10 tips on staying sane in self-employment
As full-time jobs disappear, everyone's talking about freelancing as the future. A pro's advice on how to do it right.
I was a freelancer back when it wasn't cool.
In 1997, I was fired from my job as a weekly newspaper editor. So I decided to work for the only boss I could tolerate: myself. But prior to the millennium, the only people who freelanced for a living were either famous or inferior.
"Why would you give up a full-time job with benefits and one bad boss to work for no benefits and a bunch of bad bosses?" my best friend asked me.
Back then, it was a good question. These days, the answers are much clearer:
- Benefits ain't what they used to be. In the 1990s, employers offered good benefits automatically, while freelancers spent hours researching complex plans that offered less. That's changed: Many employers have cut their health insurance offerings so deeply that a third of full-time employees are thinking about finding a better deal on their own. And having a human resources department on hand to explain the details? Even that's disappearing, a new study shows. Meanwhile, as freelancing expands across many industries, insurance options are slowly catching up. If you don't know an insurance agent to consult about intriguing plans like the curiously named groups of one, you can start with the National Association for the Self-Employed and the Freelancers Union. These two organizations tout their insurance plans right on their homepage.
- The Internet nets more money. When I started freelancing as a writer and graphic designer, I had to spend money to make money: I bought envelopes and stamps to mail my invoices. The Internet has saved me time and money in ways that are obvious (e-mailing invoices, designing my own resume website) and obscure (using instant messaging to talk to a boss about a deadline assignment from the comfort of my couch and using Google Docs to get it done). Best of all, it no longer costs me money to learn the programs that save me money. To teach myself how to build my website, I watched YouTube videos. Whenever I've had a computer question, I've done an Internet search and found my answer in minutes.
- What job security? The recession has turned the working world upside down. Full-timers are being laid off and replaced by freelancers, part-timers, and contract workers (which are really all the same thing, but more on that in a moment). And even when the good times roll once again, that's not likely to change much. "I think we are seeing a fundamental change," Tom Mobley, a professor in the Farmer School of Business at Miami University in Ohio, told CNBC. "Companies will staff up at certain levels again, but I think they will use freelancers or consultants on a regular basis going forward."
But freelancing won't set you free if you don't do it right. I should know. Not only do I freelance, but so does my father. And my brother. Dad has dabbled as a quality-control consultant for companies in Mexico and China, while my younger brother writes iPhone and iPad apps. Here's what I've learned, some of it the hard way.
While I'm a journalist, these tips will apply to any freelance career:
Freelancing isn't for everyone -- or every career. I have friends who freelance in myriad professions, ranging from public relations to private investigating. But some jobs don't fit into freelancing, especially those that require working in teams or in the office.
The job-searching website CareerBuilder recently listed its top 10 "freelance-friendly" jobs, and they include some I never would've thought of -- like interior decorator and translator. But all of them have one thing in common: You work mostly by yourself. So if you prefer working in groups, freelancing might leave you lonely.
Don't get hung up on names. I've been a freelancer, contractor, part-timer, and temp worker -- sometimes all for the same company. The differences are small but important. When I freelance, I'm hired to do one assignment at a time. When I contract, I sign on for a certain number of weeks or months. When I'm part time, I've worked 10 to 20 hours a week and initially thought I had more job security -- but in reality, the contract work proved more reliable. Part-timers get fired with alarming frequency and little notice. And who replaces them? Temp workers!
Whatever the boss calls it, consider it. The only jobs I avoid are so-called part-time jobs that require 32 hours a week -- just enough to not give you benefits but too much to work elsewhere. And you can (and probably will) get fired with little or no warning.
If you can't find a freelance accountant, find one who works with freelancers. Specialists always possess knowledge generalists don't. Like this: Did you know taking a deduction for a home office increases your risk of getting audited?
But otherwise, deciding whether to incorporate is confusing. Money Talks News tackled that topic in "Should you incorporate?" You can also search online and find dozens of websites offering conflicting advice. My own advice is simple: Talk to your accountant and incorporate only if it helps your bottom line. I admit I did it partly because I thought that's what all successful freelancers do. It's the freelancer's vanity, sort of like a Porsche for a middle manager.
If you enjoy doing something different (but related) every day, then freelancing may be for you. But how do you start?
And here's something else to consider: I get more work if I give you work. Every so often, I'm offered a freelance, contract, or part-time job I can't do -- either because I'm too busy or the pay is too low. So I refer those employers to other talented freelancers, and my reputation is enhanced for making the hookup. If those satisfied employers don't come back to me later (and they usually do), those who got my endorsement probably will -- to throw me work they can't handle.
My parting advice: Buy a freelancer dinner and drinks. You can find them online. Almost every occupation has an online group or forum. We're freelancers -- we don't make money by being shy.
Following these tips may not make a killing -- that Labor Day study I cited above shows that most freelancers make less than $50,000 annually -- but you can certainly make a living. And you'll work your own hours and be your own boss. For some of us, that's more than enough.
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Even those who don't like to shop are probably hitting the stores this month. Here's what to be on the lookout for and here's what to avoid.