Freelance falsehoods
We are deep within the throes of the gig economy.
By 2020, more than 40 percent of the U.S. workforce will be freelance workers, according to a study by Intuit in 2010. A study by UpWork and the Freelancer’s Union found that 57 million Americans did some sort of freelance work in 2017.
While freelancing is soaring in popularity and on its way to eclipsing the employment norm, there are still many myths surrounding this type of work. Here are a few notions about freelance work that don’t hold up in most cases.
MYTH 1: YOU ARE YOUR OWN BOSS
Most full-time freelancers have heard, “I’m so jealous you have no boss to answer to.”
Freelancers work for clients. Contract work can be unsteady and seasonal, so building a diversified client base brings a stable income. While a freelancer no longer answers to one boss, he or shehas one mini-boss per client.
Juggling those clients, being available and communicative and hitting deadlines can be more challenging than having just one supervisor.
MYTH 2: IT’S NOT LIKE YOU’RE STARTING YOUR OWN BUSINESS
Freelancing is, in fact, a business. For consistent part-time freelance workers, and especially full-time freelancers, it is recommended to set up a business, rather than working as an individual or independent contractor. There are several financial benefits to setting up a business. The most common way for freelancers to set up their own business is a Limited Liability Corporation.
An LLC separates your personal finances from your business. Therefore, if someone sues an LLC they cannot come after an individual’s personal assets. There are also tax benefits to setting up an LLC vs. staying an independent contractor.
A freelance company is likely to come across as much more professional to new prospects as opposed to just a person pitching services. There’s a
foundation that needs to be built as with any other legitimate business.
MYTH 3: IT’S EASY MONEY
Difficulty of actual work aside, the money aspect of freelancing is anything but easy. From collecting income to managing finances, caution and care need to be taken each step of the way. Here are three big challenges: Getting paid: It’s an unfortunate truth that many businesses will stretch 30-day terms. When pennies need to be pinched, it’s not payroll that a business puts off, it’s the payment to contractors. Freelance workers need to be organized and steadfast with invoicing and following up for payment.
Fortunately, there are lots of tools and systems to help along the way. But accruing a paycheck can often be more difficult for freelance work than the bi-weekly check a typical salaried employee receives.
Managing finances: Freelancers shouldn’t just deposit checks into their bank account. For an LLC or independent contractor, it is recommended that freelance income be kept in a separate bank account.
Separating freelance wages from other personal day-to-day banking will make life much easier come tax season, especially for those who freelance in addition to their full-time job.
Taxes: Freelance compensation is untaxed, therefore the worker needs to keep track of his or her income and pay any taxes owed. Figuring out how much is owed to the federal and state government is not an easy task. Tax rates vary
MYTH 4: YOU CAN WORK AT MIDNIGHT IN YOUR UNDERWEAR
While freelancing does usually offer the freedom of remote work, working whenever and wherever you want is a common misconception.
Freelancers need to adhere to somewhat normal business hours in order to communicate with clients. They also need to be somewhere with reliable WiFi, so while working from a beach is a nice fantasy, it’s typically an unrealistic environment for productivity.
Furthermore, video calls with clients or co-workers are commonplace, which requires wearing appropriate clothing. Freelancers also may need to meet with clients, travel for an assignment or venture out to do research for a project.
While freelance work can be done in PJs and yoga pants now and then, most successful workers try to keep a semblance of a normal life and appearance.
Researchers have found evidence that how people dress for work can affect how productive they are by giving them a psychological boost. Pants and a nice shirt might make you feel good about yourself and set you up for the workday.
MYTH 5: FREELANCE WORKERS ARE INTROVERTS
It is true that a significant portion of freelance work is done from home, at a coffee shop or a co-working space.
Some people mistakenly believe that type of career path would be perfect for an introverted personality. But freelance workers are their own marketing team and the face of their brand. Effective freelancers need to work hard to build their client base, often attending meetups or networking events.
Whether a freelancer is starting a business or trying to keep a side hustle going, he or she needs to be vivacious at times and resourceful always.
Adam Heitzman is a co-founder and managing partner at HigherVisibility, an SEO firm.