Whether you want to work full-time or part-time, more and more professionals are turning to freelancing and entrepreneurship. It's a very different reality from that of salaried employees. No one is immune to a faux pas, so here are six mistakes often made by new freelancers, and how to avoid them.
If you want to become self-employed, take the time to make an appointment with an accountant, but not just any accountant. As there are many financial advisors out there, choose one who is very familiar with the particular reality of self-employed workers and their legislation.
Together, you'll be able to make a game plan and see whether it's best to incorporate or not. It would also be interesting to discuss topics such as taxes, available tax deductions, instalments and your retirement. The better prepared you are, the easier it will be to dive into the world of self-employment. Of course, you can also use Bankeo to find an accountant who's right for you.
A mistake often made by new self-employed workers is to maintain a salaried mentality. Since most have only experienced this reality, they use what they've learned in the entrepreneurial world. Unfortunately, to succeed as a self-employed worker, you have to get rid of these ideas. Here are two examples:
A self-employed worker is more like a business partner than an employee:
A self-employed worker is not an employee of his customer, but a partner or collaborator. It's a relationship of equals. For example, the customer cannot force the self-employed worker to work exclusively for him or to work from his office.
To have a decent quality of life, I have to ask for more than an employee:
Why are self-employed rates so high? The reason is simple: a self-employed worker has many expenses. They also have to finance taxes, vacations, retirement and insurance. Their billable time is also less than that of an employee. According to some calculations, a self-employed worker would have to charge an hourly rate of at least $40 to live decently.
Most freelancers and self-employed people wear many hats. They're responsible for finding contracts, invoicing, accounting, following up with customers, promoting their business and so on. After a while, this can become exhausting, especially if it's not your core business.
Therefore, as mentioned for our first mistake, take the time to surround yourself with professionals. This could be an accountant, a business lawyer, a coach, but also a social media manager, a strategist, a graphic designer and so on. A virtual assistant can certainly lend a hand if needed. You can also take the opportunity to meet other self-employed people at networking events. In addition to expanding your network, you'll be able to chat with people going through the same challenges as you.
To protect yourself and your business relationship, it's a good idea to have a service contract. This should contain details of the service to be provided, such as how it will be carried out, payment terms, intellectual property and termination. A simple exchange of e-mails is often not enough to avoid misunderstandings and problems. Take the time to meet with an employment lawyer to discuss everything you need to protect yourself.
We'd also like to take this opportunity to remind you that a contract found on the web is unlikely to meet all your needs.
Similarly, another mistake often made by new freelancers is not asking for a deposit before starting work. However, it's something that's becoming increasingly popular in the entrepreneurial and freelance world, as it helps protect against bad payers.
Once you've signed the contract, ask for a percentage of the amount. This can be done in different instalments throughout the service. Some freelancers ask for 50% at the beginning and 50% at the end, while others prefer 30% at the beginning, 30% at mid-term and 40% before sending the final files. Whatever you do, don't forget to mention it on your service contract.
Finally, when you become a freelancer or self-employed, you can quickly feel overwhelmed by everything to do with accounting, especially if it's not your area of expertise. Have I calculated my taxes correctly? Have I sent that invoice or received payment? Did I take the time to enter all my business expenses for last month? Have I kept all my receipts for tax deductions?
Fortunately, there are plenty of accounting tools and software to help you avoid costly mistakes, including Momenteo. So forget those complicated Excel spreadsheets and shoeboxes for your invoices, and move into the modern age. You'll save time and money.
As we said earlier, there's a good chance that as a freelancer you'll make mistakes, and that's normal. However, we hope you'll be able to avoid the ones we've just outlined. Don't forget to take the time to surround yourself with a top-notch team, and keep in mind that you're no longer an employee, but your own boss. We wish you every success!
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