A beginner's guide to freelancing

It’s been over a year since I first thought of writing down everything I’ve learned about freelancing. I’ve now been freelance for more than three years but the title still has a double meaning — this is both for beginners and by a beginner, because I know I still have a lot to learn.

This has turned out even longer than I expected but there’s a lot to say. Some of this might only be relevant to coders or web designers, and some of the financial stuff will only be relevant to UK readers, but I hope there’s plenty interesting for anyone thinking of going freelance.

If I’ve missed something, either post in the comments or email me (phil [at] gyford [dot] com) and I’ll update the page.

Contents

When to start freelancing

I guess I was lucky in that I was made redundant, stumbled into freelancing because I couldn’t think where to apply for a job, and it all worked out.

If, like many potential freelancers, you’re in a job and unsure about whether to take the plunge, here’s what you should do first:

  • Decide why you want to freelance. What’s your aim? Maybe you want to do a specific kind of work, or work with a certain kind of person or company? Maybe you simply want to avoid commuting. Maybe you want to earn as much money as possible or work as little time as possible. Whatever the reason, it would help now and in the future to be clear on your ambition, even if it’s only so you can check back occasionally if you’re feeling dispirited.
  • Work out how much you money spend each month, and how much you need to scrape by. It’s useful to know what your break even point will be.
  • Save some money. Even if you begin a paid project the day after you leave employment, you might not see any income from it for a couple of months or more.
  • Think about how you’re going to get work (see You are your marketing department for more). Ask friends and contacts if they employ freelancers in your field and whether your skills would be suitable. If someone says “Yes, I’ll give you loads of work!” don’t quit your job just because of that; even with the best of intentions these things often don’t work out as planned.

You are your own marketing department

I hate the very idea of marketing but as a freelancer you can’t avoid the fact that you must sell yourself to get work. The first thing to do is to tell everyone you know that you’re available for work (and what it is you can do). Email, phone, IM or just talk to them and let them know. Don’t assume people will hear about it if you don’t tell them directly (not everyone reads your blog).

If you’re doing web/technology work you should have a website. Personally I think it’d be nice if this wasn’t necessary but without one you’re invisible to much of your core audience. A website serves two purposes:

First, you should have a page that describes what you can do, with examples of your work. Make it as clear and simple as possible (here’s mine although I’m not saying it’s a perfect example). This isn’t necessarily so people can stumble across it and decide to hire you, although they might; it’s more so that your friend can email the link to their boss and say “we should hire this guy”. It’s a page to point at that describes what you can do to people who don’t know you.

The second point of a website is to keep you visible. Blog. Post things about your field so people can see where your interests and talents lie. Post things about work you’ve just completed so that people can see what you’re working on, and that you’re still freelancing. If you’ve got no work don’t feel too ashamed about saying so — it’s easy for people to assume you’re fully booked, or have stopped freelancing, unless you remind them occasionally.

Of course, putting yourself about in the real world is just as important (and something I’m particularly bad at). If you’re working from home this is especially important. Meet friends and colleagues for lunch, coffee, drinks, whatever. Go to any industry social gatherings you can face. Go to conferences. If you really want to get yourself known, speak at conferences. I’ve never done this myself but it’s a great way to become known for doing work in particular fields. Suw Charman wrote a handy guide on how to become a conference speaker.

You are your own boss

Home distractions vs office distractions

Most of my freelancing has involved working from home. Occasionally, particularly if working for an agency, I’ll go to their office (in which case having your own laptop to take is often essential).

I’d heard that working from home could be difficult, that it’s hard to keep work and home life separate. I thought I’d be fine, being disciplined and organised. But no, it really can be difficult, particularly if you like to spend some of your free time doing something similar to work (eg, making websites) — the two can inconveniently overlap however hard you try.

Other downsides to working from home:

  • You need to be organised and conscientious — there’s no boss to look over your shoulder.
  • There’s no one to talk to. IM and email don’t make up for real life chat.
  • Home has its own variety of distractions: popping to the shops, doing the washing, watching TV, raiding the fridge, anything else that seems more appealing than work.

But there are plenty of good things about being at home:

  • No commuting.
  • No office politics.
  • No pointless meetings.
  • Peace and quiet (or your own music, whichever you prefer).

I’m not sure whether working from home provides greater or fewer distractions than being in an office. A lot of time in some offices seems to be spent chatting, laughing at YouTube videos, having meetings, playing pool, making tea, having more meetings, etc. On the other hand, when there’s no one around to notice what’s on your screen the distractions (or addictions) of email, RSS readers, or every website ever seems so much greater. Working from home requires more discipline to avoid distractions.

One alternative would be to get together with some friends and rent a work space between you. It would add to your overheads but might be the perfect balance between the freedom of freelancing and the sociability of work.

Working hours

One of the supposed great benefits about freelancing is “you make your own hours”. Well, kind of.

If you want to work fewer hours per day or days per week you need to be very definite about it and be strict with yourself. But even then, if you’ve had no work for a while and someone comes along offering you five days a week work with no flexibility it’d be tough to turn it down. I’ve managed to avoid working weekends by mentally ruling them off-limits and completely unavailable for work, but if I’ve got free weekdays I’ll take on whatever work is going. Ryan Carson has some good advice from when he decided to work a four day week.

What hours each day do you want to work? Again, be strict with yourself or else it’s easy for distractions to eat into your work time. I’ve found it simplest to stick to fairly normal office hours. I may pop to the gym mid-morning and finish an hour later in the evening, but otherwise keeping regular hours is a good way to keep work separate from work — it’s easier for everyone to make the distinction. Working something close to normal hours also means you’ll be available when the client is at work (assuming they’re in the same time zone). Also, while you might work better from 6pm until the early hours, many clients will think it unprofessional and may find it hard to picture how much time they’re getting for their money. More on this in You are your own account manager.

Another aspect of how much time you spend working is what holidays you take. Although you can, in theory, have holidays whenever you like it is harder when you’re freelancing. You don’t want to book something far in advance in case your dream project turns up at just the same time. It also feels as if holidays are more expensive than usual because every week off is a week when you’re earning no money. I guess the answer is to be strict with yourself and be honest about when you need a holiday and schedule it in, but this is more “do as I say, not as I do”!

You are your own HR department

If you’re working at home, make sure you have a good working environment. Working on a laptop on the sofa might be comfy but it won’t do your body any favours after 40+ hours every week.

  • Buy a decent desk and chair and position your monitor at a suitable height.
  • Look away from the screen every few minutes (if you play music, look out the window, stretch your arms and move your shoulders whenever the song changes).
  • Get up and walk around and stretch at least once an hour.
  • Have your eyes tested at least once a year.
  • Get some exercise. If you’re not even walking to work you need to find a way to get some exercise a few times a week, Tubby.

This is all dull but important nonetheless. If you’re young and about to ignore the above, please just do it and come and thank me in ten or twenty years when all your friends are hunched over, half-blind and unable to move their wrists or fingers.

You are your own accounts department

Keeping track of income, expenses, tax, etc can be a nightmare for some people. You do have to be organised but it shouldn’t be too complicated. I can’t claim to understand the intricacies myself, but I get by.

When you start freelancing, if you’re in the UK, call Revenue & Customs and tell them you’re going freelance. They keep a record of this and you’ll have to do Self Assessment tax returns each year (which some people, mostly higher earners, do even if they have normal jobs). They also have a page all about Self Assessment for the Self Employed and there’s a page about becoming self employed generally.

Bank accounts

You might find it useful to open a separate bank account for your work-related money, although I haven’t felt the need — I try to keep life as simple as possible. If you start a company (see below) you’ll definitely need to open a separate business banking account however.

Just as it’s a good idea to have some savings before you start freelancing it’s worth trying to keep some savings in case of cash flow problems. It only takes a quiet month and a late payment or two and you may not have income for 2-3 months. I tried to keep enough money by that I could live for three months without income and it was invaluable at one point.

Also, set up a savings account for the money you owe the taxman, as suggested at greater length by Doug Bowman. Don’t even think about it, just do it. Whenever you get get paid, immediately pay a percentage into your savings account so that when tax time arrives it’s no problem. How much to put aside? You can estimate your annual gross income and work out how much of it will need to go in tax (and National Insurance if you’re in the UK). Doug suggests 30%. I’ve been putting 25% aside which has done me OK so far, but the more you earn, the larger percentage you’ll need to put aside (in the UK more of your income will be within the 40% tax bracket).

Invoicing

When you finish some work for a client you send them an invoice which, in theory, puts into motion their processes for ensuring you get paid. When you send invoices depends on the job, and if it’s not clear it’s worth asking the client what they expect before you start work. If the work is going to take a month or less I usually invoice once the project’s complete and the client’s happy. If it goes on for longer I usually invoice at the end of each month (either calendar month or after a month of work).

An invoice should contain the following information:

  • The word ‘INVOICE’ at the top of the page (I don’t know how essential this is, but it makes it clear you’re asking for money).
  • Your name, address and other contact details
  • The client’s name, address and contact details
  • The date
  • Your reference number (make up a system for numbering your invoices so you can be sure you’re talking about the same invoice if you have to chase something up)
  • The client’s reference number, purchase order number, etc (if they’ve given you one; smaller companies tend not to)
  • A brief outline of the work you’ve done, maybe only a single line. You might want to break this up a bit into identifiable chunks of work, or separate weeks, depending on the project. List the cost for each piece of work (I usually charge per day and list the number of days and the daily rate too) and show the total amount.
  • If you’re charging VAT/tax (see below), show that and the complete total.
  • If you are VAT registered list your VAT number.
  • If you’d like the client to pay direct into your bank account, provide the necessary details.
  • Terms — by when do you expect payment? I include the phrase “Payment by BACS transfer or by cheque to the above address within 30 days.”

If you’ve formed a company there are probably other details you must include that I don’t know about.

I also have the phrase “We understand and will exercise our statutory right to claim interest and compensation for debt recovery costs under the late payment legislation if we are not paid according to agreed credit terms” which I think I found on the Better Payment Practice Campaign site, although I’ve never had to worry about that kind of thing thankfully.

I usually send a PDF of the invoice via email, and haven’t had any complaints, although a few larger organisations have a separate postal address to which I mail a paper version instead.

What records to keep

Whether you hire an accountant (see below) or not you must keep records of your incomings and outgoings. Each tax year I create a new spreadsheet with one page for income, one for expenses. The income list has the following columns:

  • Date invoice was sent
  • Date invoice was paid
  • My reference number
  • Client name
  • Project
  • Amount charged
  • Amount to put aside for tax

If you’re in the EU and register for VAT you might replace the last two columns with:

  • Net amount charged
  • VAT charged
  • Total amount charged
  • VAT owed to HMRC (which, if you register for the Flat Rate Scheme, will be less than the amount you charged, see below).
  • Amount to put aside for tax

At the end of the tax year I move any unpaid invoices over to the next year’s spreadsheet.

Expenses

The other page of the spreadsheet lists my expenses. There are columns for:

  • Date
  • My reference number (again, make up your own system)
  • Company/shop
  • Item
  • Cost

Every time you spend money get a receipt (or print out your email confirmation for online purchases), write your reference number on it, and put it with all your other receipts for the current tax year (in an envelope, shoe box, or just paperclip them together). The more organised you are through the year, the less of a nightmare you or your accountant will have (and an easier job for an accountant means paying them less).

You could separate the expenses into different categories. My accountant suggests these:

  • Direct costs
  • Labour costs
  • Repairs & Renewals
  • Printing, Postage & Stationary
  • Subscriptions
  • Protective Clothing
  • Computer Consumables
  • Research, Books & Journals
  • Mobile phone
  • Landline
  • Car expenses
  • Travel & subsistence UK
  • Travel & subsistence abroad
  • Advertising & promotion
  • Professional Indemnity Insurance
  • Bank Charges and Interest
  • Other Finance Charges
  • Capital Computer
  • Capital Car
  • Capital Equipment
  • Services
  • Misc

I only use a few of those categories myself and don’t even understand some of the others.

Basically you can include anything you buy solely for work and a percentage of things you buy partly for work. If you work from home a proportion of your bills could count as expenses. There are many grey areas and I probably err on the side of caution as to what counts as a legitmate expense. Every year my accountant calls me, bewildered as to my lack of expenses and I explain that sitting at home writing code doesn’t rack up many costs.

When the end of the tax year comes around you subtract your total expenses from your total income to work out your net income, the amount on which you’re taxed. (Yes, this is a very simple explanation — there are many complications to keep tax lawyers in business.) Which means that if, say, you’re paying 22% income tax you’re effectively buying anything expensable at a 22% discount.

Is an accountant necessary?

It depends on how prepared you are to do your own tax returns etc, and how much income and expenses you have. I expect that the more complicated and substantial your finances, the more the expense of paying an accountant will be worthwhile in the money they save you. My finances are pretty simple and I pay about £400 for a set of very simple accounts and a completed tax return. Of course, an accountant can also provide advice on other things you could be doing to save money. Unless you enjoy doing all this stuff, and taking time off paying work to do it, ask friends if they can recommend accountants.

VAT

If you’re in the UK (and, I assume, the rest of the EU) you can become VAT registered. In the UK you must register for VAT if your “taxable supplies” (what you charge clients) are over £61,000 per year. If you bring in less than that you can voluntarily register. Read more on registering for VAT in the UK.

When you’re registered you must add VAT on top of your charges to clients (that’s 17.5% at time of writing). If you only deal with other VAT-registered entities (ie, businesses) this isn’t a problem as they will claim the VAT back from the government eventually. If you deal with individuals who aren’t VAT registered you’ll be effectively raising the price of your services by 17.5% which is less good.

On the plus side, you get to claim back all the VAT you spend on purchasing goods and services.

Rather than registering for VAT normally another option is the Flat Rate Scheme, which is much simpler. You add VAT when you invoice as normal, but rather than working out how much VAT you need to claim back from your purchases, you simply pay a flat percentage of your income. As this percentage is lower than 17.5% you make a little money out of the arrangement (although, in turn, you’ll have to pay income tax on that extra cash). It’s not a huge amount of money but it can be worth the minimal quarterly hassle of filling out a simple VAT return.

For example, you invoice a company for £1,000 and add VAT, making a total charge of £1,175. At the end of the quarter you fill out your VAT return and send HMRC a percentage of your income (the percentage assigned to you depends on your trade; mine is 13%). In this case we pay 13% of £1,175: £152.75. This leaves us £22.25 better off than if we hadn’t registered for VAT, before paying income tax. Not a lot, but it all adds up.

As with income tax there is, of course, much more to it than I’ve mentioned here. And don’t blindly take my advice without checking with someone who knows what they’re talking about!

Forming a company

Should you form a company or stay as a freelancer (or sole trader, in the lingo)? There can be, I think, some financial advantages in forming a company and it can also make you seem more professional and capable. But it does mean more admin overhead and higher accountancy fees. Although I could probably have saved a bit of money doing this I’ve avoided it so far, preferring to keep things simple, and I don’t think the money I’d have saved would be worth it. If you have an income of more than £50,000 I’m guessing it’s probably increasingly worth starting to look into.

How much to charge

Working out how much to charge clients is very difficult. There are many variables at play (your experience, your speed, tightness of deadlines, type of client, etc) and it’s not something for which people freely give solid examples. I wrestled with this early on and had some useful comments posted.

Most of my work has been at a standard day rate — the client will hire me for a set amount of time and pay me accordingly. The alternative is to be asked how much a particular project will cost to build. Either way, you need to work out how much you charge per day.

When pricing a project you’ll need as many details about it as possible. Break it down into small parts and work out how long each will take. This can take a long time and can be difficult — certainly, it’s not something I’m good at. I tend to be over-optimistic so I usually add a bit of extra time on to allow for the inevitable and unexpected problems, and all those final little details that take a surprisingly large amount of time when you’ve “nearly finished”. On average it’s worked out about even. I’m sure people far more skilled than I have written in greater detail on this kind of planning.

Once you’ve worked out how long the project will take, and you know your day rate, you know the cost of the project. How to set your day rate? Anil Dash suggests that clients should be shocked when you tell them. Steve Friedl’s consulting guide says “If you’re booked up solid, your rates are too low”.

Not only do you have to allow for your own skills in your price but the price changes depending on the client. Simply, some clients will have more money than others and are used to paying larger amounts. You need to factor this in with how much you want to do the work:

  • Will it be fun or a chore?
  • Will you learn new skills and meet interesting new people?
  • Will it be something you can show future potential clients to generate new business? (I’ve done quite a few internal-only prototype websites which are fun to work on but don’t get seen outside the client’s company.)
  • Will you own any of the intellectual property or will your client own everything you’ve done (usually it’s the latter)?
  • Will it be a long project of constant work that might earn them a discount (one long project is less hassle than lots of short ones)?

Matt Webb has some interesting thoughts on this kind of weighing up.

As for my own experience… Most of my clients have been businesses rather than charities — I’m doing this for money so I can afford to do other fun and interesting things in my non-work time. But there’s a big difference in what different businesses will pay for the same work. For example, you’re doing work for a new media agency on a project for their client EndlessMegacorp. The agency might be prepared to pay you amount x for a day’s work, but they’ll be charging EndlessMegacorp amount x+y (quite possibly a multiple of x) for the same day’s work (which, to be fair, includes the agency’s greater overheads).

So if you do some work directly for EndlessMegacorp, or some other large company that often employs new media agencies, they’re less likely to blink when you suggest a day rate that’s larger than x. On the downside, you then have to handle the client, do some project management, etc.

OK, enough of the “x+y” stuff; let’s be slightly less elliptical. Three years ago I did some HTML templating work for a new media agency who usually paid £150/day. I managed to get a bit more out of them, but not much, and haven’t worked for so little since. More recently a different agency paid me £300/day but that was their upper limit. My day rate is usually more than this and non-agency clients don’t seem to blink, which suggests I should try Anil Dash’s method.

Pension

No, not exciting, but worth mentioning. If you’re freelancing you’ve got no company pension scheme so you should sort one out. Now, rather than later. Who knows, it might even be worth something one day.

You are your own project manager

You need to keep track of how long you spend working on each project. If you’re getting paid by the day you need to know how much to charge. If it’s a flat-fee for a project it’s still useful for you to know how long the project took (and how long each part of it took) so you have a better guide next time you’re asked for a similar quote.

I don’t have a sophisticated system for this. I mark full or half days worked for a client in my calendar and sometimes keep track at a more detailed level elsewhere, particularly for a flat-fee project. There are various tools to help with this kind of thing such as Billable for the Mac and the web-based Side Job Track.

You should also keep notes of meetings and phone calls. Even if your memory is better than mine these may come in very useful when trying to recall if a particular feature is in or out after a weekend of not thinking about work.

Not long after starting to freelance I wanted one place to keep track of all my work notes. Seeing as I already had a weblog system in place I settled on creating a private weblog. I have categories for each client and project, and every day I post an entry outlining what I’ve done that day (maybe simply pasting in an email I’ve sent the client). Notes of meetings and phone calls go in there along with snippets of code and anything else that might be useful. I’ve never had a client ask me to account for my time, but I’d like to be able to provide them with a good answer if they ever do.

Because every project has a slight overhead in terms of setting it up (meetings etc), running it (client contact, space in your brain, etc), and winding it down (invoicing, archiving, etc), the fewer projects you have running at once, the simpler life will be. If you have five projects on the go and you’re working one day a week on each you’ll have a harder job than if you’re spending all week on a single job. Of course, often one takes what one gets, but it’s worth bearing in mind.

Scheduling projects in advance can be tricky. Some clients will be eager for you to start right away but then have to delay you because of some endless internal bureaucracy. Some clients will say they definitely need you, but not for a couple of weeks, only for the project not to happen after all. Given that I often don’t have written contracts there’s an added element of vagueness about scheduling. My rule of thumb is to assume the project won’t happen until the client gives a definite start date, deadline (or number of days the job will last) and agrees the fee. It could still fall through but not as frequently as all the projects that are “going to happen next month probably”. I’ve probably had nearly as many “possible” projects not materialise as I’ve had definite projects that I actually worked on, so I’ve learned not to get my hopes up.

While a lot of jobs can be quite last minute it is possible to get booked up — there have been a few times when I’ve been booked up for three months ahead and have turned other clients away because I didn’t want to be tied down for any longer (I might as well have had a proper job if I did that!).

You are your own account handler

Communicating with your client is important, particularly if you’re working off-site where the client can’t see you. Once you’ve started a project I’d suggest a minimum of emailing the client at the end of each day with an outline of what you’ve done. There are no hard and fast rules, and each client is different, but don’t assume that they think everything is going smoothly if they don’t hear from you. You might be able to ease off a bit once the project gets going.

If you email, post or FTP work to the client (designs, HTML templates, etc), keep a copy. If you do work on-site at a client’s office, keep a copy of what you’ve done. (Obviously, this is harder if, say, you’re working on an existing codebase, but then it’s hopefully all version controlled so you won’t need to keep copies of anything.) On a couple of occasions I’ve had clients come back to me weeks later as they’ve lost the work I did for them and they were extremely grateful when I was able to immediately send them another copy.

Also, if the client sends you designs, code or documents to work from, keep them safe somewhere and work from copies — it can be very handy to have untouched versions in case something goes wrong.

Earlier I discussed working hours and these can have an effect on your relationship with a client. Unless you confirm things beforehand the client probably assumes you’re going to be working fairly regular office hours. If they call mid-morning and don’t hear back until the evening because you’ve decided you’re working into the night, it won’t go down well. And to be honest, for most clients, it’s going to be harder for them to feel confident about you if you work irregular or unusual hours.

Of course, some clients will work irregular hours and in return, unless you’ve agreed otherwise, you should stick to your regular hours. Just because the client emails you at 11pm with some notes don’t feel you have to respond until the next day. If the client gets used to you responding late at night then they may come to expect it.

Generally, make it as obvious as possible when you’re working and when you’re not. If you’re working in a client’s office they know, otherwise they don’t without your help.

You should also be prepared for clients wanting to talk about their project while you’re working on someone else’s. This is inevitable, particularly if you often have a few projects current at once, and it’s a balancing act — obviously, if a client is paying for you to work for them today, they have priority, but you don’t want to be completely unavailable to other clients (unless you’ve warned them first).

Finally, a new client will involve more overhead in terms of communication, bureaucracy, getting to know each other, peculiar invoicing and payment methods, etc. Clients with whom you already get on are worth keeping hold of.

Should you expect a contract when you begin a project? I can only say that I’ve done a lot of work for clients with nothing more than a verbal agreement and I’ve never had a dispute over payment from either side. I may have been extraordinarily lucky, and a large number of my clients have been people I already know or are friends of friends. If I was working for an individual I had no connection to I’d probably be more keen on getting something in writing, but I’d be less worried with a reputable company I didn’t know (they’re less likely to disappear overnight).

Larger companies will often provide a contract, although they vary in their efficiency at getting it ready, which can be a problem if you’re both otherwise ready to start work. One large company I’ve worked for sometimes ends up providing lengthy contracts for me to sign after all the work has been completed, such is the bureaucracy.

You are your own IT department

When you’re working for yourself there are a few techy things to remember.

If your computer dies — dodgy disk, overheating, OS upgrade that goes wrong, etc — any time you spend fixing it is time you’re not earning. If you’re on a tight deadline and your computer’s unusable, you’re in trouble. I’ve kept my old laptop around in case my new(er) one dies and I need a rapid, if clunky, replacement.

If you get a new computer — because the other one died or just because they’re shiny and irresistable — the time it takes you to install and cofingure all your favourite applications and extra doodads is also time out from doing paying work.

The same issues affect any part of your personal IT infrastructure — if your wifi goes down, your router mysteriously stops working, or your ADSL suddenly cuts out, it’s bound to be at the moment you really, really need it.

Finally, backups. Losing your own data is bad enough, but if you lose something you’ve spent a couple of weeks working on for someone else it’s possibly even worse. They’re not going to pay you to do it again, so you’ve got a lot of unpaid and very dull catching up to do. And if it happens just before a deadline you’ve also got some explaining to do.

You should be backing up your work, email, and anything else vital, at least once a day. Ideally you should back it up off-site too. The cost of something like Strongspace or JungleDisk will more than pay for itself when something goes wrong.

You are your own careers adviser

If you have a proper job then career progression is often more obvious. Your role might change if it’s a quickly expanding company, you might become responsible for new hires below you, you might get promoted, you might move to a different post in the company, or you may leave for a better job elsewhere.

If you’re freelancing, on your own, it’s very easy to effectively stay in the same job for a long time. You can become known for doing a certain type of work, so that might be all you’re offered. There’s also a limit to the scale of work you can accomplish on your own, whereas in a company you can be one part of a team working on something bigger.

It’s easy to stagnate, particularly if you’re lucky enough to have lots of work — there’s no time to stop and think about what you want to do, to develop new skills, or to create examples of other things you can do to attract different work. So, particularly if you’ve been freelancing for a while, it’s good to set aside time to read, play, meet new people, and make sure you’re heading in the right direction.

On the other hand, if you work with a variety of clients you do get to see how many companies operate — both in terms of processes and code (if you’re a programmer). This can give you wider horizons than if you work for the same company for years. But back on the first hand, particularly if you’re usually producing work from scratch without input from others, it’s easy to get stuck in a rut of how you design, code, etc, as you see too much of your own work and too few examples of how else to do things. If you’re on your own it’s also harder to ask others for advice about how to tackle something.

There is also the issue of feedback, or the lack of it. Hopefully, in any decent company, you get a sense of whether colleagues like your work or not — it’s easier to give feedback when you’re face to face, even if it’s just a few words. You also get formal appraisals and while (in my experience) they’re rushed through as quickly as possible they are useful.

If you’re working remotely however, you often don’t get much feedback. I suspect this is simply because everyone is too busy and unless you’re face to face decent feedback is the kind of thing that gets forgotten. It’s useful to know if you’ve exceeded or failed to meet expectations, and in what way, or you feel like you’re working in a void.

Conclusion

Although I fell into freelancing for a negative reason — I couldn’t think of a company I wanted to work for — it’s been a good three years. In that time I’ve done a larger amount of more varied work than in any three years of having a “proper job”. I’ve also had more time off and made a little more money. Although I should have got out and about more I’ve still met some lovely new people and I’ve had a chance to work with great people I already knew. When a project ends I still get the fear that there’ll be no more work but so far something’s always turned up eventually.

Even for someone who is happy on their own, 3½ years of spending most weekdays at home alone is a bit much. If I wasn’t already about to reduce the time I spend on work I’d be looking at ways to fit some more human contact into my working life. But once you’ve tried the freedom and variety of freelancing it’s very hard to go back to one of those regular jobs…

Further reading

Comments

  • Thanks for this Phil, this is an excellent guide and I'll link to it on my blog.

    About the loneliness aspect, it really got too much for me after 4 years and for me the answer was to hire a desk in a shared office space. I'm much happier now (although not necessarily more productive with all those lovely chatty people around).

  • A fantastic article, and superbly timed! My reduncancy at the end of the month means I'm going to try it out as a freelancer again for the first time in a good while. I'll be sharing studio space with some guys I've worked with before to avoid the evils of working from home. So… wish me luck.

    Oh, and if you have any spare interacton design work… ;)

  • Thanks Phil, nicely written and logical. I do some of these things, and others I should do (!!)

    Depending on where you live and $$ getting an office space would be a good way of getting out of the house.

  • This was quite the article. I like some of the software references for invoicing. Of course, I glazed over during the UK specific parts since I don't reside in, nor do business there. If anyone has similar tax/business info to add that applies to US citizens, that would be appreciated.
    Thanks nonetheless.
    Cheers

  • I was forwarded this by a friend in New York and found it very helpful. I've been freelancing for a few months now and don't miss the office at all.
    Great stuff, thanks.

  • You should definitely be proactive with your expenses :) I mean, you're claiming the right percentage of your rent and household bills, right? All your books (even if vaguely related to your work), hosting costs, etc.. there's a lot once you start digging. If you ever travel in your car to a client, you have a percentage of car costs, insurance, maintenance, etc, right there :)

  • I don't claim a percentage of my mortgage because then I'd open myself up to some other taxes/costs related to my home (I forget the details now). I do charge a percentage of household bills. I rarely buy any books related to my work (everything I need is online). If I do travel to a client (which is rare) I can walk, take the tube (travel tickets don't add up to much) or use my bike (which doesn't create many expenses).

  • Yeah, mortgages are tougher. That's why I rent, because it works out cheaper in the long run for me (assuming I invest what I would have otherwise spent on the mortgage). Well if your expenses really are low, and you can't find any to squeeze through, then you don't have much to worry about and are doing pretty well! Good work :) (Oh and don't forget any software you buy! Those Adobe packages, etc, all add up quick.)

  • Good work!

    This seems like a lot to know or “worry about”, but it's not. Baby steps. Working for yourself is great. Even if your not making much money at first. Stayin' at the salary job will get you no where. Working for yourself keeps you on your toes.

  • Phil - saw your article in Populicious - congrats!

  • You have to be careful about blogging. I agree you should have a Web site with clips, but blgging could become a conflict of interest with some magazines. And who has time? It just means another deadline (with no pay).

  • Sure, if you're a writer by trade then writing lengthy pieces for no money could be a bit foolish. Although I still think that in some cases it could still be useful to help raise, or just maintain, your profile. And if it's seen as a form of personal marketing then saying

    And who has time? It just means another deadline (with no pay).

    kind of misses the point — it's investing time in something that will hopefully get you more work on what you're interested in.

  • Thanks for the great article!
    I think that the most difficult part in freelancing is being your own boss. It's so much easier to get distracted while working for yourself!
    I find that the best thing to do to fight procrastination is simply setting clear goals and planning every step towards them. This way you do not have to worry about that gigantic project you have to complete but you just take the small steps necessary to complete it, one by one. I even went as far as writing my own planning software!

  • This is a great guide! There are several options for lightweight freelancing software to handle invoicing, etc. While some of these are limited to the US, others work across the globe. Check out my post on “Who needs a bookkeeper?”: http://www.simplifythis.com/blog/2006/10/who-needs-bookkeeper.html

  • This is a great article you have here. If I dont stop reading it and get back to work I will have no other option than to freelance lol. Great work and very detailed explanations cheers.

  • Amazing article, very full of information and an excellent resource.. I have written a few articles on the subject, primarily focused on the graphic-designer's perspective, but a huge amount of the information you have given here can be used directly.

    I will refer to this post on my homepage, since it gives such great info for budding freelancers.

  • Great article! I've been “freelancing” for over 2 years now and there is nothing better than being your own boss. All the success and failure is on your shoulders - a big responsibility - but a very gratifying reward!

    I was pleased to see “backups” mentioned in here. EVERYONE should have FREQUENT backup now-days. It's even more important when you are a freelancer. Imagine losing your mp3s or digital pics. Now imagine losing a weeks worth of billable work for a client. Don't hesitate - get an external drive (or two) and add it to your daily and weekly calendar. It's a requirement.

    I would also suggest getting a scanner. Scan everything. Checks that come in, bills, monthly bank statements. Everything. Create a process and stick to it. It's a bit tedious at first but it will save you and your accountant a lot of frustrations quarterly/yearly.

    Finally, set aside a lot for taxes and expenses. Its a lot nicer when your CPA tells you it's only half what you have stashed in a money market account instead of double!

    All the best folks!

  • Excellent article, and very timely for me, I recently started freelancing and am trying to get everything line up just right. I use FreshBooks to take care of the timetracking and accounting side of things and highly recommend it. Check out my recent post on the subject: http://www.sqljazz.com/blog/?p=64

    Again, thanks for the excellent post.

  • Excellent post. I would add one slight variation on the bookkeeping issue, learned through hard experience. Now, I freelance in the U.S., where we need to pay our taxes every 3 months (and we lost track of this one quarter in my first year, which is why we made the change).

    Everytime I receive a check now I have a spreadsheet where I enter the check amount, then calculate the tax rate for federal taxes (this year about 24%, although every year we tweak it) and one for state taxes (2% this year). And I call this Accounting Running Counts and every week make sure it's calculated and printed out and handed to my wife, who handles our household finances, so we always know how much money we need to keep aside for the taxman.

    This is, I suppose, a variation on your putting money directly into a separate bank account. This is something I suggested to my wife, but she prefers it the way we do it now because it allows her to juggle funds.

    Best,
    Mark Terry
    www.markterrybooks.com

  • Thank you, Phyl. This is very useful not only in the UK, but in my home Latvia too.

  • Enlightening as I'm about to take the plunge into freelancing. Thanks again

  • Excellent! I am a freelance translator for many years. I have learned so much from this article. Thank you very much. I will post a link in my blog:
    Tips For Translators http://getdirectclient.blogspot.com/

  • Excellent post. After 2+ years of freelancing as a programmer, I failed to approach your detailed outline of the whole process. Guess it was too long for me.

    The main problem for me now … is how to expand, being a failed manager of more than *me* … I don't see what the next step should be, guess what! I will wait the thing to just popup as usual.

    Thanks Again for the reference post.

  • Thank you very much very useful. I do think you should have included chronic masturabtion as a hazard of working from home.

    thanks
    -anonywanker

  • Thanks, best read ever about this subject! I about to start something too, although not the make big heaps of money (hopefully i will though..) but more to gain some experience (I'm studying a webdesign related education atm).

  • What a wonderful article! I am adding a link to this on my Freelance Writing Blog.

  • Thanks Phil,

    This is a really useful article. Having employed freelancers for years, it's very useful to know how things work from the freelancer's perspective - particularly now that I am planning to set up as a freelancer myself. I will definitely be recommending your site to others.

  • > If I do travel to a client (which is rare) I can walk,
    > take the tube (travel tickets don't add up to much) or
    > use my bike (which doesn't create many expenses).

    I worked on-site for a chunk of last year and was able to claim about £150 for business-related cycle mileage.

    Better-still, you can buy a bike, and bike safety kit (inc lights etc.) in a very tax-friendly way:

    http://www.leedscyclists.org.uk/Tax%20breaks.htm

    Most accountants don't know about this stuff, so if cycling is a chunk of your freelancing travel (including cycle-commuting to rented office space for some of the allowances) - then let yours know!

  • Hi Phil,

    I am working as a software engineer in a good renowned firm but my family circumstances will not permit me to work after a year. So i wish to start to work from home on weekends from now itself. I want to start it from a site that offers free membership. But the problem is that i am not able to trust and decide how to start with it.
    can you suggest me a trustworthy site so that i can go about it

    regards
    Richa Kinra

  • Richa,

    I don't understand what you mean. What kind of site do you need and what do you need it for?

  • Hi Phil,

    I did enjoy your article and the info it contained. As a professional ghostwriter I understand fully the impact staying at home to write can have on your social life. I don't mind though as I get to stay at home and raise my two children. I run a website where I provide information for those wishing to take up a career as a ghostwriter. Just to make the separation here: Ghostwriting is where you write for clients who then take the credit for what you have written. You also sign over copyright to all the material. Freelance writing on the other hand although commonly known as ghostwriting can refer to writing for magazines, newspapers, websites etc, but retaining copyright and having your name published with your work.

    I wonder Phil as you haven't clarified, what work do you actually do? Are you a ghostwriter, or a freelance writer, or indeed both?

  • Hi Amanda,

    The clue to my freelance profession is in the second paragraph: “Some of this might only be relevant to coders or web designers…”! So I'm not a writer at all, at least, not one that aims to earn money by writing.

  • Hi Phil

    Definitely a good resource. Being a freelancer has all the parts of a big business. There is in reality little difference between the functions of a 30000 corporation and a freelancer. The major difference is the scale.

    Note, what do you think of the role of online freelancing job sites such as for instance:
    http://www.rentacoder.com
    https://www.it-globalized.com
    and http://www.guru.com ?

  • Hi Phil,

    Thanks. Quite informative and clear article.

    Good that you mentioned the “house-hold chores” too, that can be a major distraction! :-)

  • Thanks Phil..I'll be coming back to blog about your points. My favorite of course,is the one about invoicing.

  • hi,
    maybe have a look at Sourcebench for a list of freelancing ob portals and listings.

  • What a great article.
    Thank you very much :)
    Really i learned from it too much.
    Sara
    Egypt

  • For marketing, you really have two choices: market yourself or market your services. I prefer the latter, because it takes the personal feelings out of being rejected and it makes my company sound more professional than if I talk about it just being me (which it no longer is).

    Other marketing ideas: pay-per-click ads when done right can yield a 10x return (but they're expensive to start with if you don't have a lot of capital to start); post your freelance services to FREE online directories like FreelanceLocalTech.com or FreelanceDesigners (for technical freelancers) or — if your clients will look for you there — yellowpages.com or kudzu.com.

    Don't just pick one way to market yourself, pick the way that the majority of your desired clients will find you! If you're not sure how clients will find you, that's your first task for the morning.

  • many thanks,am happy to find your sit and i love every thing i read.am a young nigerian who have been writing for a year now and i dont know what to do and how to go about freelencing.pls i need your feed back.

  • Just wanted to say thank you. I'm just starting in freelance translating Japanese to English and you brought up many things I hadn't thought of. Really glad you put this out for us all to read!

  • I needs some tutorials help.
    Can you guide me?

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