Starting a home business as a freelancer is certainly something to pursue if you have skills. Services such as graphics design, website design, writing, software development, and video creation, are in high demand these days, just to name a few.
People around the globe are joining the ever-growing ranks of online entrepreneurs every day and most need the services/skills you can provide. While there is a lot of competition to deliver these services, you just need to set yourself apart from the competition to attract and retain a loyal customer base.
There are a lot of benefits to working on a freelance basis such as setting your own work hours, you set the prices for goods and/or services you provide, the ability to work from any location, etc. But there are also some drawbacks.
We’ll discuss a few of those so you can make a more informed decision as to whether or not you’d like to give it a try; so you can decide if freelancing is really right for you.
Let’s take a look at a few of the drawbacks that might make you reconsider freelancing. Keep in mind you can always do freelance work while employed traditionally if you’re not ready to leap right into full-time freelancing. In fact, that’s usually the best idea and what most people do when starting out.
1. Keep Accurate Records as a Freelancer
Taxes… yikes! It’s something you don’t think much about when you work for someone else because your taxes are taken out of your paycheck. The only time you really think about it is during tax season when you have to file your tax return.
But, when you’re a freelancer, you do need to think about taxes all the time. You need to be diligent about saving/keeping track of business-related receipts so you can properly claim your business expenses. Your records must be complete and accurate.
You have to save money from every payment you receive to cover taxes, and it really hurts when you have to write out that check to Uncle Sam. You send in your tax due in one payment unless you pay your taxes quarterly.
Taxes for a freelancer or anyone self-employed can be pretty complicated. So, if you aren’t a tax professional, you’ll probably want to hire one to help you when you first get started. Also, there’s some pretty good tax preparation software on the market to help you out.
Finding work as a freelancer isn’t guaranteed, and you may find the lack of a guaranteed paycheck a deal breaker. Because work is unpredictable, or even seasonal, especially in the beginning, many freelancers work a full-time or part-time job to supplement their income.
In the meantime, you will increase your chances of finding work consistently by signing up in as many freelance marketplaces as possible. Have available a professional portfolio of work to present to potential clients upon request. In addition, seek references and testimonials that will help others choose you over your competition.
3. Lack of Benefits as a Freelancer
The lack of benefits is a major factor, indeed, a deal-breaker, for a lot of potential freelancers; health insurance topping the list. While a lot of jobs don’t offer health benefits, most people don’t stay at those jobs for very long.
Health insurance for the self-employed is outrageously expensive. If your income is relatively low you may qualify for Medicaid. Also, rules change so you may be able to purchase health insurance through an association at a reduced price. You need to consult with a tax professional to advise you on this.
Self-employed individuals do pay into Social Security and Medicare. Even so, retirement is a huge issue and you should consider starting an IRA (Individual Retirement Account) as early as possible and contribute the maximum amount possible to ensure you have enough money available when you do retire.
See https://www.ssa.gov/pubs/EN-05-10022.pdf for more information.
Interruptions can be a big problem and kill productivity in any work environment. When you work from home, it can be much worse. Friends and relatives just don’t understand that you’re working and think they can interrupt whenever they feel like it.
People who have never worked from home or don’t accept the fact that it’s “real” work will never understand that they just can’t expect you to drop whatever you’re doing at any moment to address their needs. It’s up to you to set boundaries right from the beginning.
If you don’t feel you can do that, then you should do the next best thing… turn off your phone. If you live in a home with others, then set up a home office and close the door when you are working.
I mention this as a drawback because as a freelancer you’ll be working on deadlines and you can’t afford constant interruptions; your clients won’t appreciate you missing a deadline because Aunt Sally wanted to chit-chat. It’s bad for business.
Remember, there are drawbacks to everything… even traditional jobs. Do yourself a favor and be clear in your mind that fear of starting your freelance business is not what holds you back. Fear is the root of all dashed dreams; but it is something you can overcome.
Freelancing may not be for everyone, but for others, it’s the only “job” that makes them happy. They have the satisfaction of providing a needed service; doing what they love to do. At the same time, they earn a substantial income. What’s not to love about that?