What is freelancing?

According to the dictionary definition of freelancing, a freelancer is someone who sells their work or services by the hour, day, or job, rather than working on a salaried basis for one employer.

While there are many variations in how freelancers get paid, the clients they work for, and the projects they take on, that’s the basics!

To say it in layman’s terms, a freelancer is a self-employed business person who sells their services to other businesses (clients).

Freelancing is growing rapidly in popularity. More and more people are choosing to go the freelance worker route, and that was even before the coronavirus pandemic introduced working remotely to billions more people around the world. In 2019, around 35% of the American workforce, or 57 million people, were already freelance workers according to Upwork’s annual Freelancing in America study.

How is freelancing different from a 9-5?

The main difference between a freelance worker and an employee position is benefits. In freelancing, also known as contract work, you function as an independent contractor. This means you don’t have benefits like health, vision, and dental insurance, paid time off, nor a company retirement plan.

Your employer also does not set aside taxes for you ahead of time — you know, all those annoying line items on each paycheck showing you all the money disappearing from your check each pay period.

Before you get too excited about that money not being automatically taken out, I should make it clear that yes, you still have to pay those!

Instead of receiving a W2 form from your employer in January (if you’re in the USA), you’ll need to request a 1099 form from every client you’ve worked for over the course of the year that has paid you more than $600. (If you’re a regular reader of the blog and putting all the free tips and advice in action, you’ll be making well over that from each of your clients!).

One of the most vital things to understand about freelancing is that you are basically your own company. Freelancing means you go out and find clients and projects to work on. They’re not handed to you in a steady stream like in a 9-5 job, which can be good and bad, but we’ll get more into that later.

Freelance workers are also commonly called:

  • Contractors
  • Independent contractors
  • 1099’ers

There’s a certain misconception out there that freelancer workers are usually only with a company on a part-time or short-term basis.

That is not necessarily the case. I speak from personal experience when I say that there is no one-size-fits-all definition of freelancing or freelance work. I know plenty of freelancers who work with clients on an ongoing basis. I’ve been with my longest client for 3 years and counting.

While I don’t work full-time, that’s a choice on my part and I have worked full-time hours for clients over the years when we were working on major projects. Freelancing is what you make of it.

What is freelancing doing to the traditional employment model at companies?

Frankly, it’s turning it upside down. Many companies (especially smaller ones) love freelance workers because they don’t have the same costs of employees. Without payroll fees, health insurance benefits, and office space needed for in-person employees, companies can afford to pay more for a freelancer’s hourly or retainer rate.

group of people in office

Some small companies have completely done away with the W2 model and only work with contractors for all of their day-to-day business needs — renting offices in shared co-working spaces, or going completely online. From customer service to coding to operations management, they create on-going contracts with freelance workers to build and sustain their businesses.

What are some of the benefits of freelancing?

There are a whole host of things to love about freelancing including working in your pajamas and ditching the morning commute. For the sake of this post, I’ll keep it short and stick to 5 of the most important.

It’s cheap to get started

Freelancing is one of the cheapest businesses to start, as well as one of the fastest. You can get started for $0, and even if you want to splurge and spend a bit on a website, you can still get one up and running for under $100.

freelancing is cheap to start keyboard with money

If we strip what freelancing is down to just the essentials, in order to get started, you’ll need:

  • A computer
  • Wifi
  • A professional email address (free)
  • A way to accept payments from clients (free)
  • Time

That’s it! I started freelancing when I was broker than broke and had around $30,000 in debt. I really needed to make money and I didn’t have any spare cash lying around to spend. That led me to eventually become a 6-figure freelance worker with practically no overhead.

I’ve noticed that when most people start off, they spend way too much money on things that don’t matter initially. I’ve known some people that want to incorporate as a business right away — this isn’t necessary in the beginning. You can stay a sole proprietor when you’re just getting up and running and not pay a dime.

I see other people run out and get paid subscriptions to services like Quickbooks for invoicing because they want to feel like a “real grown-up business” right off the bat when it’s really not necessary. Nothing against Quickbooks, but there are other services that you can use free forever!

A lot of new freelancers overspend on things they don’t need and don’t spend nearly as much attention on the one item on the list above that is most important — time. Time spent on the right activities that is! Getting out there and finding clients!

Freelancing is the ultimate safety net

Not answering to one specific employer but working with several means that you have a lot more freedom. I know this may seem counter-intuitive.

Most of us have been groomed since childhood to go the “standard route” in life. Get good grades in high school, go to a good college and maintain those good grades, get a good job, and ideally stay with that employer forever. But that was our parents’ way of life, not ours, and “the times they are a-changin’!‘”

Now I know that it “seems” safer to have a “steady” job. You’ve got a dress code that probably involves dress slacks, and you get in your functioning sedan (a far cry from the junker you drove in college), you drive your same route to work past the same Starbucks where you stop for the same latte (only changing it up for pumpkin spice during fall) and park in your same space in the office garage.

You don’t have to “think” about what to do because your boss tells you what to do and you’ve got a steady stream of work coming in from him or her, mixed in with meetings and the time you spend daydreaming about other stuff while trying to look busy.

Perhaps most importantly of all, you don’t have to worry about getting paid. Every two weeks like magic, your paycheck is deposited into your bank account and you’re lulled even further into content complacency. This is what it’s all about right?

Well, it’s not what freelancing is all about! See, I was once right there as well, comfortably chillin’ at a job I was bored out of my mind at. Until I got laid off without warning. And realized that the safety net society had built a 9-5 job into … wasn’t one at all. When I got laid off I lost 100% of my income. 1 job, 1 paycheck, all gone.

Freelancing is a way to make the rug being swept out from under you almost impossible! Even if you’re only working with a small number of high-quality clients, as I advocate constantly here on the blog, if one of them has to shut down a project, you still have income from other clients coming in. Plus, once you’ve found clients, you know how to do it. So you’re confident that you can go out and bring in more business if one door closes.

What freelancing essentially means is stepping up and taking control of your life.

Lots of earning potential

The most I ever earned as an employee was around $53,000 a year, and that’s before taxes. Granted, I didn’t make the most lucrative career choices. I was a middle school teacher for most of my professional career, 7 years.

And no, I wasn’t making the above in teaching. There, I probably topped out at about $42K. When I left teaching I bounced around to a couple of odd jobs — the $53K one at a disaster of a startup where I left after only about 6 months.

In my first year as a freelance worker, I made $94,858.24. And what’s best … I didn’t even know what I was doing back then!

I’ve made considerably more in the years since then and even the coronavirus pandemic — while throwing a wrench in some client projects and financial projections — didn’t leave me high and dry like many people. I say this gratefully and I think it’s important to put it out there because so many people, when they think about what freelancing is, lean toward thinking it’s unstable, unpredictable, and unsafe. This just isn’t the case!

Many people also get caught up in the low earning numbers projected by various studies or other freelancers they know who are barely keeping afloat. The same Upwork study referenced above states:

“The median freelancer rate is $20 an hour, compared to a median of $18.80 an hour for the U.S. workforce overall.¹ This reflects the fact that skilled services are the largest type of work performed by freelancers. Indeed, for those who sell skilled services, the median rate is even higher at $28 an hour.”

Some might think that giving up the stability of W2 employment with health insurance, vacation time, etc. just isn’t justifiable for $20 to $28 an hour but remember, this is just a median number and a starting point. I took on my first client at $35/hr, the next at $50/hr, and never looked back. Freelancing is absolutely a way to grow your income to triple digits hourly and six figures yearly if you want.

Unmatched flexibility

Freelancing is a great way to bring more flexibility into your work. I have worked with great clients on awesome projects that interested me. I’ve told other clients no because I didn’t think they were a great fit for me. As YOU, INC, you’re able to manage your own workload and availability to clients.

If you’re someone who gets bored easily like I do, freelancing is awesome for the ability it gives you to work in a ton of different types of businesses, instead of staying in just one industry.

I’ve also worked on several continents in numerous different time zones and it’s never a problem for clients because I’ve set up systems that make it work. Since your interactions with clients from day 1 are remote, they typically don’t care if you’re checking in from Indiana or Iceland! (And if they do, you’re free to go out and find a different client who doesn’t care as long as the work is done.)

I also tell clients my payment terms, when they can expect to hear from me, and when work will be delivered. I’m not tied to my desk and I don’t work on a 9-5 schedule. If a friend wants to go for a long lunch in the middle of the day, we do it! And if we decide on a bit of shopping after, well, I quit for the day and come back to it the next. Freelancing means that I have the ability to change up my days to suit what’s happening in my life.

Don’t get me wrong, I’m not irresponsible, nor advocating that you be when you start your freelancing career. But there is an incredible amount of flexibility to make freelancing into exactly what you want it to be.

Respect and responsibility

One of the most important things to keep in mind when freelancing is, you are not an employee subject to your boss’s whims. You are an equal, you are your own business, and you are your own boss. You must internalize this into your own personal definition of freelancing and never forget it.

freelancing is a business woman holding boss mug

This is important because I see a lot of people taking crap from clients and stressing themselves out so much with the wrong kind of work and clients that they hate freelancing as much as they hated their old 9-5s. This is not what freelancing is all about!

A freelancer is an equal with the client. They have something you want = money, and you have something they want = skill in a particular area. This is an even transaction. So you should keep this in mind from the very first contact with the client.

Sure you may want and really need their business, but you’ll only get a positive outcome if you respect yourself, and handle the entire client relationship from the start in a way that makes the client understand they need to respect you as well.

What are some of the cons of freelancing?

While there are many great things to love about freelancing, it’s also very important to be aware of some of the challenges that come along with the business.

Work can be inconsistent

For many people, this is the first thing they think of. Almost everyone knows a freelance worker, be it a friend or family member, who struck out freelance and is now in a crazy cycle of too much work at sometimes and not enough in others.

It doesn’t have to be that way. If you’re doing it right, freelancing means a safe and steady income stream that you can count on. This starts with selecting high-quality clients and working in skilled areas where the client needs ongoing help, not just one-off gig work.

There are lots of extra responsibilities besides the work

A freelance worker is responsible for a whole host of other things that traditional employees are not. Things like managing invoicing and payments, paying taxes on time, and purchasing the tools needed to run your business are all on your shoulders.

stressed man holding head in hands

It’s up to you to purchase your own health insurance

This is a major drawback to freelancing as companies typically buy health insurance for their employees in bulk, thus reducing the cost. When you’re going it alone as a freelance worker, it’s up to you to find and purchase your own health insurance.

This can be very expensive in the United States so it’s something that you’ll want to keep in mind before beginning to freelance. If you’re planning to become a digital nomad or set down roots in another country, you can often find very affordable healthcare options outside the USA that provide great service at a fraction of the cost.

What freelancing means for taxes

Without your employer withholding taxes for you, it’s up to you to pay your taxes each year and to pay them on time. When starting out, many freelance workers don’t realize that they should be paying their taxes on a quarterly basis (in the USA). You can be subject to an additional fine at the end of the year if you wait and pay in a lump sum..

The good news is that, while initially scary, doing your taxes as a freelancer isn’t that hard. A good accountant who understands self-employment is a good investment and will help you get systems set up to properly track your income, expenses, and pay your quarterly taxes on time — which you can typically do online.

If you decide to expand from a sole proprietorship to an LLC or other business type someday, you’ll definitely want to seek out an accountant’s advice.

What is freelancing all about?

So we’ve gone over what freelancing is, as well as some of the pros and cons of being a freelance worker. Now, let’s take a bit of time to talk about the nuts and bolts of what freelancing means and how to go about it.

You’ll need a computer, wifi, a professional email address, a way to accept client payments and to refine what skills you have to offer. You’ll also need time to research what rates are being paid to others in your industry, and lots of time to go out and look for clients and projects.

You can approach clients on a freelancing platform, or reach out to them directly.

What is a freelancing platform?

A freelancing platform is a service that connects freelancers looking for work with clients who have work available. Some people utilize freelancing platforms when they’re just starting out and don’t know where else to look for clients. These platforms, like Upwork and Freelancer.com, already have thousands of freelance jobs available for someone just like you. Basically, you set up a profile and join the site, where clients have also created a profile and put up job posts.

what is freelancing platform front page of upwork site

There, you join others in bidding for those jobs. Platforms can be a decent starting point but you’re up against hundreds of thousands of other people, all going after jobs in the same place. It can work, but it can also be really demoralizing if you send out a bunch of proposals and never hear anything back.

Freelancing platforms also take a nice cut out of what you earn. It’s how they make money, and it is fair because it was due to the platform that you connected with the client in the first place, but it’s definitely something to consider when setting your rates.

If I don’t use a platform, how do I find clients?

The other option is to go it alone, seeking out potential clients and pitching them on your services. A lot of people get scared by this idea and so they stick to the platforms because they can’t imagine doing this.

“I’m not salesy! I can’t cold-pitch clients!”

I hear this all the time and even thought it myself back when I was getting started. But my desperation (I was super broke and in debt remember?) led me to figuring out how to do this fast!

In a very quick explanation, finding work requires doing research into your ideal clients and the types of projects you want to work on, getting to know their business and potential needs, crafting a pitch on why they should work with you (read, why you are the dreamiest Mc’dream solver of all their problems), and sending them a pitch!

It may be scary in the beginning, but it’s not terribly hard and I’ve taught tons of my students each step of the process.

The good news is, even if you’re completely terrified of selling yourself, if you do this right, you won’t have to do it very often. I’ve been a freelance worker for several years and haven’t sent more than a dozen pitches in all that time. Once you land your first few clients, if you do good work, your existing clients will love having you around long-term, and new clients will keep coming in by word of mouth.

What is a freelancing job example?

As I’ve traveled around the world the last few years, I’ve gotten this question a ton and my response is always the same: Just about anything you can think of that can be done with a computer and wifi connection.

While that rules out in-person jobs like electrician, lawn maintenance, or surgeon, it leaves you with a whole host of options.

In my few years of working freelance and traveling the world I’ve connected with people who freelance in:

 

What length of time is a freelancing contract?

A freelancing contract is going to be, you guessed it, flexible! It depends on you, the client, the project, and what type of services you offer.

Some contracts are short and one time. Let me give you a quick real-world example. Last week, one of my clients got US Patent Office trademark registration approval. That meant we needed to update all of our logos to proudly display the official circle R.

Since we’re way too small for an in house design team (and, as far as I know, no one on the team is familiar with Photoshop or Illustrator), I hired out the job on a freelancing platform.

The contractor gave us a couple of options for where the trademark symbol would be placed, experimented with color options, we approved the initial round, they did the logos in all the colors and sizes we needed, they delivered the final designs, and we approved, paid, and closed out the contract. Short and sweet, the whole contract was only a few days, from Thursday to Monday!

Other contracts are one-time, but for a longer period of time. Once, a large client of mine who had thrown up a Facebook page but wasn’t using it strategically, hired a freelance worker to create a Facebook strategy playbook.

We worked with her for about 5 months as she came in, did interviews and research to learn more about the company brand, voice and vision, as well as did in-depth research on our customers and the type of engagement they would be expecting from us as a brand.

She created our entire Facebook strategy from scratch, ran it for a month or so, then gave us the turn-key strategy to implement with our internal team. Using her work we’ve taken the page from around 10K followers to closing in on 1MM.

Still other contracts are long-term indefinitely. I’ve been with my longest client for three years. At times I’ve worked with him 10 hours a week, or upwards of 40 hours a week depending on my availability to take on work with him, as well as what major projects we’re working on.

These ongoing types of engagements are often billed bi-weekly or monthly, just like a W2 employee and provide great long-term stability but also the freedom of taking on other clients and projects.

Who is freelancing for?

Due to the unique number of hats that a freelance worker has to wear, freelancing is not for everyone. Here are some key traits that you’ll want to make sure you have before diving in.

Discipline

Freelancing means you have a ton of flexibility. You get to create your business the way you want it to be but that also means that you’re the only one around to do all the work. That means it’s up to you to be disciplined enough to maintain your own work schedule and get to client commitments in a timely manner. No one is going to ensure you sit down at your desk and get the work done, or keep you from overbooking. That’s all up to you.

Organization

Many freelance workers are disorganized so you can gain a competitive edge by making sure you are very organized. You’ll need to manage multiple clients and projects, schedules, and deadlines. Again, this isn’t hard, but you’ll want to be able to put systems in place and use your calendar effectively as well as free project management tools like Trello or Asana.

witeboard covered in sticky notes

Professionalism

Deliver on time. Do what you say you will. Be organized and collected. Take responsibility for your actions. Be a team player. All of these are parts of being professional and again, many freelance workers drop the ball here. Remember that definition of freelancing as a business owner? Make sure you act like one.

Strong communication skills

Because you’ll be working with clients on a remote basis, strong communication skills are a must. You need to be able to express yourself well in writing, both in emails and via chat tools like Slack. You may need to write up reports, create project plans and presentations, and conduct meetings with a wide variety of other team members and other outside contractors. In the online world more than ever, because so much of it is done in writing, poor grammar, misspelling, and inability to express yourself in the written form will be noticed.

Willingness to work hard

This is key. Over the years many people have looked at my success and said, “Must be nice!” or “You’re so lucky …” But I’m not lucky. I worked hard for my success and continue to do so. I didn’t have a mentor or teacher and so I figured things out the hard way, with trial and error, and learned a lot along the way.

Even once you’ve figured out what freelancing means is to you and what kind of business you want to have, you work hard on a daily basis as well. As a freelance worker, you’ll become involved in lots of interesting businesses and projects.

Instead of day-dreaming at your desk and taking tons of snail’s paced trips to the breakroom catching up on all the latest company gossip along the way, you’re invested in the work you’re doing, and it can be exhausting. Sitting down at your home office alone, putting in a solid 8 hours of work is far different from showing up at an office where it’s estimated that the average worker only puts in around 5 hours.

If you’re not willing to work hard and it’s easier for you to just be handed your next assignment by a boss, it’s not ideal for you.

What is freelancing going to do for you?

Well, hopefully, if you’ve identified that freelancing is right for you … it’s going to change your life! I know it did mine.

I went from being broke and $30K in debt, to making over $94K in my first year. My personal definition of freelancing is that it is the ultimate freedom. The freedom to choose who you work with, the types of projects you work on, how much money you earn, and even where you work!

If you’re ready to get started make sure you pick up a free copy of the pitch I’ve used to generate over $200K in freelance work.


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