Freelance finance: How to make more money

Freelance finance: How to make more money

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Going freelance is simultaneously exciting and terrifying, and worrying about freelance finances is a big part of that. It pays to be prepared – largely because once you start freelancing, a single company will no longer be regularly paying you. We asked those who’ve made the leap for their advice on how to make it work, and their advice ranged from everything from being organised, whether or not you really need to learn how to network to getting to grips with tax. Here’s what they said: 01. Set realistic expectations “You must think of your new business like a startup: savings are a ‘runway’ to transition you from the stability of a monthly salary,” suggests strategist Christopher Murphy . It’s therefore a good idea to build up at least three (preferably six) months of living expenses prior to going freelance. Also, have a plan to step back if things don’t work out. “I told my wife we needed at least six months to discover whether my freelancing would work,” recalls creative director, designer and developer Shane Mielke . “And if I wasn’t successful, I’d immediately apply to whatever agency would have me, so we wouldn’t cut deep into our savings.” While that might sound negative, Mielke argues freelancing is anything but – as long as you’re organised and know how to network. “I made a single tweet, received my first project, and haven’t looked back since,” he says. “Although people sometimes think freelancers sacrifice money for freedom, that’s not necessarily the case – it can be very profitable and I’ve consistently made more money than when I worked as a salaried employee.” 02. Manage your overheads Mielke’s point about organisation is crucial. As Clearleft founder Andy Budd notes, a major challenge of freelancing is the uneven nature of income: “Even if you’re lucky enough to immediately land a long-term contract, you’ll probably work for a month before you can invoice. And many companies pay on 60- or 90-day cycles: miss a payment window and you’ll have to wait until the next one.” Even with smaller companies, you may find yourself chasing payments, hence why graphic and web designer Colm McCarthy recommends “mandating a 50-to-60 per cent deposit from new clients, with the remaining balance arriving in staged payments upon delivery of agreed work”. Naturally, get this written into a contract. Income is at least broadly understood among most people considering freelancing. Outgoings… less so. When you’ve worked in a salaried environment, it’s easy to forget what you’re spending and then fritter money away. “You must track exactly what you need to be using in your business,” recommends brand designer Rachel Shillcock . “I work with a lot of online tools and renewal bills quickly mount up. So I do an audit every quarter to ensure I cancel anything I’m not using.” Murphy notes that such tracking should extend to everything: “Software. Pens and paper. Sticky notes. It all needs accounting for. When you’re salaried, someone else pays for these […]

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