Top Freelancing Fears and How to Combat Them
So, you really fancy the idea of setting up your own freelance business, and you think you can do it. Maybe you want to be a writer, a designer, a dressmaker? You know you have the talent, the dedication and the ability, but there's still something holding you back from pursuing your dream. Is it one of these freelancing fears?
I have no idea how to register as self-employed
There's really nothing to it. Let's assume you're a freelancer working for yourself, as a sole trader. At the moment it's just you and you don't employ anybody. You need to contact HM revenue and Customs (HMRC) to let them know that you have set yourself up in business, even if it's just a part time extra income at the moment.They will set up a self-assessment account online for your taxes automatically. That's another thing people tend to worry about, but we'll get to that later. So, all you need to do for now is visit the HMRC website and register. It gives you the option to register your business for self-assessment (including Class 2 National Insurance contributions) as well as Corporation Tax, PAYE for Employers and VAT if you need them too. You'll need to have your National Insurance number, contact details for you and your business, and the date you became self-employed to hand.
Once you've registered for self-assessment you'll get a Unique Taxpayer Reference (UTR) number which enables you to file your tax return with HMRC. This usually takes about seven days. You need to register as soon as possible, it's advisable to make this one of the first things you do, and you MUST register within three months of starting your own business, even if it's a part time business.
Tax returns scare me!
There's a lot of mystery around tax returns, but they needn't be scary. There is one really easy option - give them to an accountant to do! If you find a good accountant, he or she will be able to make sure that you claim for expenses where you're entitled to them, and also ensure that you don't claim fraudulently for anything by mistake. There's also the comfort of knowing that you've handed your tax return responsibilities over to an expert.There are some excellent services for freelancers, affordable options designed specifically for freelance contractors who are starting out and just need a basic service. Expect to pay around £30 a month plus VAT for this type of service. Google 'affordable accountancy services' for a selection.If you choose to go it alone, you can ask advice from the HMRC website or you can call the self-assessment helpline on 0845 900 0444.
I won't get enough work
This is a tricky one. All freelancers go through lean times unless they are very lucky, and there's no way around things like global recession. The best way, if at all possible, is to start off with some savings in the bank, and if you can, test the water part time before taking the plunge. Suzanne, a freelance writer, was lucky enough to start up with a lump sum, but she explains that it soon depleted!"I left a job in the civil service in 2007" Suzanne told us, "And because of my long service, I had over £10,000 in voluntary redundancy pay to keep me going while I started up my business."Circumstances intervened though. "I found the first year was encouraging, I built up some good clients and started to make money, but the recession hit in 2008, and at the same time I separated from my husband and had to survive on just my freelance income."
The nest egg was going fast, and by 2009 things were hard. "One month in 2009 I made just £300 before tax and the rent on my flat was £500. I panicked and applied for other office jobs but I found that people saw 'freelance writer' and discarded my applications for office work because I didn't fit their ideal candidate mould. I considered signing on at one point."
Carrying on through, seemed to be the only way forward - Suzanne reports that things improved over time. "I registered with as many agencies, websites and groups as possible and kept plugging away. I got work from unlikely places, and referrals always helped. Now I have a core group of regulars and I try to make sure I get references from one-off clients too. It all helps. Diversifying and taking on challenging projects is another way to get work."
Where do I advertise?
Everywhere. There are oodles of freelancing websites; some of them are free to register on such as People per Hour and Free Index. People per Hour is a site where you also have an opportunity to enter 'hourlies' - what you offer to do for a client in a set amount of time - or bid for projects that people have posted. Money you make through PPH will be paid through escrow and you have to pay a percentage of any earnings to PPH.Free Index is completely free and you can advertise any business there. You can pay for a premium listing if you want to but it's perfectly possible to get a good amount of work just through a free listing. You move up the ranks as you get more good reviews from clients.
Look for groups and organisations that are relevant to your business, too. Use social media - set up a Facebook page, a Twitter account, and a Linked In profile. If you make things, get yourself on Etsy and Pinterest too. All of these are free and excellent ways to get the message out there without spending money. As you make more income, you can join organisations that give you access to projects and job opportunities in your area of work, advertise in the local press and more. The options are endless and mostly inexpensive; it just takes a little imagination.
Do I need a business bank account?
No. It's advisable to have a separate account for your business, but as long as you're a sole trader, it doesn't have to be a designated business account. Banks generally don't like you using a personal account for your business, but that's probably because business accounts are often more expensive to run than personal accounts.When you apply for an account, make sure that you get the best deal by comparing rates and free periods. Also, be aware of overdraft charges - some accounts such as LloydsTSB will charge you a large fee for renewing an existing business overdraft facility every year, even if you haven't dipped into it!
Working from home - how will I get everything done?
This one's a biggie. Everyone will say to you if you tell them you're setting up a business from home "I could never do that - I wouldn't have the motivation."Trust me, you will. It might sound like a glorified chance to sit at home and watch Jeremy Kyle, but in reality, if your income depends on getting on with your work, you will have no trouble getting on with it.
The first thing to do is establish a routine. Get the kids off to school, have your breakfast, check your emails. Whatever admin needs doing, set a time for that. Then just get stuck in. Suzanne, the freelance writer above, explains how she does it.
"My routine is so variable - I have regular work that I do on set days of the week, but some weeks I have very little else to do, and other weeks I have a whole load of work that I need to get out of the way. My normal routine is to get up, have breakfast and deal with emails. I don't have the TV on, but I might listen to the radio or MP3s while I work.
"If I have a busy week, I try to get the bulk of the work done between Monday and Wednesday, leaving Thursday and Friday quieter and free for last-minute jobs, quick turnarounds or urgent deadlines. If I don't get any, I go shopping or watch a film, as that doesn't happen often!
Deciding to work for yourself is a massive decision, and not one to take lightly, but it can be very rewarding. Most freelancing fears are really nothing to be afraid of…
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