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There are currently over two million active freelancers in the UK1, who contribute £125 billion to the UK economy1. For the vast majority, 1.77 million1, working on a freelance basis is their main source of income, but for others it's a secondary or part-time position to earn extra money or gain more experience.
There are many different sectors you can freelance in, these are some of the more popular ones in the UK:
Understandably, as markets, economies and technologies change, the demand for freelancers in certain areas increases and decreases too. Micro Biz Mag did some keyword research in 2020 to discover how many searches are made each month for a variety of freelance skills.
|Freelance Graphic Designer||2,400|
|Freelance Web Designer||2,000|
|Freelance Web Developer||1,700|
|Freelance Social Media Manager||470|
|Freelance SEO Consultant||260|
|Freelance SEO Expert||250|
The advancements in technology, such as increased internet speeds, video conferencing, file sharing services etc. make it easier to work as a freelancer. Especially in the digital sectors, as shown in the above table, where homeworking isn't a problem at all. The ability to do homework also makes freelancing an attractive option to parents. They can juggle looking after their little ones with earning money, while saving on expensive childcare costs.
In a nutshell, not a lot. If you're a freelancer you're technically self-employed, especially when it comes to filling out official documents such as tax returns.
Freelancers do work alone, whereas some self-employed people may employ other people in their business. But it's more defined by the type of industry you work in. For example, if you're a copywriter, you'd probably class yourself as a 'freelancer', whereas if you're a carpenter working for yourself, you're more likely to call yourself 'self-employed'.
If you're currently employed, you might be considering going freelance because you've seen other freelancers enjoying the perks of being their own boss and working the hours they want. Here we take a look at these benefits, and a few others.
You're no longer constrained by the regular 9–5, you can choose what hours you work.
That might be 10 or 60 hours a week, it just depends how many you need to achieve your income target. Some freelancers are happy to do their bare minimum, while others push themselves to work all the hours they can.
Whichever camp you fit into – the choice is still all yours.
This flexibility around the hours you work and where you work give you greater freedom, especially if you can work from home. As with any job, you'll have deadlines, but it's up to you how you hit them.
If that means getting up at dawn, doing a couple of hours, then stopping to sort the kids out for school – no problem. Or maybe you've got a week's work but fancy meeting friends for a few drinks on Friday afternoon? You can simply work late Thursday or get up early to finish the job.
When you work for yourself, you can choose the clients you want to work for, nobody can force you. Although if things are quiet, you can't afford to be too fussy.
Having several clients often leads to a wide range of projects to work on, which keeps things interesting. You'll also get the opportunity to visit different client premises (this will inevitably be limited during the COVID-19 pandemic) and meet new people (probably over Zoom currently), further adding to the variety.
While you may report into clients as you work on projects, overall you make most of the decisions yourself.
No longer being told what to do and what to work on can be hugely satisfying.
Freelancer day rates and project fees tend to be higher than if you were a full-time employee in the same position. This is because you have fewer other benefits available to you, such as being paid if you're ill or on holiday, and to cover periods when there's no work coming in.
You're also in more control of how successful you are – the more work you put in, the more you get out. And, compared to a salaried job, you're less likely to mind working late when you know you're getting paid for it.
Most people have rent or a mortgage to pay, as well as the usual household bills. Obviously when you are employed you know how much you're going to be bringing home each week/month to cover these expenses. When you're a freelancer that's less certain.
There are often peaks and troughs, some months you can be crazy busy, others you're refreshing your emails every five minutes waiting for the next job to land. This inevitable creates income variations, which all being well, even out in the year to give you what you need (and hopefully a bit more).
The 'uncertainty' is something freelance creative copywriter David Rose mentioned to us, especially this year: "In these unprecedented times, one of the biggest challenges freelancers face is the uncertainty about when jobs will come in. Businesses have become more reactive than proactive, which makes things less predictable. There's always an element of this for any freelancer, but 2020 has heightened it further."
'Money' is often the deciding factor on whether or not to go freelance. Do you have some savings? This might give you the confidence to take the leap as you know there's back-up money there as you build your business and for quiet spells. Does your partner have a good income? They might be able to help cover most of your outgoings until things are up and running?
As a freelancer, it's just you. Although, depending on your sector, you will often have face-to-face meetings and projects in a client's workplace where you can interact with others. But it's still not the same as having colleagues you work with on a daily basis and who you nip out for a sandwich with to catch-up on the latest office gossip.
You're more likely to work from home too as a freelancer. Especially since lockdown. Meaning even less regular contact with people, which suits some, but not others.
Being your own boss can be great. But if you're the type of person that has to always be told what to do, you might want to avoid freelancing.
You have to be disciplined and manage your time effectively so that you hit your deadlines and keep your clients happy. Stopping for five at home is fine but stopping to watch eight episodes of a box set in the middle of the day when you have a 5.30pm deadline isn't.
If the work is rolling in, it can be difficult to force yourself to take time off. As days off equal a loss of income. Even during the days you're working, consider taking breaks otherwise your projects can suffer, which will affect your business. Try to schedule time off and routine breaks to avoid any burnout.
Finding clients at the start can be a bit of a challenge. Fortunately, word of mouth is one of the most common ways to attract new clients, so once you've got a couple of solid jobs under your belt, you should find it becomes a lot easier. Until that happens, here are a couple of things you could consider to bring in some work as a freelancer:
Your success as a freelancer very much depends on you as a person – your personality traits and approach to work. Yes, you have to deliver great work too, but how you behave and interact with clients is equally as important – below are a couple of soft skills you might want to consider developing:
Creating a look-and-feel for yourself, as well as a tone of voice, can help attract new clients by making you more memorable. As with any branding though, always present it consistently, don't change it every few weeks because you're bored.
Depending on your skillset and contacts will determine how far you go with your branding. It might be as simple as choosing a basic colour palette and adding a touch of humour to your writing. You could go further still by creating a logo, icons, graphics and an image library. Anything you can do to make yourself more distinctive and professional will help.
Coronavirus has affected everybody, there's no escaping it, and the freelance market is very much reflective of the current business landscape. Some are struggling, others are getting by, then there are those who are doing good.
As we know, certain sectors such as hospitality, tourism, high-street retail and the arts, have been hit harder, which inevitably has a ripple effect on freelancers who work in them too. It doesn't matter if you're an experienced freelancer, with a huge client base, if you operate in certain industries, you'll notice it more. Research commissioned by the PR Cavalry showed half of PR freelancers have lost over 60% of their income and two thirds don't qualify for government support. At present freelancers can check if they qualify for any of the below government help schemes.
Each link will take you to the gov.uk site:
It's not all doom and gloom though, and it's a cliché, but out of adversity comes opportunity. As a result of the pandemic, businesses are less likely to be hiring new full-time employees, choosing instead to use freelancers on a project-by-project basis when they have demand.
We asked David to tell us about the positive and negative effects of coronavirus on his freelance creative copywriting business: "It's hard to find any positives out of all of this. If pushed, I'd say embracing new technology, like video conferencing and shared work boards. Well, this tech isn't 'new', but it's certainly become mainstream now.
"I'm not going to go into any detail on the negatives. My income is certainly down on last year, but I'm healthy and I still have a business, for that I'm grateful. Others have been affected far worse than me, and not just financially."
David went on to tell us that many freelancers were already geared up to working from home, so the lockdown had little impact on that side of things, but it has minimised the opportunity for client interactions: "No longer having face-to-face meetings with clients and being able to work in their offices makes it more difficult to maintain strong relationships with them. This doesn't mean it's not achievable – you just need to keep being as helpful and accommodating as possible and deliver great work."
If you become a freelancer, you basically have two options as to how you legally form your business: a sole trader or a limited company. There are advantages and disadvantages of both, which we touch on here, but it's always best to get professional advice before deciding on the route to take. Something David totally agrees with:
"I employed an accountant right at the start. Another freelancer recommended I do it – and what a great bit of advice it was. They helped me set up the business from a legal/financial point of view after running through the pros and cons of being a sole trader and a limited company. They also continued to look after the money side of things for me, together with my wife who does the day-to-day bookkeeping. I might be good with words, but I'm terrible with numbers."
A self-employed person who is the sole owner of their business. It's the simplest business structure around, making it one of the most popular.
It's easy to set up and there's relatively little paperwork, other than an annual self-assessment tax return. You'll also have greater privacy than other registered businesses, as your details are not on Companies House.
The main drawback of being a sole trader is that you, the individual, have unlimited liability as you're not viewed as a separate entity to the business. This means you're personally liable if the business gets into debt and you could lose personal assets. The tax rates also tend to be higher compared to those of a limited company.
A business structure with its own legal identity. One that's separate from its owners, shareholders and directors.
You have limited liability as there's a clear legal distinction between the business owner and the business itself. So, if things go wrong, you'll only lose what you put into the company, rather than your personal assets.
Limited companies also tend to be more tax efficient than sole traders, as rather than paying income tax they pay corporation tax on their profits. Plus, there's a wider range of allowances and tax-deductible costs that you can claim against your profit.
The legal and financial side of things are more complicated, such as the need to outline your Director's Fiduciary Responsibilities. You also have to file an annual return and annual accounts. With these added tasks, it can be more cost effective to hire an accountant, especially as they say a good one will more than pay for themselves.
If you're employed, your employer usually takes care of paying your taxes through the Pay As You Earn (PAYE) system. As a freelancer, you're responsible for paying your own taxes. Some freelancers do this themselves, while others like David, choose to use the services of an accountant.
Depending how you set up your freelance business, sole trader or limited company, will determine what tax records/information you need to keep and submit to HMRC. Either way, keeping good financial records will make this job much easier, so you might want to consider carefully filing your receipts, invoices, bank statements and bills.
If you go freelance as a sole trader you need to register for and file a self-assessment tax return. This assessment calculates how much tax and National Insurance you owe based on your income and expenses and must be completed every year.
As previously mentioned, a limited company's finances are a bit more complicated. First you have to register on Companies House and inform HMRC that you're operating as a limited company. As you are technically an employee of the business, you also have to set up and register a PAYE scheme.
You need to complete a company tax return at the end of the accounting year, which will show the company's taxable profits and if you have to pay any corporation tax. As a director of a limited company, you must also submit a personal self-assessment tax return.
If you do become a freelancer, you might want to consider taking out freelancer insurance. Accidents happen, and no matter how wonderful you are at what you do, we all make mistakes. Having insurance in place from the start could help protect your reputation and livelihood should the worst happen.
There are several types of insurance you might want to consider, including ones that are tailored to your particular profession such as Photographers Insurance and Web Designers & App Developers Insurance. But two of the common insurances used by freelancers are professional indemnity insurance and public liability insurance.
This covers the compensation costs and legal fees you are required to pay if someone is harmed, or their property is damaged, because of your business activities.
Even a quick meeting in a coffee shop holds liability risks. If you're a freelance journalist for example, and you knock hot chocolate over your interviewee's laptop, you could be liable for the cost of replacing it and their loss of income while they're waiting for it to be repaired/replaced.
Professional Indemnity Insurance covers you if a client claims your advice, work, ideas or designs harmed their company or caused them a financial loss.
Maybe you're an accountant and you accidently emailed confidential financial records to the wrong client, you'd be liable to a claim. You can find out more about this type of insurance in our guide to professional indemnity insurance for freelancers and the self-employed.
Taking out Public Liability Insurance and Professional Indemnity Insurance will give you the reassurance you're covered, should somebody make a claim against you. But here are a few simple pre-emptive steps you could take to reduce the chances of this happening in the first place:
A dedicated workspace is important for any freelancer working from home. It will help you to be more productive, as there are less distractions from what's going on elsewhere in your home, such as your partner watching your favourite TV show or the cat swinging from the lounge curtains.
Having a separate workspace also allows you to set it up exactly how you'd like it to be, so you're more comfortable if you're spending long hours in front of a screen. And you'll create a better work/life balance, as you'll find it easier to separate the two.
If you're working from home, it's important to define your 'standard' working day. It makes it simpler for your clients to know when they can get in touch with you and helps give you some structure. So set your alarm, get dressed and hit the ground running as if you were going into work normally, and aim to finish at a similar time every day – so you switch off too. Inevitably with some jobs you'll be burning the midnight oil, but at least you'll be earning money for yourself.
Freelancing isn't for everyone and you should strongly consider your own personal circumstances before making a decision.
We asked David for his final thoughts on going freelance: "It was a big decision, but it worked out for me. Even with the impact of coronavirus, which has affected my income, I wouldn't change it. In fairness, ask any freelancer do they regret taking the leap, and very few will say 'yes'. Well, maybe a couple more might this year."