As a freelance writer working online for more than 7 years, I often forget how foreign it might seem to people who’ve never freelanced before. That’s why I created this guide. If you’re wondering what freelance work is all about, then this post is for you.
I scoured the web for all the top questions people ask about freelancing and answered each below. I’ll update this post regularly to include new questions from my course students and whatever I find on the web.
So please, start from the top of What is Freelance Work or jump to whatever you want to know most.
The Basics of Freelancing
What is freelance work?
A freelancer is a self-employed person who doesn’t call anyone or any business their boss. They usually work on pre-defined projects with multiple clients, often simultaneously. They have full control over where and when they work and set their own rates. They also pay their own income tax and don’t receive any of the benefits that come with being an employee.
Freelance professionals can work in a variety of fields, such as writing, editing, web development, design, photography, acting, and more. Many freelancers work online. If their work is something that can be done remotely, they may also work from home.
What’s the difference between a freelancer and a contractor?
The difference between a freelancer and a traditional employee is pretty clear to most. But the difference between a freelancer and an independent contractor is a bit more confusing. There are a few factors that differentiate freelancers from independent contractors. Usually, freelancers:
• Pay self-employment tax
• Don’t have employees
• Set their own rates
• Work remotely
• Work with multiple clients at the same time
In contrast, independent contractors can end up working for a single client for an extended period of time. Contractors can work at an hourly rate and have their own employees working under them. Independent contractors can be self-employed or find companies through an agency to work with.
How many people freelance?
More than a third of the US workforce is freelancing — that’s 59 million people. While some are full-time freelancers (like me), many freelance part-time while also working a regular job. The number of freelancers grows even more on a global scale, with people in nearly every country in the world joining the freelance job market.
Do freelancers work remotely?
The majority of freelancers do work remotely. There are some freelance niches that require people to go certain places in order to complete their work, but not many. According to Upwork, when the COVID-19 pandemic began, only 10% of US freelancers had to stop freelancing, mostly because they were in non-remote working situations. The other 90% were able to continue their remote work from home.
What are the advantages of freelance work?
Freelancing as a small business has a lot of advantages:
• A flexible schedule
• Work from home
• Work online
• Travel the world while you work
• Be your own boss
• Spend more time with your family
• Unlimited income growth potential
• And more
A recent poll showing reasons why people freelance returned some benefits that you might not expect, such as:
• To be in control of your own financial future
• To pursue work that you’re passionate about
Freelance work has a lot of benefits. Which are most appealing to you depends on what your priorities are.
What are the disadvantages of freelance work?
Freelance work does have its disadvantages, just like any field. Some include:
• Finding your own clients
• Income instability
• Having to buy your own health insurance
• Paying self-employment tax
Working in the gig economy comes with some challenges and instability, but it’s nothing you can’t mitigate with the right freelancing strategy.
Becoming a Freelancer
What freelance work is in demand?
There are lots of freelance work categories that are always in high demand, such as:
2. Software Development
3. Creative/ Graphic Design
5. Technical Writing
7. Web Development
11. SEO Services
12. Public Relations
13. Virtual Assistant
15. HR Management
16. Teaching and Tutoring
17. Acting/Voice Acting
18. Multimedia Art/Animation
19. Market Research Analysis
20. Paralegal Services
These are just some examples. There are always new niches growing in popularity that can earn freelancers great money. Right now, the fastest-growing freelance niches are Maths, Game Development, and E-commerce.
How much can I get paid freelancing?
How much you can get paid as a freelancer depends on a lot of factors, including your field and how much you choose to charge. Freelancers earn an average of $21/hour, with variability based on their field. Project management, multimedia production, and sales have the highest average hourly rate overall.
However, these numbers just show earnings per hour and don’t include fixed-priced jobs, which is the most common way freelancers are paid. I do fixed-priced work exclusively because it allows me to earn more for my time. For example, I have a client that pays me $440 for a blog post that takes me 2 hours to write. That’s $220/hour!
You can earn a lot of money freelancing if you follow the right strategy and price your services the right way.
Where can I find freelance work?
You can find freelance work on freelancer platforms and job boards, or through marketing and networking.
• Freelancer platforms
There are lots of websites out there designed to connect freelancers with clients and facilitate their working relationship. Upwork, Freelancer.com and Guru are examples of generalized platforms that help freelancers find work in a variety of niches.
• Job boards
You can also find freelance work by applying for positions posted on different job boards. FlexJobs is one example, but there are also niche sites where you can find freelance jobs in writing, design, programming, and other areas.
Marketing yourself online is a great way to find high paying clients. There are lots of ways to market your services, such as creating your own website, optimizing it for SEO, promoting your services on social media, etc.
Networking is probably the best way to find good freelance clients. Build relationships with other freelancers and business leaders online and make sure they understand what services you offer, so they can refer new clients to you.
Managing Your Freelance Income
How do freelancers get paid?
Freelancers can be paid in a number of ways: bank transfer, PayPal, Stripe, or other payment solutions of their choice. Freelancers who work through a freelancer platform like Upwork get paid directly through the platform.
Freelancers get to set their own rates and rate structure. They can choose to be paid hourly or receive a fixed fee for a project. Here’s a breakdown of how freelancers in the United States get paid on Upwork:
How do I keep track of freelance income?
Most freelancers use some kind of bookkeeping software to create and send invoices, track projects, and track their income. This is important to understand how much you’re earning and what your tax obligations might be. There are lots of bookkeeping tools to choose from, but I recommend Bonsai, the software I use, because it’s designed specifically for freelancers.
Do freelance workers pay taxes?
The short answer is yes. But what your tax obligations are and how much you need to pay will depend on your earnings and filing status.
What’s the minimum I have to earn to pay freelance taxes?
If you earn $400 or more for freelance work in a year, you are obligated to pay taxes for that income. As a freelancer, you should be prepared to pay taxes by setting aside some of your monthly income for it, or request to pay your taxes in installments after you file.
You are able to write off some business expenses which can reduce how much you owe. However freelance taxes can still be expensive because you have to pay income tax and self-employment tax.
What is the self-employment tax?
Self-employment tax is a special tax that exists to cover your Social Security and Medicare contributions as a self-employed person. The tax is 15.3%, and you can calculate how much you owe using the Schedule SE tax form.
Do freelance workers get unemployment benefits?
Freelance workers can get unemployment benefits thanks to the CARES Act passed in 2020. This is an important safety net in the case that you lose clients or are unable to work. There are both state and federal unemployment benefits, but you need to determine your eligibility and prepare the right paperwork to qualify. Here’s a helpful guide that helps you with the process of applying for unemployment as a freelancer.
How does freelance work affect unemployment benefits?
Lots of people engage in freelance work while collecting unemployment benefits for a regular job. Freelance work can affect your unemployment benefits, depending on how much you earn. Each state has its own threshold of how much freelance income you can earn before your benefits are reduced. Freelance income earned above that threshold can be deducted from your unemployment check.
What is freelance work? If you read through all the questions, you now have a pretty good idea! Freelancing is a great career choice with lots of benefits that you can only realize if you give it a try. Luckily, it’s possible to start freelancing without giving up on your day job, so you can ease your transition and grow your income over time. If you need help getting started with freelancing, consider signing up for either of my courses or reaching out to me through email with questions. Here are links to both of my courses:
Academia to Affluence: How to Turn Your Liberal Arts Degree Into Endless Freelance Income
FREE Mini-Course: How to Leverage the Value of Your Liberal Arts Degree by Choosing a Profitable Freelance Niche