taxes. Also, track all assignments, e-mails, and proposals to not miss out on anything.
- Build a strong portfolio of your work profile. This helps in gaining recognition and jobs and helps in motivating oneself to perform better.
- Have clear communication and ensure regular follow-ups for better clarity of work and deliverables.
A few more freelancing tips for the freelancers to ensure timely payments:
- Freelancers should also ensure that they have a freelancing contract to prevent payment delays.
- They should not wait for a long time for invoicing once the work is complete, for it may leave an impression that there is no rush in payments.
- They should have strong follow-ups for ensuring timely payments.
Benefits and Drawbacks of a Freelancer
Becoming a freelancer comes with its perks and challenges. It, thus, becomes important for an individual to weigh down the reasons for becoming a full-time freelancer and quitting their full-time salary position in a company.
Some of the pros and cons of freelancing are mentioned below:
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1. Does a freelancer make money equivalent to a full-time work contract?
Even though freelancing is not a traditional career path, a freelancer does have the opportunity to earn a decent income from the comfort of their chosen time, place, and work. Moreover, often it is seen that people earn more while freelancing than in a traditional full-time job.
2. Does freelancing provides an individual to work randomly during the day?
Freelancing offers an individual the flexibility to choose their work timings and hours. However, individuals need to have a standard work schedule for maximum efficiency and productivity.
3. Should an individual quit their regular job to work as a freelancer?
Being a full-time freelance worker or working full-time under an employment contract for a particular company is an individual’s personal choice. But, the person needs to understand that freelancing requires a lot of responsibility and accountability for the work being done and the project being undertaken.