Say the word “freelancing” and what comes to mind? For most people, the image that surfaces is most likely that of someone, comfortably clad in pajamas or loungewear, sitting at home in front of a laptop with a steaming cup of freshly brewed coffee or tea conveniently at hand. It’s a relaxing picture, and, depending on your personality, may very well be the way you choose to work if you decide to take the freelancing plunge.
But there’s a lot more to being a freelancer than that one simple picture. If you’re in a field that offers freelancing opportunities, and you’ve been considering quitting your job and becoming a freelancer, it’s important to sit down and take a good, hard look at the pros and cons of being a freelancer. As with most things in life, there are risks and there are rewards to freelancing, and the only way you can decide if the freelancing life is the right life for you is to carefully examine the various advantages and disadvantages of being a freelancer.
5 Advantages of Being a Freelancer
There are several advantages of being a freelancer. The following five are among the top reasons people decide to become full-time freelancers:
1. You work when you want. For many people, working nine-to-five simply doesn’t take advantage of their most productive and efficient hours. As a freelancer, if you work better in the early hours of the morning, or late into the night, you have the freedom of adjusting your work schedule to accommodate your best, most productive working times. You also have the flexibility to adjust your schedule so that you can live your life more fully. Haven’t seen your college friend Mike in years, and you find out he’s in town for one day next week? If your deadlines permit, you can schedule a nice, long lunch with him to play catch-up. And medical and dental appointments? You can easily schedule them in during non-busy times of the work day.
2. You work wherever you want. Freelancing these days isn’t just about cutting your commute time from an hour to zero minutes. With the increasing connectivity of our everyday world, freelancers these days have the option not only of working from home, but also out and about in their home cities—in the library, at the local Starbucks, in a park on a beautiful spring day. If you’re more adventurous and don’t require a consistency in your work places, you might find yourself joining the small but growing number of freelancers who choose to work from all around the globe, traveling wherever they want while still meeting their deadlines.
3. You are your own boss. You know what you like to do, and what you do best, but when you’re working for someone else, none of this matters that much to your supervisor or manager. When you’re a freelancer, you’re the one in charge of the assignments you accept—you get to build the career that you want. Sure, at times you may end up working on projects you’re not that interested in, in order to have work during the downtimes, but that’s a choice that you get to make as a freelancer. Unlike an employee, you have the freedom of full control over the work you take on, and for whom you work.
4. You have more income potential. There’s nothing as disheartening as finding out, as an hourly or salaried employee, that your employer is charging a customer or client ten or twenty times the amount you’re getting paid for a project on which you’re doing all the work. As a freelancer, you’ll be able to charge what your work is worth, and you get to pocket all the profit after your expenses are paid. Your income isn’t capped by your hourly or salaried rate, either. The more effort you put into finding clients and landing new jobs, the more income you have the potential of making.
5. You can take advantage of more tax deductions. As a freelancer, you’ll be able to deduct a lot more expenses, deductions that aren’t available to employees. Deductions you can make may include things like the costs associated with your home office, travel expenses, costs related to entertainment and meals, your Internet access, your cellphone package and any other reasonable and legitimate costs which you incur as a result of running your own business. There may also be a number of tax sheltering investments you can take advantage of as a freelancer, so it pays to consult a tax expert and/or financial planner to see how freelancing might affect your taxes.
5 Disadvantages of Being a Freelancer
There are also many disadvantages of being a freelancer. In making your own personal risk-benefit analysis, you should pay careful consideration to each of the following:
1. You have to make more than your previous salary. Too many people make the mistake of assuming they’re doing well if their freelance income matches the income they made when they were employed. In order to make a success of freelancing, you need to calculate an hourly or by-project rate that provides you with an annual income that doesn’t just match your previous salary, but also includes the costs of all the employee benefits you’re no longer receiving. Depending on how generous your previous employer was, these benefits may include things like paid sick leave, health insurance, 401(k) contributions, paid vacation time and disability insurance. You also need to include an amount for the expenses you’ll incur as a result of running your own business.
How much extra should you charge in order to be properly compensated for the value of these employee benefits and other costs? It will depend on a number of factors, including the industry in which you’re working and the kinds of benefits your previous employer provided you. As a general rule of thumb, you may need to make anywhere from 2 to 2.5 times your previous full-time base salary (the multiplier will vary depending on your particular circumstances), in order to account for the value of the employee benefits you’re foregoing as a freelancer, as well as all the other expenses you must pay in order to run your business.
2. You have to wear a lot more hats. While you’re offering a specific service to your clients, as a freelancer you’ll find yourself devoting a certain amount of time each week to business activities you never had to do before as an employee. Not only will you be responsible for the work your client has hired you to do, you will also need to do all the administrative work that’s required, such as billing, paying invoices and dealing with other accounting matters. You’ll also have to do your own sales, marketing and advertising. Overall, it’s likely you’ll find yourself spending at least seven to ten hours per week on these additional—and unfortunately, non-billable—activities.
3. You have to deal with inconsistent cash flow. Your rent or mortgage needs to be paid each month, you have to buy food every week, the car payment needs to be made—unfortunately, none of these costs adjust themselves to your current cash flow. As an employee, you could count on getting a regular paycheck, but when you’re a freelancer, unless you’re lucky enough to land a few clients with regular, consistent work for you, the cash you’ll have incoming won’t arrive in an evenly paced manner. You may very well have four or five times this month’s rent coming to you within the next 30 days, but unfortunately, that’s not going to mean much to your landlord or the bank on the day your rent or mortgage is due.
4. You are responsible for finding your own work. When you’re employed, you come into work, and someone will give you work to do. As a freelancer, you won’t have this luxury. Occasionally, especially once you’re established as a freelancer, you’ll receive an email or a call from a prospective client who has heard of you through word of mouth, but for the most part, you’re the one who has to do the legwork to get those jobs. Whether it’s through frequenting freelance job boards—there are several online, particularly for the creative fields, such as freelance web developer jobs, freelance web design work and online writing jobs—or through good old fashioned networking, it’s up to you to land the work that will pay the bills.
5. The buck stops with you. No longer will you have the luxury of passing on client problems or office mishaps to someone else. As a freelancer, the proverbial buck does stop with you. In addition to negotiating with the occasional deadbeat client (it happens, even to the most careful of us) and soothing the irate client, you will also have to handle things like malfunctioning office equipment and missed payments. So when your laptop falls in love with the blue screen of death, there won’t be a handy IT person to come along to fix things for you, or to give you a new one. And when an up-to-now reasonable client turns out to be an ultra demanding one, yes, unfortunately you’re the one who’ll have to deal with the repercussions.
Making the decision to become a freelancer can be a life-changing one, and as such, it’s not a decision to be taken lightly. Only you can know whether the freelancing life is the right one for you. If you’re considering taking the plunge into freelancing, the best thing you can do for yourself is to sit down and examine all the pros and cons of freelancing carefully and objectively. If you find the rewards outweigh the risks, then maybe it’s time to jump in. But if the risks seem too big to you, perhaps the time isn’t quite ripe yet to take on the world of the full-time freelancer.