The Hidden Costs of Freelancing
Freelancing may sound like a dream come true to many people. But as it often happens, not everything is what it seems. Indeed, working from home and being your own boss is tempting, as is the fact that one can save a great deal of time when not having to travel daily to reach the workplace. However, nothing is perfect and freelancing is no exception, as there are a couple of disadvantages that need to be considered before switching to such occupation.
Scheduling Can Be Hard
Even though you are your own boss and but you determine when to work, sometimes the lack of mentorship can influence your productivity in a negative way. Scheduling can be hard, especially when you have to deal with clients from different time zones. Freelancers often have to work during unusual parts of the day or have varying schedules and adjusting could be hard. When you decide to be on your own, you should be prepared to spend more hours working than you would at a regular office job, so building an efficient regime could be a great challenge. Also, the isolation from not having contact with any colleagues or management can result in reduced motivation and productivity.
Legal and Tax Implications
As with any field, managing your freelance income taxes is crucial for the smooth progress of your independent career. However, with your independence, your responsibility is greater as well and you would need to manage your taxes and legal matters yourself. This means that you would need the time to get familiar with what exactly you need to pay, and how the process goes. Freelancers also have to estimate the amount of their taxes individually, so a very well kept documentation is a must if you want to avoid legal mistakes. All in all, you have to be very careful as bureaucracy can be tricky at times and every fault could cost you dearly.
You’re Not a Company
One typical challenge of being a freelancer is the fact that there are no benefits at your disposal such as paid vacation or health insurance. Even if you are living in a country with good health coverage, every day not spent working is a day that you receive zero income. You also need to consider what to do with your clients and how to deal with deadlines when there is an emergency, or you need to take some time off. You can also forget about typical corporate perks like bonuses, awards or recognitions. Another thing worth considering is the fact that you will have to pay every business expense yourself, so additional budgeting is required.
Loans and Credit Concerns
Since you are on your own, occasionally you will have to deal with money concern as you will have to cover the cost for every repair or emergency expense yourself. Finding loans can sometimes be tricky, because banks might ask for proof of income – and your income could fluctuate a lot. From the bank’s point of view, most freelancers are unreliable since their salary can vary greatly with every month, so therefore often getting a loan from a banking institution is not an option for you. There are private options available which you should definitely look into.
It Can Be Unstable
When you become an independent contractor, one of the first things you would probably notice is that the work load is distributed quite unevenly. Often there are days which are hectic and you would be very busy, covering more hours than usual, and there are also times when you would hardly have anything to do, so learning to recognize such periods in advance is vital. Additionally, you need to be prepared financially for the times when you don’t have clients, as your income varies with the amount of work you have.
Finding the Right Balance
Not having someone who tells you when and how long to work may seem quite attractive at first but this freedom is not always a positive thing. For many it is hard to draw the line between their professional and personal life and often it is hard to determine how much work is truly enough. As a result you may either often overwork yourself, or not keep up with your schedule, which could lead to a short-lived freelancing career. Another difficulty a lot of freelancers face is finding the right motivation for work, especially when you are working alone and it is hard for you to stay disciplined.
With that being said, one should definitely consider all of the aspects of freelancing before setting on that path, since this is not something for everyone. Choosing this as a career depends strongly on individual situation and qualities, as for example not everyone is suited to work independently and in isolation. In the end, there is nothing wrong with sticking to the corporate world if that feels better for you.