Freelancers are self-employed individuals offering their services to multiple clients, usually earning an income on a per-job basis instead of making a consistent hourly wage or salary. They typically charge hourly or daily rates for their time, expertise and any work they produce for their clients.
Whilst freelancing work can be short term, it can also be incredibly lucrative for those who are disciplined enough to manage their workload and maintain healthy relationships with multiple clients. Freelancing is common in creative industries such as graphic design, writing and photography – although that doesn’t mean that non-creative focused individuals can’t be freelancers. Most service-based sectors have opportunities to go it alone.
There are many benefits to freelancing. It can offer a flexible working schedule, allowing you to fit your work around your life rather than the other way around, and also comes with more creative freedom and control, as it puts who you choose to work for in your hands. Still, many people are nervous about going freelance, and there are many misconceptions surrounding freelance work. Today we’re going to explore some of the myths in more detail and shine a light on what freelancing is really like.
Misconception: There’s No Job Security In Freelance Work
This is perhaps the biggest myth in freelancing. We often see this argument crop up when discussing freelancing because people assume that, if all your clients were to cease using your services today, you’d be left without an income. If you’ve got a strong roster of clients you work for, the likelihood of that happening is incredibly slim.
When you work for an employer, if you lose your job, whether because you’ve been made redundant or the company has ceased trading, if that was your only job, then you will have lost all of your income. There is no guarantee that you’ll instantly be able to find another job that offers the same salary and perks as your previous job.
The job market can often be volatile. Employers may be slow to hire in your sector even if they have work available in your area of expertise simply because they cannot justify recruiting for a full-time position. In these circumstances, they often turn to flexible freelancers who are happy to work ad-hoc.
The Reality: Multiple Clients Means Multiple Stream of Income
For freelancers, if one job ends or a client decides to stop using your services, you still have other clients providing you with a way to make money whilst you open up your services to other prospective clients. It’s true that, if a client decides to leave you, you may see a reduction in your income until you find another client to take their place, but you will have the revenue from the projects you are still working on to support you.
Replacing a client is often easier than finding a full-time job in your field of work. If you’re good at what you do, maintain healthy relationships with your clients and ensure you have a great freelance or contractor accountant to help you manage your income, then many of the job security risks associated with freelance work can be mitigated.
Misconception: Freelancing is Lonely and Isolating
Some people are concerned that going freelance will see them stuck in their homes all day, having no contact with the outside world. It’s easy to understand why freelance work is perceived in this way, since you don’t have to commute to an office space and a lot of freelancing jobs can be done using a computer and the internet. People assume that freelancing is lonely work that contributes to them feeling isolated.
How much human interaction people need to be happy in their job varies from person to person. Someone who writes for a living may prefer the solitude of working from home as it allows them to write in a distraction-free environment where they can concentrate. Other people thrive off the buzz of a busy office environment, which may prevent them from freelancing for fear of losing that connection with their colleagues.
The Reality: Freelancers Can Choose To Work Alone or With Others
The truth is there are many solutions to tackle loneliness and isolation amongst freelancers. If your job only requires a computer and the internet, you can do it from anywhere with WiFi. Many freelancers work from their favourite coffee shops, libraries, restaurants (during off-peak hours) and even from the homes of fellow freelancers.
For freelancers who crave the atmosphere of an office environment, a co-working space could be the answer. Co-working spaces often operate on a subscription service in which a monthly fee gives you access to workspaces across your city that you can use as an office as often or as little as you like. As a freelancer, you really can work from anywhere, and the digitisation of many industries has made it possible to complete all aspects of your work from wherever you are. You can even do your accounting from a coffee shop with our FreeAgent accounting software.
Misconception: Freelancing is Stressful
Freelance work is often viewed as more stressful than being employed by another company. This is largely because the sole responsibility of managing your workload, client expectations, and business finances falls exclusively on your shoulders when you work for yourself. When you’re in full-time employment, you know exactly how much money you’ll take away at the end of each month, but freelancers rely on clients paying them on time and have to chase those who don’t. The prospect of having to manage a business single-handedly can be very overwhelming for some people.
There is some truth in all of this, and the early days as a freelancer may seem stressful as you get to grips with working for yourself. However, any new job is stressful, whether you’re employed or self-employed. As you build a name for yourself as a freelancer and news of your skills spread, you’ll find that the pressure eases, and a lot of the stress-inducing things that troubled you when you started will just become a part of your daily working routine.
The Reality: Freelancing Gives You Control Over Your Workload
The fact is that freelancing gives you the freedom to take on as little or as much work as you choose. If you’re working for an employer, you may have no choice in the amount of work you’re doing, but, as a freelancer, you can choose to stop taking on new projects for a while if your workload is too intense. If you want to take a month off work to go on holiday, no boss is telling you that you can’t – in fact, if you’re able to work remotely as a freelancer, you can continue to work even whilst abroad.
There are many tools and resources available for self-employed people so they manage their time, workload, marketing and money. As freelancer and sole trader accountants, we understand that handling business finances can be a daunting prospect for anyone considering working as a freelancer. With a reliable accountant by your side, you can start your new venture with the confidence that your finances are in safe hands.
Misconception: Freelancers Make Less Money
When people are considering freelancing, they often have concerns over how much money they will earn. Many people worry that their income won’t be consistent without a stable salary and is entirely reliant on clients paying their bills on time. There are many horror stories out there of clients who expect freelancers to offer a service for less money than the actual value of the work or clients who refuse to pay, full-stop.
Other people may not feel confident talking about money with clients or pitch their rates too low for fear of being viewed as too expensive.
The Reality: Experienced Freelancers Typically Earn More than Employees
It’s true that, in the beginning, going freelance might mean a dip in income when you’re just starting and people don’t know who you are or what you do. As you begin to take on clients, build a reputation for yourself, and work on multiple projects simultaneously, you’ll soon find that your earnings can far exceed what someone on a fixed salary can earn doing the same job. It does require patience, resilience and consistency; after all, this potential income isn’t just going to fall into your lap the minute you decide to go freelance, but it is there to be earned if you are willing to take on the work.
If you know your worth and negotiate good rates, your earning potential can be enormous as a freelancer. Freelances can charge higher hourly rates than an employee because they have several costs incurred through freelancing that they need to account for. A good client will understand this – and those are the ones you want to work for. Some of the top industries where freelancers earnings exceed those of employees are:
- Software development
- Management and consulting
- IT infrastructure
- Engineering
Of course, the hourly or daily rate of a freelancer varies across both industry and location. Still, research has shown that the average daily rate of a freelancer in the UK in 2021 is £126.85, which equates to a yearly average salary of £33,111.75, compared with the average salary of someone in full-time employment, which currently sits at £31,460.
There are unavoidable costs involved in going freelance – you’ll need to think about your overheads, contractor insurance, paying tax and putting money aside for days where you are ill and cannot work. If you’re not confident with the idea of setting accurate rates for your services, why not have a read of our article on how to set prices as a contractor or freelancer?
Misconception: Freelancers Don’t Have to Answer To Anyone
Many people may be wary of pursuing freelancing because they feel they lack the strict discipline required to keep themselves in check, aren’t good at negotiating or have concerns about handling their finances when self-employed. In part, it’s true that freelancers don’t have a boss or superior they have to answer to, at least not in a traditional sense. There won’t be someone holding you accountable or ensuring you meet deadlines.
When you’re employed, your wage and all your taxes are sorted out on your behalf by your employer, but freelancers have to rely on themselves to communicate with HMRC and ensure they’re paying the correct tax and managing their income correctly.
The Reality: You Also Need to Deliver for Your Client
The first person you have to answer to as a freelancer is yourself since you will be your own boss. You will need to hold yourself accountable, get work done when it needs to be done, manage your time effectively and ensure that the administrative side of your business, like your accounts and marketing, are taken care of. It does require discipline and hard work, but millions of people worldwide have been freelancing successfully for many years – so it might not be quite as daunting as it first seems.
The second person you have to answer to is your client. You will need to manage their expectations, ensure work is completed for them within the agreed time scale, and produce high standards of work for them. If you don’t, you risk your client withholding payment from you or moving on to find someone else who can do the work.
The added benefit of providing your services for a client is that, if you’re unhappy working with them for whatever reason, you too can choose to walk away from the project and stop working for them – a luxury that is not available to people in full-time employment.
Here at Gorilla Accounting, we are specialist freelancer and contractor accountants, so you don’t have to be a financial expert to go freelance when you have us by your side. If you’d like more information about how we can support you as you get started in the world of freelancing, drop us a message or give us a call on 0330 1079673.
