6 common mistakes made by new Self-Employed workers

Whether you want to start out full-time or part-time, more and more professionals are turning to freelancing and entrepreneurship. This is a very different reality from that of employees. No one is immune to making a mistake; therefore, here are six common mistakes made by new Self-Employed Individuals and how to avoid them.

Not taking the time to meet with an accountant

If you want to become self-employed, take the time to Schedule an appointment with an accountant, but not just any advisor. Since there are many financial advisors out there, choose one who is very familiar with the individual realities of self-employed workers and the laws that apply to them, as well as the basics of Taxation for Entrepreneurs in Quebec.

Together, you can come up with a game plan and see if it’s better for you to incorporate or not. It would also be interesting to discuss topics such as taxes, the Available Tax Deductions, the tax instalments and your retirement. The more prepared you are, the easier it will be to dive into the world of self-employment. Of course, you can use Bankeo for Find an accountant who meets your needs.

Sticking to an employee’s rate and mindset

A common mistake made by new self-employed workers is holding onto an employee mindset. Since most have only ever experienced that reality, they apply what they’ve learned from the world of entrepreneurship. Unfortunately, to succeed as a self-employed worker, you need to let go of these ideas. Here are two examples:

A self-employed person is more of a business partner than an employee:

In fact, a self-employed person is not an employee of their client, but a partner or collaborator. It is a relationship between equals. For example, a client cannot require a self-employed worker to work exclusively for them or to work from their office.

To have a decent quality of life, I need to ask for more than an employee does:

Why do Rates for a Self-Employed Worker Are they really that high? The reason is simple: a self-employed person has many expenses. They also have to cover their taxes, vacations, retirement, and insurance. Their billable hours are also fewer than those of an employee. According to estimates, a self-employed person should charge an hourly rate of at least $40 to make a decent living.

Not surrounding yourself with professionals

Most freelancers and self-employed workers wear many hats. They are responsible for finding contracts, for invoicing, the accounting, following up with clients, promoting their business, etc. After a while, this can become exhausting, especially if it’s not your main area of expertise.

Therefore, as mentioned in our first point, take the time to surround yourself with professionals. This could include an accountant, a business lawyer, a coach, or even a social media manager, a strategist, a graphic designer, and so on. A virtual assistant can certainly lend a hand when needed. Also, take the opportunity to meet other self-employed professionals at networking events. In addition to expanding your network, you’ll be able to talk with people facing the same challenges as you.

Not having a service contract tailored to your situation

To protect yourself and your business relationships, it’s important to have a service contract. This should include details about the service, such as how it will be provided, the payment terms, intellectual property, and termination. Often, a simple email exchange isn’t 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 online will likely not meet all your needs.

Not asking for a deposit before starting work

Along the same lines, another common mistake made by new self-employed workers is failing to request a down payment before starting work. However, this is becoming increasingly common in the entrepreneurial and freelance worlds, as it helps protect against bad payers.

Once the contract is signed, ask for a percentage of the total amount. This can be paid in several instalments throughout the project. Some freelancers ask for 50% upfront and 50% upon completion, while others prefer 30% upfront, 30% halfway through the project, and 40% before sending the final files. No matter which approach you take, be sure to specify it in your service contract.

Not using accounting software to help you

Ultimately, when you become a freelancer or self-employed worker, you can quickly feel overwhelmed by everything related to your accounting, especially if this isn’t your area of expertise. Have I calculated my taxes? Did I send this invoice Have I received payment? Did I take the time to enter all my business expenses from last month? Did I keep all my receipts for tax deductions?

Fortunately, there are many tools and accounting software to help you and prevent costly mistakes, including Momenteo, or even QuickBooks, Xero and Sage. So forget about complicated Excel spreadsheets and shoeboxes for storing your invoices, and embrace modernity. You’ll save time and money.

Conclusion

As we mentioned earlier, there’s a good chance that as a self-employed person or 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, you’re your own boss. Good luck!

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