When people think about ways that they could earn extra money freelancing, the initial idea can feel overwhelming. And the picture in their head of what it might look like is just too vague. Or maybe it conjures up too many hurdles. And too many chances to fail.
I call that process thinking. Getting caught up in the details of “how to” instead of simply setting your mind on “Let’s get started. I’ll find a way.” Process is important. In fact, it can be critical. And we’ll get to that soon.
But first comes the vision of what it is you want to create. The other details will fall in place as you go along. Plus having a clear vision, will help you when obstacles pop up. They always do.
Choosing your freelancing specialty
Unless you already know exactly what you want to do, this part can take some time to materialize. And it’s worth giving yourself that time. Think of it as the first step in turning the idea to earn extra money freelancing into an actual business.
Some general areas for you to think about to help you come up with possible independent contractor (freelancing) businesses:
- Special knowledge / talents
- Things people have asked you to help them with
- Work skills you especially enjoy using
- A business you might want to develop part-time for now
- Something you can see yourself enjoying for a long time
Examples of freelancing specialties:
- Pet care
- Web development / maintenance
- Blogging (your own or other blogs)
- Writing / copywriting
- Child care
- Auto repair
- Computer repair
- House painting
- Landscaping / lawn care
- Art / graphic design
- Cleaning service
- Moving service
- Handyman (woman) / contractor
- Career coach / life coach
The list can go on and on. But hopefully this gets you thinking about the kind of business you might like to start for yourself. Even if it’s just one customer at a time in your spare time. Remember, each new satisfied customer is a chance to find more customers via word of mouth.
So now it’s time to start thinking about some of the details. No rush. The time you spend thinking things through up front, will help things flow more naturally later on. Especially once your business really gets going.
Licenses / certificates / liabilities / insurance
After you decide on your area of freelancing, you need to research carefully to see what else you might need. Is there a license or certificate needed? And don’t just use the internet as a resource. Make sure you check with local and/or state authorities just to make sure.
For instance, if you decide to take on handyman or contracting work (managing home repairs / renovations), there may be one or more licenses required. And you’d also want to check to see what related activities (plumbing, electrical) require separate licenses. Some towns can be pretty strict about that.
Also, you’ll need to think through potential liabilities and get appropriate insurance if needed. It will cost extra, but an umbrella insurance policy might protect your personal assets from damaging lawsuits later on. This isn’t necessary for all freelancing, but if you are taking on clients who might suffer losses because of you, insurance is probably a wise choice.
Please don’t let all this scare you
If all this makes you want to rethink freelancing, please don’t let the process scare you. We all go through this. I know I did! Just take a few slow, deep breaths. As I said, no rush.
One at a time, you’ll put the pieces together. Good things take time to build. And by taking it step by step, the solid foundation you lay now will give your business a much better chance to survive and thrive!
When you start taking freelance jobs, it’s smart to get things on paper. Even if you’re working for someone you know and trust, a contract helps clarify what each is thinking. And it can save on arguments later on. Also, a written contract lets you define the exact scope of the work expected, the terms of service delivery, and the price. Nothing should be assumed.
Some companies have a standard contract for 1099 workers — the general IRS designation for non-employees who are independent contractors (rather than part-time staff.) If they prefer using their own contract, that’s ok.
Just make sure you read everything carefully. Ask questions about anything you don’t understand — and even things you do. Get it clear up front before you start. This is not the time to be shy.
For your convenience, I found this basic freelance contract on the Freelancers Union website, a wonderful resource, btw. Hopefully, you’ll find this helpful: => The Freelance Contract
Should you incorporate?
I’m not a lawyer, so you might want to get legal help with this decision. There are also tax implications, since there are different ways income is treated for individuals versus corporations. And even that might be changing, as discussions of possible tax reform proceed.
In my case, because of the kind of work I was doing, I began working as a “sole proprietor”. This meant I didn’t need to incorporate. And everything I earned was taxed as personal income. But you do get to deduct business expenses, which helps a lot. Plus insurance provides an added safety.
When you’re just starting as a freelancer, odds are you don’t need to become a full-fledged corporation. Sole proprietor might work nicely for you. Especially if you don’t have any employees.
You can also register as an LLC (Limited Liability Company), which will limit your personal liability. It may also open you up to some additional tax benefits, even though the income is viewed as personal. On the other hand, there may be some annual fees, depending on the state you live in.
For more information on this: => How To Form an LLC
This is just a reminder that your taxes will not be deducted automatically. In addition to money you earn as you go along, you will get a 1099 statement at the end of the year from each client. This will tell you how much you earned from each source.
But that doesn’t mean you can wait until April 15th to pay your taxes. Freelancers / independent contractors need to pay QUARTERLY estimated taxes, your best guess of what you’ll owe based on your after-tax earnings.
If your income is fairly steady, then you can just pay an equal amount each quarter. But if your income is not regular (and with freelancing this is common) you have to make your best guess for each quarter. With some exceptions, there are underpayment penalties if your guess is way off.
This one is simple. You need a government issued EIN (employer identification number) for a client to pay you legally. I added that last word, since I know many people get paid under the table.
But, remember, apart from the illegality, you are losing out on future social security dollars if you do that. Under the table money does not get reported to the IRS. And that is something that can come back to bite you. That said, it’s not my place to preach.
⇒ Apply to the IRS for an EIN here.
If you’re going to be looking for clients, a professional business card is a great thing to have. You can usually get them made at local copy / print shops and even online. It doesn’t have to be fancy. In fact clean and simple, with crisp black print, is often a more professional look.
You can even use them as a mini-resume, with a few bullet points stating your services and / or skills. Best of all, this handy-dandy marketing tool can usually be bought for under $50 for 500 cards.
Professional email address
Even if your specialty is comedy writing, clients want to know they’re dealing with a solid business person they can count on. And [email protected] might not feel quite as reassuring to a potential client as a more businesslike google email address.
You can save the wackier stuff for your marketing materials. And even there, successful freelancers, no matter what they do for a living, know how to make sure they present themselves as people who know how to take care of business. It’s important to remember you don’t need to be funny every minute to be funny for a living.
And the same is true whatever your field. Even the most creative artists have to learn that negotiation starts with your very first communication. It plants an impression. You want to earn serious money? Show that you know when to be serious.
This is a huge topic, and so I’m not going to try to cover it all here. But, if you want to earn extra money freelancing, you’ll have to find ways to get yourself known. Jobs can come to you unexpectedly, but the more you help yourself, the more your business will flourish.
Word of mouth is great. So if you can just find a client or two to start, offering quality work plus a friendly, reliable delivery will usually get you more jobs. But, of course, you need to take it further than that. Some things to explore:
- Alumni websites
- Your own website (takes time, but can pay off; plus good to have that for them to check out your legitimacy.)
- Online sites that have reviews (ask clients to give you some thumbs up)
- Online networking groups (in your field or other types you might enjoy)
- Member organizations (for networking)
- Events and street fairs (you can have a table)
- Advertisements (paid as well as free ones like Craigslist)
- Personal mailings (you can snoop online and on the street to find potential clients)
- Knocking on doors (depends on your specialty; remember your business cards)
- Grocery lines (saying this with a wink, but it’s about being ready to find opportunities anywhere)
There’s much more, of course. But hopefully this gives you a solid beginning. And remember, if you want to earn extra money freelancing, you only need to start with one client. And then do it a step at a time. You learn and get better at this as you go along. Good luck!