Part 1: The Rules of Engagement
I read an article this morning about what it means to be a freelancer, written for those who are just dipping their toes into being The Boss of Your Own Domain. While some of it rang true, I found it sadly lacking in the depth I would have appreciated when I started out over a decade ago. Yeah, sure — you’re not really your own boss. It doesn’t take a wet-behind-the-ears freelancer much time to work this one out. Miss one deadline for the one client you’re servicing, or come home from a two-hour, three-martini lunch to find your inbox has become ground zero for World War III-levels of panic and destruction, and you’re well on your way to understanding how little your time is actually your own. That is, if you care about building a vibrant client base and successful business.
But there’s so much more than just having a little more time at home, or the pros and cons of not commuting and/or not wearing pants to work.
(1) Show Up & Communicate
One of the things I’ve heard, over and over, is, “Thank you for showing up.” There is an over-abundance of freelancers who simply don’t show up, whether it’s for the “meet and greet” in-person or on the phone, returning voicemail or email, or getting the promised work done by assigned times. It’s not that some of these people don’t know how to do their jobs. I’m sure many of the unsuccessful freelancers out there are absolutely brilliant at writing code, closing sales, building websites, designing a flyer, or whatever — but some people really can’t seem to communicate in a productive and timely manner.
Look, it takes some time to figure out how to be your own boss. I say this as someone who went from the position of being the Regional Accounts Manager of the entire western seaboard (plus three states) of a Fortune 500 company. I was once in charge of creating and deploying curriculum for multiple programs in local charter schools (managing second graders is the hardest job there is, I’m sure. Deadliest Catch crew, don’t even come at me until you’ve tried to teach fifteen rampaging seven-year-olds how to use Microsoft Word).
When I first started out, I had extreme anxiety around answering phone calls and listening to voicemail. So I….just didn’t. The voicemail box gradually filled up. People were emailing me frantically. I’d over-promised (like ya do), knowing I could probably still figure things out and deliver, but in the meantime, I was so harried I would only respond through email. It stressed my clients out because they didn’t know what was happening. Worse, it stressed me out knowing all those messages were stacking up, and ultimately taking up valuable head space and taxing me emotionally, when I could have better directed that energy into my work.
If you have good clients, many times all they want to know is that you give a damn about them and their project. And often, the best remedy for the stress of knowing you’re going to be late on a deadline is just letting the client know you’re there for them and still openly communicating. In fact, the most important time NOT to bury your head in the sand is when things are going poorly. Whether you expect to be able to finish up the project on your own or need to outsource help, just keep the channels of communication open. I promise you, from the bottom of my heart and the rest of my human components, showing up and communicating is absolutely the Number One Most Important Aspect of Freelancing.
(2) Have Your Legal Ducks in a Row
Having a proposal process and a client contract are crucial to your business, even (and especially) when you’re doing business with friends and acquaintances.
- The Proposal generally outlines what work you’ll be doing, with a time and cost estimate to the client. This can be casual and conversational in nature, but it always needs to be “on paper.” That way, as you head into creating your more bullet-proof and specific contract, you’ll have all the expectations and kinks worked out. Once you’re done finagling the finer points of the project after your proposal goes out, you can just plug in all the relevant info. The initial proposal should be sent out or shared as a document you can refer back to — not just a string of emails. Your proposal shows clients who you are, what you do, what they can expect from you (and not), and what the costs associated will be. More than once, I have gotten additional work because of my proposal package, alone.
- The Contract is very specific. In this, you will include project benchmark dates and tasks, the breakdown of costs. It’s legally binding, and will accurately set all the expectations. This protects both you and the client. You must have a contract. In the contract terms, you should make sure unforeseen issues are covered. For instance, in my line of work, a lot of the responsibility falls on the client for creating and delivering content, making sure the correct server environments are in place, having the ability to share information in the cloud, and more. If the client thinks those things fall on my plate, suddenly the scope of the project is far above what I’ve quoted and I’ve bitten off more than I can chew.It’s necessary everyone knows exactly what is expected of them or their team from the get-go, and while the project progresses. If you are running a multi-stage project, there should be a dedicated section, even a separate contract, set up for all stages. In the contract, you will also set up a fee schedule, which takes place at big, pre-defined benchmarks.
Getting paid and asking for money doesn’t need to be unpleasant or contentious, and it’s made a lot easier when it’s right there in the black and white of your contract. You don’t complete the tasks, the next installment doesn’t get paid. You complete the tasks, and you don’t move forward until the client is current on the fee schedule. It really is that simple — and monumentally important.
(3) Get That Paper: Invoicing, Billing, Fees, and Taxes
You have to invoice and bill in a timely manner. If you’re not bringing in money, you’re not a successful freelancer. If you’re billing clients six months late, you’re being unfair to the client and compromising your chances of getting paid without dispute. There are enough really great free and low-cost solutions to your accounting needs that you shouldn’t go without. You also don’t have to go crazy trying to learn Quickbooks when you’re a sole proprietor. A small, reliable, no-frills solution might be better and more practical for you. Whatever you choose, do it from the start and do it right.
Billing & Invoicing
I use Wave. Wave connects to my bank account and downloads transactions, allows me to categorize expenses, upload receipts, set automated invoice reminders for the client at specific intervals, and manually enter transactions that may not show up from my online banking (like cash purchases). It also allows me to set specific rates for different tasks and projects, accept credit card payments, and invoice directly through the app. I’ve used other applications that are directly tied to my time-tracking software, but I prefer Wave. For me, it’s worth a couple extra seconds to manually enter the times into Wave when I’m invoicing, rather than having it all connected through Toggl.
Best of all, it’s free for a user who needs the basics, like me, and their support team is really great.
A designer friend recently suggested accepting CC payments as a way to get paid more quickly, and boy-howdy, was she right. Before, I was looking at two to three weeks, minimum, for a check to get cut, mailed, received, and deposited. Now, it tends to be about a week from the time the invoice goes out to when I see the money in my account.
*Here’s a more complete review of Wave from a friend over at Cloudwards. Check out the pros and cons there to see if it’s a good fit for your business.
Taxes & Licensing
I cannot stress the importance of knowing the tax laws and financial obligations of your budding business, and putting money aside incrementally and faithfully — even when it hurts. Here in Los Angeles, I have to abide by multiple rules — the Fed, the state of California, and Los Angeles County all want a piece of my action. It’s the cost of doing business in my pajamas, and you can easily get buried in debt if you don’t do it right. On that note, be sure to check into whether or not you need a license to operate your business where you live.
A professional accountant is not necessarily expensive, and I highly recommend you find one. A good one can help steer you toward ways that will save you money or lighten your tax load, do your taxes correctly to avoid an audit, and so much more.
I am supposed to pay my taxes quarterly, in advance. Yeah, that’s a thing. Furthermore, I pay out between 28-31% of my income. It’s more than a “normal” employee would pay, but not by all that much. The problem is, when you’re hard up for cash when you first start your business, it’s all too easy to say, “I need this now, but I promise myself I will set aside some money later.” DON’T DO IT. Just set aside what your accountant recommends and understand you may still owe a little in the end. You may live in a state without income tax and local fees associated with being a 1099 employee or freelancer, and that’s awesome for you. But please, don’t go in blindly.
I messed up my taxes pretty badly in 2002 and every. year. the IRS gives me trouble, charges me weird fees, audits me, etc. Even when I’ve been diligent and have nothing to worry about, being audited is a huge pain and takes up a lot of non-billable hours at your own expense. The IRS might say this isn’t their policy, but I know more than a few people who’ve been targeted and harassed for years after a single mistake. Don’t mess up your taxes; chances are, you will regret it for years to come.
Money Money Money, MONEY!
You want it, even if it makes you uncomfortable to declare the value of your work and subsequently take that money from your clients. You’re not a one-person non-profit. Even if you are, you need money. Ain’t that the sad truth of life? If I could receive cupcakes, cat food, and my rent being magically paid in exchange for work, I would do it that way. Alas, this is not how money works. And while you can barter cupcakes for several other worthwhile things, Time Warner Internet, and many other useful vendors, tend not to accept that type of currency.
So again, do it right and do it from the beginning. Get the right accounting tools. Get an accountant. Let him or her guide you toward the right way of doing business so you don’t get buried in financial trouble a year in. It’s really, truly the very last thing you want to deal with.
I hope this can be of some use to you, if you’re freelancing or considering it. If you have any questions, please be sure to comment.