Everything you need to know about making money to become self-employed


Illustration: Lily Blakely

With little else to do in the past 18 months, many of us have overthought, flew away, and generally put aside every decision we made.

For some it has meant dreaming of handing over your advice to your ungrateful 9 to 17 and the wing as a freelance writer. But to become self employed doesn’t have to be a hopeless fantasy: many people handle it – and enjoy it far more than hour-long commutes, quarterly reviews, and socializing with people you would otherwise avoid at all costs.

Of course, if you are self-employed, you must pay your own taxes, navigate the tricky reality of not receiving sick pay and expect your monthly income to fluctuate massively. But there are many benefits – including being your own boss and having more autonomy in your day-to-day life. Before you take the plunge, however, there are a few things you should probably learn about balancing the pounds.

Save money before you quit your job

While any freelance writer can tell you that it’s perfectly okay to go through lulls, your landlord probably won’t be as sympathetic if you tell them your rent is late because you’re “in your day.” of flop ”.

If you are already employed, it is best to save money before become self-employed, just in case you’re struggling to find enough work to cover basic costs. “Aim to have a year of living expenses set aside in savings,” says Joseph James, 35, independent business coach at Money, mindset and strategy. “It might sound like a lot at first, but if you commit to it, the peace of mind you get is amazing. ”

Josh Crowe, 23, does a range of freelance work in public relations, music production, writing and journalism. He stresses that it is essential to take into account the inevitable “ebbs and flows” of self-employment. “I think everyone is guilty of spending too much for a month,” he says. “But when a month is going well, it’s an even better opportunity to save more than just spending a lot of money.” So when your first big payout arrives, resist the urge to splurge it all. Deliveroo and a Goodhood candle.

Social researcher and freelance writer Chloë Maughan, 27, adds that it’s also important to consider dreaded payment delays. “There is no regular payday, and sometimes my bills can all come in late, which can mean I’m getting to the day when all of my utility bills need to be paid and I don’t have to. not enough money in my account to cover them, ”she said. “So it’s really, really crucial to have this emergency fund in place.”

Write down everything you spend and earn

It sounds simple, but you do it not want to end up frantically trying to figure out your annual income on the eve of the tax filing deadline, yelling at your dad on the phone as you beg him to explain how Excel works. Indulge yourself by keeping an eye on all your income and expenses from the start.

I use spreadsheets and keep records of all my sales and customer invoices, ”explains Joseph. “I also sit down once a month and watch the money coming in and the expenses coming in.”

Chloe also keeps her finances organized on a spreadsheet. “I organize all my [earnings] in a fairly simple spreadsheet and I do it sort of month-by-month with built-in formulas, so that calculates things for me pretty straightforward, ”she explains.

Have multiple sources of income and don’t be complacent

Chances are, if you are just starting out, you won’t get a lot of money with just one stream of income. Many people work part-time in addition to being self-employed, whether that’s scanning tickets at the door of a nightclub, making lattes three mornings a week, or giving private lessons to a nightclub. GCSE student in the evening. It doesn’t really matter what you do – what matters is that you at least have some guaranteed and regular income.

Essentially, the important thing is not to get complacent – even when it seems like your inbox is filled with countless new commissions and opportunities. As Josh says, “Always be on the lookout for new commissions so that you’re sort of ready for the next month and not over-relying on a commission you’re already working on. “

Tax! Tax! Tax!

You’re not a true freelance writer until you wake up in a cold sweat at 3 a.m. wondering if you’re going to go to jail forever for filing your tax wrong. To help you navigate the scary world of taxation, Joseph recommends bringing in a professional if you can afford it. “Pay an expert for their time and get the best advice possible,” he says. “Hiring a great accountant and consulting a tax advisor is a great investment in itself and takes the pressure off. “

If you can’t afford to hire an expert, Chloe suggests going about things on a monthly basis. “I have set up a spreadsheet where each month I try to calculate my national insurance contributions, my taxes and student loan repayments based on what I earned that month.” , she says. “I keep this money in a separate account.”

While it may seem like a long time to do each month, once you get to the heart of the matter, it’s actually not as intimidating as it seems at first. It’s just a matter of making it a habit.

Charge competitive rates

Most seasoned freelancers are probably looking back and cringe at the insanely low rates they’ve already accepted. As a freelance baby, it’s important to know that it’s okay to negotiate your rates, and you should always strike up a dialogue with a client if you think they’re underpaying you. If you’re not sure what to charge, ask around and find out from your peers.

“[You should] set a rate that takes into account the fact that you are not receiving benefits such as pension, paid vacation or sick pay. You should always try to take this into account, as well as the inevitable drops in work, ”explains Chloë.

Joseph adds that it is essential to be firm with your customers and to continually reassess how much you should charge. “As a freelance writer, it’s easy to undercharge or accept late payments. But in the long run, having strong limits and charging well for your work will be worth it, ”he says. “Set clear financial goals and think about what you would like to charge for next year and slowly start increasing your fees. “

Freelancing can be intimidating, tricky, and even hellish at times. But if you understand the details of money and try not to panic too much, it can be rewarding and well worth all the initial stress.

@serenathesmith / @lilyblkly