July 10th was a lively and interactive discussion at our Freelance Austin educational session. Members were open and vulnerable with their problems. Peers stepped up to help each other, and we discovered new tips for managing our freelance businesses.
The discussion included writers, content strategists, corporate communicators, TV newscasters, and more. We wrote our most pressing questions on sticky notes. We then categorized the questions into broad topics such as:
- Finding clients and making more money.
- My employee/labor status.
- Financial planning and consistency.
- When things get weird and awkward.
Dawn Weathersbee, Freelance Austin’s Communications Chair, facilitated as we shared our collective wisdom around navigating tricky situations common to the freelancing experience.
The conversation included the following crowdsourced topics:
Q. What if you’re hired as an independent contractor but suspect you’re possibly not being treated according to that status?
A. It’s important to recognize red flags that show you’re being paid as an independent contractor but being treated as an employee. For example, if an employer requires you to work in the office, puts you in charge of a team, or requires you to use the company car or cell phone, these are signs that you’re not working according to your legal status as an independent contractor. You can find out more about legal definitions of employment status from the IRS.
Q. What do I need to do in terms of taxes as far as the IRS is concerned?
A. If you have W2 income, it’s like you’re employed as opposed to doing contract work and the employer deducts the taxes from each paycheck. If you’re working as a 1099, you will need to pay the taxes yourself on a quarterly basis. Consider putting aside the money for those taxes as you receive each payment. The Electronic Federal Tax Payment System (EFTPS) allows you to set up a system to pay your estimated taxes monthly or quarterly. This way, you won’t be on the hook for one big payment at the end of the year, plus penalties for not paying your quarterly taxes on time.
Financial Planning and Consistency
Q. How can I create a more consistent income?
A. The best thing to do is try to put clients on retainer. For example, they could agree to pay you for a certain number of hours per week or month on a recurring basis.
You might also put together your services in a package. Let’s say you write blogs, take photos, and produce videos. You might offer to put together a package that includes one blog, three images and an accompanying video for a set price. It’s important to be very specific about your offer, so be sure to include word count for the blog and length of the video. Getting clients to sign up for packages will help you to sell your services in bulk and create more financial consistency.
Q. How do I raise my rates on existing clients?
A. The more data you can provide to your client the better. Provide your clients information that shows how much a full-time employee doing your job would cost, as well as the average cost of benefits your client is paying that full-time employee. Point out how much they save by hiring you as a freelancer, and then introduce your new rate.
That said, small business owners may not be considering hiring someone full-time as an alternative to hiring you. They may instead wonder if they need the service that you provide at all. In this case, have the data to show the value you bring to the business.
Sometimes clients are unwilling or unable to pay more, even when you’ve been doing a great job for them. Know that you deserve to make your rate and walk away. Freelancing is like dating; sometimes the relationship just isn’t worth saving. There are always other fish in the sea.
When starting with a new client, you may want to include a clause in your contract that says, “My rates go up 5% per year.” Then give notice three months before your automatic raise goes into effect and again one month before.
Finding Clients and Making More Money
Q. Where is a good place to find clients when I’m just starting out?
A. Austin Freelance Gigs is a Facebook Group whose goal is to help small businesses and freelancers connect.
You might also consider joining professional associations in your field and volunteering to contribute to their communications. If you’re a writer, you may get a byline. If you’re a photographer, you may get a credit.
Even if you only have a few clients, identify those who are most lucrative and enjoyable. You can say to your favorites something like, “We work well together. I want to replicate you! Can you introduce me to two other people just like you?”
It’s important to constantly let people know who you are and what you do. It may not yield results right away, but you’re seeding a garden and may hear back a month or two later.
Success as a freelancer can seem overwhelming. It’s sometimes difficult to be on your own. As the trend of hiring independent labor grows, freelancers must learn to help each other. Freelance Austin wants to support your growth, so we’ve dedicated our organization to that goal.