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For the past five years, I’ve been a freelancer off and on, with a few years of staff writing work in-between. Now, since the end of last year, I’ve been both freelance and running my own website. After making some initial rookie mistakes, I now have two LLCs, an accountant, an attorney, and a stack of paperwork to manage it all that would make a Mad Men-era secretary cringe. Don’t get me wrong—I love what I do, but now that I’m doing it right, I realize that being self-employed is way more complicated than I thought it would be.
Being self-employed provides an incredible freedom to do what you love, and to do it on your own schedule. But it also takes away from you the promise of a steady paycheck–and the knowledge that someone else is taking care of paying your taxes – that allow you to not be constantly vigilant. Everything from taking a vacation, to doing your end-of-year finances, becomes an ordeal when you’re freelancing. And to identify where the landmines are hidden, I spoke to 11 freelance workers in different industries to hear their horror stories, find out what took them by surprise, and protect myself (and maybe you) from making the same mistakes.
Chelsea Fagan is the founder of The Financial Diet, a (non-boring) blog about personal finance. She is onTwitter.
DIY accounting. “For nearly 10 years, I worked for a big-four consulting firm, where I became highly specialized in a few specific tasks and systems, so when I reached a fork in the road in my career (I was constantly traveling and wanted children, so I knew I was either going to go in-house somewhere, or freelance), freelancing felt like the obvious choice. I was very lucky, in that in my first year I broke even, and by my third year I was out-earning my previous top salary.
But I made the key mistake of attempting to do my own taxes, instead of hiring someone qualified to do them (and who had the time to dedicate to going over everything properly), and I found myself owing nearly $65,000 to the IRS one year, out of nowhere. It did not put my husband and I into total financial ruin, but it hindered our ability to do a lot of things we had planned for that year, and nearly drove me to take a salaried job with one of my big clients. Since then, I have taken a small yearly hit in income to pay a very good accountant to manage my taxes. I would recommend any freelancer do the same.” –Joanna, Consultant
Uncompensated labor. “One of the worst client experiences I had was during our first week working together. He'd book an hour for a video call, and three hours later I'd be starving to death and hours behind on my other work. If the time were blocked off for a three-hour meeting, it would've been totally acceptable, but I was being treated like a salaried employee who had nothing else to do but hang tight while my client side-barred about his upcoming family vacation. I sent an email after this happened three times in one week, and our meetings have been scheduled correctly ever since.” –Ellen, Copywriter
Demanding paychecks. “I’m not sure if it’s considered ‘freelance,’ but I make my living as a musician, with a small part time job in a restaurant to help pay the bills. For the first few years of my career, I would accept being paid partially or altogether in open bar tabs and food, even though we were decently successful and drawing good-sized crowds. It wasn’t until the drummer in a comparable band told me that they were getting a few hundred bucks a show that I started demanding money. I don’t even want to think about everything I lost out on in that time.” –Curt, Guitarist
Figuring out the financial logistics. “The first year I was working for myself, I literally knew nothing about expensing things. Nothing. I lost out on probably over $10,000 that I could have kept, totally legally, because I didn’t bother to ask anyone how taxes work when you’re self-employed. I was an idiot.” –Naomi, Personal Trainer
Rapidly changing job descriptions. “At one freelance job, I was brought on for a specific kind of content (that I was actually excited about doing), but when I was actually working the job, I was getting assigned shitty stories that were outside the parameters of what we'd originally discussed. I was constantly trying to pitch stories I was excited about, or that I thought were better, and they were getting thrown away and replaced with whatever randomly clickable cat story I was assigned. It was disappointing. While I really like freelancing and the freedom that comes with it, the fact that there's no brand pushing for you, and no one that's trying to keep you happy no matter how well your stuff does, gets frustrating.” – Melanie, Writer
Having to justify what you're worth. “I’m a web designer, and I consider myself kind of an ‘all-in-one,’ in that I can do both the coding and the actual visual look of the website. This is not a given–a lot of web designers can only do one or the other, and as you can imagine, there is a lot of value in being a one-stop shop. But a LOT of my clients will get testy when I break down my bill into my hours spent coding and my hours spent designing. They assume that because I’m one person, this is all getting done ‘at once,’ but that is just impossible. But the problem is, when I try to quote them a flat fee (instead of breaking it down into hourly work), they balk there, too. They don’t understand that, with me, they are paying one person for the price of two jobs, and are already saving money that way. They just get greedy, and always challenge me on my quotes.” –Maria, Web Designer
All the of work that goes into maintaining a professional appearance. “There are three lessons I’ve learned from my own mistakes:
I made all of these mistakes in my first year of freelancing, and I have now mastered them all, and my earnings reflect it.” –Alex, Designer
Occasionally not getting paid for your work. “The biggest issue I’ve run into as a freelancer, that I think everyone has probably run into at one point or another, is non-payment. I’ve had companies just straight up stop responding to me when I invoice them for work, and I have chased a client down for nearly a year over a few hundred dollars. No one tells you this, but one of the biggest parts of freelance work is being your own accounts receivable person, and making sure that you’re on top of everything you’re owed and when. If you’re not establishing up-front their payment schedule, and confirming it before you sign your contract, you can almost guarantee that they’ll cause you trouble. And if you forget about one of your projects that is still outstanding, you can pretty much kiss that money goodbye. Letting something “slip through the cracks” is just not a possibility when you’re working for yourself, unless you hate making money.”–Joey, Educator
Inevitably struggling with time management. “I’ve always had an issue with time management and [it only becomes worse] now that I work freelance. Often I will just do nothing on the Internet until like 2PM, put everything off, and then panic to get it all done in the late afternoon. I also tend to put things off until the day of the deadline, and make dumb mistakes because I was rushing to meet that 5PM cutoff. I want to be more focused, but I also don’t want to take Adderall, which is the only thing that really helps me.”–Heather, Technical Writer
Being taken advantage of. “So, the biggest thing I’ve learned as far as my mistakes in writing freelance has been that you need to stand up for yourself, because if you don’t, someone is going to take advantage of you. I wrote for free for a very well-known and prestigious magazine (it has both print and online editions) for nearly a year, because I was simply too scared to ask for any money. I honestly felt at the time like it would be ‘bothering’ the editor to insist on being paid, even though I was getting a per-article rate at another, smaller publication. I was also afraid to lose the byline, because it was prestigious and it felt good to be able to tell people that I ‘worked’ for them.
Before I could even ask, the editor I was working with got fired and I was bounced around between new people until, eventually, my emails stopped getting answered. I never got paid from nearly a dozen articles from this huge magazine, and I’m the one to blame.” –Jaime, Writer
Clients who destroy your work beyond recognition. “Pretty much every designer will have a story like this, but basically with a lot of your clients, you get a person who couldn’t draw a straight line with a gun to their head telling you to do things that are just absolutely ridiculous/will make your work look bad. On more than one occasion, I’ve had to tell people that in order to finish the project, they would have to agree to take my name off of it, because it was just that bad. I’ve also had clients go in after the fact and change one thing that fucks everything else up. If I had more money– lol freelance life!– I would sue them.” –Ana, Graphic Designer