The thought of freelancing has always appealed to me – no boss, no traditional workspace, freedom of assignment, mobility; the perks are endless. With that, getting started always seemed a little tedious, so I’ve shied away, but not before I took the time to compile a guide to freelancing, including some important things to know and understand prior to starting.
How is being a freelancer different that being an employee or independent contractor?
The legal and tax implications for freelancers differ than those of employees or independent contractors. Both, employees and contractors, work for a single company for a set period of time. These workers typically have set work hours and a manager overseeing their work.
In contrast, freelancers:
- Work where they want
- Set their own hours and only work until project completion
- Are hired for their expertise, so there isn’t a manager training them to perform set tasks
- Take on as many clients or projects as they choose
Every time you bring on a new client, you will need to complete a W-9. This form is required by the IRS and will help keep you in good standing with your taxes.
Additionally, you will need to complete a Form 1099-Misc for any client paying over $600 for your services. Once your client fills out the 1099-Misc, be sure to double-check their entries, so you aren’t taxed on more than you’ve agreed upon in your contract.
Legal and Regulatory Tasks:
Each state’s laws regarding freelancing differ. You can view the licenses and/or permits your state requires by visiting this website.
Additionally, you’ll want to register your business name.
Where to Search for Opportunities:
Once you find freelancing opportunities, be sure to have proposal documents, so potential clients know the terms and scope of work prior to you starting their project. Also have invoice documents created, so you can bill for the project upon completion.
If your client present you with a contract, be sure you agree with all of the terms prior to signing. Also, note that Non-disclosure Agreements (NDAs) are common when freelancing for larger brands or more volatile products. Don’t be afraid to take a project simply because you’ve been asked to sign a NDA.
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