How to Become a Freelancer – Types of Work, Pros & Cons

How to Become a Freelancer – Types of Work, Pros & Cons

Chances are, if you’ve ever worked in an office – or any kind of 9-to-5 job – you’ve also fantasized occasionally about getting out. After a grueling day of dealing with unreasonable customers, unpaid bills, pointless meetings, and a grumpy boss banging on your door to demand the report you haven’t had a single minute to work on, those Internet ads promising “$6,000 a month working from home” can start to look awfully tempting.

The bad news is, most of those ads promising big bucks for freelance work are bogus. The good news is, there are legitimate jobs out there that really do allow you to earn a living by working from home. Take me, for instance: for the last 11 years, I haven’t set foot in an office. Instead, I work as a freelance writer, in the comfort of my own home, choosing my own hours for work and play.

But while being your own boss sounds great, I can tell you firsthand that it’s not all sunshine and lollipops. Yes, it has definite perks, but it has some serious drawbacks too – and for many people, the cons are likely to outweigh the pros. But if you have the right temperament for it, you can make money working from home – and enjoy a happier, more satisfying life.

Finding a legitimate work-from-home job isn’t easy. You can’t simply Google “work from home,” because a lot of the “jobs” you find this way are really scams. In fact, the Federal Trade Commission (FTC) warns that offers to start your own Internet business, stuff envelopes, assemble products at home, work as a mystery shopper, or sell products through a multi-level marketing plan are usually fake – and even the ones that are legitimate often don’t pay as much as they claim.

However, there are a number of legitimate work-from-home position:

Some career websites focus specifically on freelance and work-at-home jobs. Examples include FlexjobsFreelancerGuru, and Upwork (formerly known as oDesk).

To find work specifically in media-related fields, you can search the freelance marketplace on Mediabistro, as well as the job postings at FreelanceWriting.com. For jobs in engineering and design, try the Canadian site Cad Crowd.

freelancer using smart phone

The greatest benefit of freelance work is the freedom. When you work for yourself, you decide when you will work, and how, and where.

The things you can do include:

freelancing at home office

Although the freelance lifestyle gives you more freedom, the flip side of that is uncertainty. When you’re a freelancer, everything about your job – who you work for, what you’re doing, how much you make, and even whether you have work at all – can change on almost a daily basis. Until you start working for yourself, you don’t realize how much you’ve become used to a set, comfortable routine.

Here are some of the challenges freelancers face that nine-to-fivers don’t:

freelancer working outdoors at laptop computer

To succeed as a freelancer, you need to be the kind of person for whom the benefits of extra freedom outweigh the drawbacks. This depends partly on your personality – people with an independent streak, who enjoy working on their own and don’t mind the extra responsibility, are more likely to be happy freelancing.

It also depends partly on how well-equipped you are to deal with the financial drawbacks of freelancing: the uneven income, the lack of benefits, and the more complicated taxes. Being organized and able to plan ahead helps with this, as does having some money in reserve to help you through tough times.

Here are some of the qualities a good freelancer needs:

woman working at home while set up with her laptop computer at her dining table in the kitchen

Some of the qualities you need to succeed in the freelance world are inherent to you: either abilities you’re born with, or skills that you can learn. However, there are also tools you can use to make every aspect of the freelance life easier. Some help you with the job itself, while others help you deal with the uneven income that goes with freelance work.

One good general source of information is Freelancers Union. It’s free to join, and its website provides tools for finding insurance, setting up a retirement plan, and creating contracts. On its blog, articles cover all kinds of freelance-related topics, including finding clients, figuring out what to charge, organizing your time, and avoiding burnout.

In addition, there are specific tools to help you deal with:

For the past couple of years, I’ve filed my annual tax return with an online software program called TaxACT, and it’s made the process a lot quicker and easier than filling out the forms by hand. If you’re comfortable doing your own taxes, TaxACT might be a good option for you. People with business income need to use the Premium plan, which costs $20 for the federal return plus an extra fee for each state return. TaxACT does not offer any help with calculating and filing quarterly estimated taxes, but Intuit QuickBooks Self-Employed provides it for $16.99 a month.

After you finish a freelance assignment, you need to send your client an invoice for the amount owed to you. With many of my clients, I’ve just typed up a simple document in Word and sent it by email. However, more recently I’ve been using a free site called Wave, which lets you create and send out invoices online, keeps track of payments for you, and provides other accounting tools for small businesses, such as payroll and sales tax reports. Many other accounting software programs, such as Kashoo and Freshbooks, have canceled their free editions, but Invoicera still has a very basic one. Another option is the open-source GnuCash.

As a freelancer, you’re essentially running your own business, and these days, a business needs a website to be taken seriously. I set up a very basic one with the free edition of WebStarts, a website builder that’s quite simple and intuitive to use. Some other free website builders that get good recommendations are WixWeebly, and WordPress.com, the most powerful of the lot – but also the most difficult to use.

If you can’t get health insurance through your spouse’s job, then your best resource is your state’s health exchange, which you can find through Healthcare.gov. In general, you can only sign up for insurance during the open enrollment period; however, if you’ve just been through a life change that affects your coverage, such as losing your employer-based insurance, you can sign up at other times.

Because freelance income tends to be spotty, it’s important to have a good budget. That way you can save your extra money when times are good and use those savings to get through dry spells. I use an Excel spreadsheet to keep track of my household expenses, but you can also use a personal budgeting program, such as Mint, to do most of the work for you.

Saving for retirement is just as important when you’re self-employed as it is for everyone else. As a freelancer, you don’t have access to a 401k plan with matching funds from your employer, but you can still choose from a variety of retirement plans that you fund yourself. I use a traditional individual retirement account (IRA); other options include the Roth IRA, the SEP IRA, and the solo 401k.

young woman typing while working at home

Working from home as a freelancer isn’t an idyllic or trouble-free life, by any means. Nonetheless, many people who have tried it – including me – would never want to go back to a full-time job. Despite the uncertainties of freelance work, the freedom to work exactly when, where, and how you want can be well worth it.

If you’re uncertain about taking the plunge into freelancing, you don’t have to do it all at once. Instead, try taking a few freelance gigs on the side while still holding on to your full-time job. That will give you a chance to build up your freelance resume, garner a pool of clients, and work out important details, such as what to charge and how much time to allow for each project. And most of all, it will let you experience the freelance life firsthand and decide whether it’s for you.

If you had the choice, would you leave your job to do freelance work from home?

Categories: Careers, Small Business

Amy Livingston is a freelance writer who can actually answer yes to the question, “And from that you make a living?” She has written about personal finance and shopping strategies for a variety of publications, including ConsumerSearch.com, ShopSmart.com, and the Dollar Stretcher newsletter. She also maintains a personal blog, Ecofrugal Living, on ways to save money and live green at the same time.

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How to Become a Freelancer – Types of Work, Pros & Cons

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