You have this dream of one day being a full-time freelancer. However, the thought of leaving your full-time job and the security it provides makes you break into a sweat. Fear not! There are steps you can take to make the transition less scary and more likely to make your transition a success.
Here are 5 steps to making a successful transition to full-time freelancing:
1. Don’t quit your day job
Please, whatever you do, don’t leave your job to go freelance on a whim. Do what I did and start doing freelance work on the side while you are gainfully employed…or what people used to call “moonlighting” back in the olden days. It’ll allow you to build up your client list and still be able to pay bills.
And don’t slack off at work. If you keep up the good work, you may just find that your current company becomes a client. (see tip #3 below)
2. Put money away for a rainy day
Anything you earn while you are still employed should be put into savings. Why? For one, unless you have a regular client that pays you on an agreed upon schedule, your income will vary from month to month. It’s quite an adjustment from getting a paycheck every 2 weeks.
Plus, you depend entirely upon your client’s ability and timeliness to pay. Some are awesome and amazing. Others are not. When they are not, it helps to have some savings to draw off of until that late payment comes in. Just remember to replenish your savings when you can when you get paid.
3. Start networking ASAP
Build your list of contacts while you are still employed. You can always use LinkedIn for doing that. Why do this now? Because these are people you trust, people you know, and people who may recommend you for (or even give you) freelance work. And as an added safety measure, these contacts may come in handy if you find that freelancing full-time isn’t working out for you.
4. Figure your earnings
How much income do you really need to live on? Remember, while you aren’t having taxes taken out of your paycheck, you do still need to pay self-employment taxes. You should set aside about 30% of your earnings in a separate account to access when quarterly taxes are due.
Plus, there is the matter of benefits. If you’re married, you can be put on your spouse’s benefit plan. But if you’re single, then you will need to pay for your own health insurance. Remember, it’s now mandatory, unless you want to pay a fine to the U.S. government.
And last but not least, there are business expenses like software, marketing and advertising, web hosting, and other fees that you need to take into account. There’s no office supply cabinet for you to raid when you need those post-it notes! 😉 The good news is, these expenses are all deductible from your taxes, so keep track.
There’s a great calculator over at Modernfreelance.com that can help you figure out how much you should be charging in order to be able to pay the bills.
5. Make the leap
Okay, so you’ve been saving your earnings, networking like crazy, and making a steady freelance income. You’ve determined that you can stay afloat between your freelance income and your savings for at least a year or two. It sure sounds like it’s time to make the leap to full-time freelancing. Welcome to the crew![sociallocker id=86222]
Thank You For Sharing
Thank you for sharing these tips. It really is appreciated!
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