1. Focus on Your Website
These days, it’s almost impossible to do business without first building an attractive and user-friendly website. Not only does your website serve as the public face of your freelance business, but it also helps ensure clients can get in touch with you and request your services. For best results, invest money into making sure your website looks professional on both desktop and mobile platforms. Additionally, you should strive to build out your site with educational articles and videos. The goal is to establish yourself as an expert in your field of choice.
2. Seek Multiple Income Sources
It’s a fact of life that freelance work ebbs and flows. If you want to maintain a relatively steady income, it’s important to diversify your client base. By taking on multiple clients of different sizes, you can protect your pocketbook in the event that one revenue source dries up. Additionally, exploring different customer bases can help you gain expertise in new and potentially lucrative areas of the industry. This is crucial if you hope to grow your business in the long term.
3. Invest in Marketing
While the Internet has made it possible to connect with clients around the world, freelancers still need to put effort into marketing their services if they hope to be successful. Before entering the world of self-employment, it’s wise to compile a list of ways by which you can reach your target audience. For example, you could attend trade shows and seminars, utilize pay-per-click ads, or take steps to improve your site’s search engine optimization. Additionally, many freelancers are turning to social media to make contacts and build rapport with current and potential clients.
4. Make Friends
One of the downsides of freelancing is that you don’t have office friends with whom you can brainstorm and commiserate on a daily basis. To make up for this shortfall, self-employed persons should strive to make friends with others in their industries. If you don’t know other freelancers in your area, you can join a group online. Not only can other freelancers recommend great tools of the trade, but they might even be able to send some work your way during a lean month.
5. Ease the Administrative Burden
Freelancers tend to charge more per hour than their traditionally employed counterparts. However, that higher hourly rate must make up for the fact that much of a self-employed person’s day is considered unbillable. After all, you typically can’t charge clients for the time you spend on administrative tasks like scheduling meetings, answering emails, and creating and filing invoices. To stay profitable, freelancers need to increase the price of paid work to account for this lost time.
Similarly, freelancers should take steps to minimize the amount of time spent on non-paying jobs. Accounting tools like FreshBooks offer easy-to-use invoicing, time and expense tracking features so self-employed persons don’t get bogged down in administrative details. Additionally, freelancers should consider saving all their admin work for one day rather than performing it in small chunks throughout the week.
6. Set Aside Money to Pay Your Taxes
Your self-employed profits are taxable. There are two types of taxes you’ll have to pay – income taxes and self-employment tax. The income taxes are the federal and state taxes owed on the profits from your business. Self-employment tax is a combined tax that consists of the Social Security and Medicare taxes you are required to pay. The self-employed tax rate is 15.3%.
The difference between self-employment tax and the Social Security and Medicare that employees pay is that when you are an employee you pay half of the Social Security and Medicare, and your employer pays the other half. As a self-employed person, you have to pay both halves. You do get a bit of a break because you can deduct the “employer” part of the tax in figuring your adjusted gross income.
Even so, if you make much money during the year as a freelancer, the combination of federal and state income taxes plus the self-employment tax can add up to a significant amount of money at the end of the year. To avoid sticker shock when you file your tax return, you need to put money aside to pay the taxes, and you may be required to pay in the taxes on a quarterly basis.
7. Save for Insurance
The Affordable Care Act compelled health insurance giants to accept all patients, but it didn’t necessarily make healthcare more affordable to the masses. According to a recent article, the average monthly premium will further rise 7.5 percent for the benchmark silver insurance plan in 2016. To stay both healthy and profitable, freelancers need to take steps to save for their insurance and out-of-pocket medical costs throughout the year.
While some freelancers can get away with buying only medical insurance, older individuals and those with more serious health problems might want to consider short-term disability, vision, and dental care insurance as well. For best results, create a savings account for health insurance and invest enough that you will be covered during months when work is scarce.
8. Set Limits
While it’s important that freelancers work hard to build their businesses, it’s a mistake to let clients walk all over you. When your home is also your office, you might be tempted to take phone calls and answer emails at all hours of the day and night. However, being this available to your clients likely means you’re less available to family and friends. By setting firm hours for work and play, you can ensure that you start every day refreshed and ready to do your job.
Freelancing might mean skipping the commute and working in your yoga pants. However, self-employed persons have to work hard to stay profitable. By following the above tips, you can give your freelance business the best shot at success in the coming years.