How many times have you sat in your beige cubicle and thought about leaving your predictable nine-to-five life behind you? Whether the motivation is a dull boss, a problematic boss, or the effort of commuting to and from work every day, the idea of working for yourself is tempting. However, the main benefit of working for a company is a piece of paper that is issued to employees on payday. There is no doubt that it is always on time and happens like clockwork. What if you decide to become a freelancer? You get paid when you complete a project, and it may not be as stable and consistent as your office work.
These are just a few of the things people should consider when making all the important decisions to leave the corporate world and move into freelancing.
What does it take to become a freelancer?
If people really want to become self-employed, a series of steps must be taken to prepare for the transition. If you are still at work, start saving money for revenge. It is wise to set aside 3 to 6 months of income in case of an emergency. There are very few freelancers who can stay busy for 12 months every year. Think of it as your insurance when you’re off work. You will thank yourself in the future!
The next step is to consider health insurance. If you get a COBRA at work, please accept it. It’s expensive, but if you need medical help, it’s invaluable. Ultimately, you can take out your own private insurance, or you can have your spouse or cohabiting partner add you to their insurance.
What kind of freelance work are you interested in? Different types of companies offer long-term or short-term contract options, especially in the areas of human resources and IT. This can be a great opportunity to gain experience in different fields while performing stable audits over a period of time. Some of these organizations even provide employee tax withholding, alleviating the need for employees to withhold some of the employer tax. Some people choose to work full-time as a temp. Some organizations offer basic insurance for these types of employees and also allow employees to work when they want to work.
For those interested in acquiring projects on their own, carefully distribute taxes from your income. Federal income tax, Social Security tax, health insurance, and in some states state income taxes must be withheld from your gross income. Keep in mind that you must deduct the employee’s and employer’s portion of the tax from your income. For example, the social security tax is 6.2%, so the employee’s share (6.2%) + employer’s share (6.2%) must be withheld for a total of 12.4%. The same applies to health insurance (1.45%+1.45%=2.9%).
Finally, you must have self-discipline to work independently. Some people work from home, or in coffee shops or other offices. Remember that no matter what type of work you decide to do as a freelancer, you need to be consistent when you work. Know when you can go on vacation and when you have to work to pay your bills. This type of profession gives a lot of freedom and leeway in lifestyle, but also brings new challenges for those who are not used to working in a structured environment.
Whatever your choice, research and prepare for financial barriers and the job market. If you read “how to” books while you’re still at work, you’ll reap the benefits of the freelancing life by being prepared.