Freelancing is a great lifestyle, but there are things to consider before you jump right in.
As someone that left the corporate world behind to work for myself, I have experienced all of the great things about the freedom of freelancing, but at the same time, I have also discovered some of the things that aren’t as great. These are the things that you never really notice or think about until you go full time on your independent work, even if you were already doing freelancing as a side hustle outside of your full-time job.
If you’re considering the freelancer lifestyle for yourself, take the time to read this one – you should consider all of the pros and cons first.
On a positive note, freelancing is great! I wouldn’t change the independence for the world. Just look at these amazing benefits:
Whether I am travelling somewhere near or far, or whether I simply want to get away from my usual workstation for a few hours, I have complete freedom over where I want to work. All I need is my laptop or iPad and access to an internet connection, and I can access everything I need to do work for my business and my clients. There’s no better feeling than sitting at a beachfront café, enjoying the sunshine and some great coffee, and thinking “just another day in the office”.
Not everyone is like me – some people like the structure of a workday, but if you are like me, the standard 9-5 is probably something that you find difficult to consistently follow. On a typical 9-5 workday, you wake up, go to work all day, you come home to have some dinner and maybe watch some TV, then you go to bed and do it all again. But freelancing? You choose your own hours. Maybe on Tuesday, you close a large deal with a new client and it’s going to lead to a lot of future work. Well congrats! Enjoy the rest of the day off and treat yourself. Then perhaps Wednesday, you have some errands to run but it needs to be done during business hours – well no problem! You can work a few hours in the morning, do what you need to do in the afternoon, then get back to work later in the evening. Believe it or not, sometimes night-time is when you do your very best work! As long as you can still achieve your targets, you have nobody to control what time you need to work.
When you’re a freelancer, everything you create is all on you! So, if your client is absolutely stoked with the quality of the work you just sent to them, guess who that reflects on? YOU! Every project that you have created has been done by you, and you get to go to sleep at night knowing that you achieved all of this and pleased your clients. It’s a great feeling!
One of the great things about freelancing is the limitless possibilities that you can achieve. Whether you’re comfortable with an income of $50,000 or if you strive for an income of $500,000, you can work hard to get to wherever you want. In a full-time position, although you can negotiate your rates with your employer, you can typically only do as much as the company is willing to offer you. Whereas freelancing, you can work as hard as you want to achieve your desired income (and beyond). There are no salary caps limiting you, and there are no job descriptions to limit the type of work that you get to do.
I could keep going on about all of the positives of freelancing, but we would be here all day. Although the pros typically outweigh the cons, if you are considering freelancing as your full-time gig, you should really have think about how and if you would be able to handle the less enjoyable parts of freelancing.
You are probably already aware of this one, but it is a point to emphasise. There is no promise of work in freelancing. Some weeks you are going to be working on a heap of exciting projects with some amazing clients that you really believe in. Other weeks, things will quiet down and you will feel the walls closing in around you as your number of active projects begins to reduce. This doesn’t mean that you are destined to fail or you need to start handing your resume to companies – it’s just the reality of business and freelancing. No matter the industry, there is always going to be an inconsistent frequency of sales coming in, and you just need to be prepared to deal with this. As a freelancer, you need savings for these quiet periods.
As a general rule, allow for at least 2 months of income in your savings on the assumption that you will earn $0 for 2 months. It’s highly unlikely that you will actually earn $0 for 2 months, but it’s always good to be over prepared than to not be prepared at all. You should also have a plan in place for these quiet periods so you can find some new projects and get the ball rolling again.
If you came from a corporate environment like I did, this will probably hit you the hardest when you go into full time freelancing, especially in the quieter periods. You don’t have a team to collaborate with, share ideas with, complain about the little things with, or even have banter with. And it does get lonely as a freelancer. When you start to feel isolated working on your own all the time, you should talk about it with others. No matter what you are doing, your mental health comes first. Something that always helps me when I feel isolated is just getting out of your usual workstation – go to a café, go shopping, seek feedback on your work from someone else, meet up with clients, just interact with anyone! Sometimes all you need is a catch up with some friends or family and things will feel okay again. If things don’t seem to get better, sometimes a co-working space is a great option to put you into a professional office environment where you can collaborate and interact with others!
As a freelancer, you receive emails at all hours of the day and night, and they get pushed instantly to your devices. When this happens, it can get hard to manage your work-life balance and to know when it is time to switch off for the day. You just need to remember that it’s okay to log off and come back to things in the morning if you are starting to feel like your day is never going to end. Never burn yourself out by feeling the need to work all day and all night just to keep up. You can always outsource your work if things are getting too busy.
As a freelancer, you’re running an independent business, so tax, superannuation, GST, and any other financial & legal responsibilities are up to you. You don’t have a corporate legal and finance team to manage things for you – it’s all on you (no pressure).
Tax is probably one of the scariest things to prepare for. You don’t know how much you are going to earn until the financial year is over and it’s time to lodge your tax return with the ATO. Always ensure you have savings in place, because unlike when you’re employed, you are going to receive a large tax bill at the end of the financial year, and you don’t want it to catch you off guard. And remember, every single purchase for your business should be recorded in your bookkeeping software so you can easily deduct all of these expenses from your income at the end. This will lower the amount of tax you have due.
Superannuation is also something that your employer would have managed at your previous job. Well now it’s up to you! Set up weekly/monthly/quarterly payments (or whatever other frequency you want) into your Superannuation account. Just because you don’t work full time, doesn’t mean you don’t need to pay Super – it will just come back to bite you in the future if you decide to skip on investing in your future retirement fund.
If you aren’t earning $75,000 in annual revenue, don’t register for GST if you don’t want to. It will cost you more money than it’s worth in the long run, so save it for later when you’re on the big bucks.
And for all other legal responsibilities, be sure you know what you’re doing to avoid getting yourself into any legal trouble. Seek out the advice of a lawyer or accountant if you need advice or assistance on anything. Nobody expects you to be a genius on this stuff, you just need to be responsible and realistic on what you do know, and what you need help with by a professional.
Freelancing is still a great choice for people that crave that independence of working for themselves. You have full flexibility to work whenever and wherever you want to work. Your possibilities for growth are limitless too! You just need to be prepared for the reality that life isn’t going to be perfect from the start as a freelancer. There are expenses, responsibilities and realities that you need to be ready for if you want to succeed, because nobody is going to manage it for you.
Always seek advice from a professional if you are considering this lifestyle for yourself or if you are struggling with anything as a freelancer or independent business owner.
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