I’ve now been freelancing properly i.e. actually looking for clients, set up as a sole trader and got a business bank account, for just over a year and a half, so I thought I’d give back a bit with some things I’ve picked up or learned over the past 18 months or more.
Firstly I have to say that I agree with what people say, in general, that if you want to get into business or set up as a freelancer university is definitely one of the best times to do it. Student loans mean that you have a bit of comfort in what you really need to earn, or if you want (or can) invest some of your student loan into a company it’s likely to be one of the lowest interest loans that you can use.
However if like me you’re a mature student it’s likely that working is a necessity rather than something that you can do because you want to, which can make things a bit more difficult. The money that you’re getting from freelancing you likely need to support yourself, or previous debts accumulated from working and living in the “real” world. Therefore it’s important to be realistic and decide whether you can support yourself from just freelancing or whether you need to have a part-time jobs too. Like I did. So at least you know there is definitely money coming in.
So one of my first tips regardless of which of the above routes you choose is to ALWAYS get a deposit from a client. It can sometimes be hard in the first instance because you are so eager to get your jobs going but it’s really is a necessity. 30-50% is generally an acceptable amount to ask for. If a client isn’t willing to pay part in advance you want to avoid them. One client I had, I had done some work for regularly, they then said they would pay me a set amount every week. This never happened and I am now out of pocket for work that I did. ALWAYS get a deposit. But please be sensible and don’t spend it until you have completed the work you’re contracted to do. Some freelance sites, e.g. PeoplePerHour, give the client the option to pay the money into an Escrow account. This may put their mind at ease because you don’t have access to the money either, however bear in mind that freelance sites do take a percentage of your fees for providing these services, so it’s possible you may have to charge more using these sites rather than dealing directly with clients.
Sticking with the money themed tips. Don’t be afraid to ask for what you’re worth. Money is always a delicate matter and can seem really precarious when you’re not sure what other people are charging and what you should tell clients you charge. You need to investigate what other people are charging, compare their ability to yours and set a rate in comparison. If you’re better charge more, if you’re not quite up to their standard, charge less. Just don’t sell yourself short in an effort to get more business. Again see my previous point about deciding whether you can really afford to freelance, or whether you need a side job.
Time management is an important factor when considering freelancing. It becomes quite important when you’ve advised a client of a timeframe, quoted them for it and then suddenly it takes longer to complete than anticipated. This is especially important if you’ve quoted a flat fee for the work. Try and work to the set timeframe, always keep the clients informed if you think you’re not going to be able to deliver on time and then reevaluate whether you need to adjust the quote or whether you just need to work a bit harder to get the work done.
One other thing that you have to deal with as a freelancer rather than just an employee is HMRC letters and tax returns which become tedious and tax returns can be confusing. There’s lots of information out there so don’t lose hope. I’m nowhere near an accountant but as long as you keep records, have bank statements, it shouldn’t be a massive issue in the early stages. Just make sure that you are claiming correctly for National Insurance Contributions, you don’t have to pay NICs if you’re earning under £5800 roughly this year. Make sure you’re VAT registered if you think you’re going to be earning a lot of money, uptodate VAT thresholds are available here. If you’re employed as well as working freelance make sure you hold onto your P60 that your get in April, because you will need it to fill out your self-assessment tax return.