In the United States, there are 56.7 million freelancers doing freelance work such as voice acting, translation and programming for clients in industries such as technology, healthcare and finance. The work done by these millions of freelancers makes around $1 trillion, and they are being paid around 70% more than other workers employed by companies.
After doing freelance work for years and making a good amount of money from it, freelancers may be ready to grow their business. Going from freelance work to a small business isn’t just about getting more clients though, and you need to be smart about it.
Create a Fallback Fund
Freelancers, whose work may vary each month, know that it’s important to save. A surprise payment for something like car issues could cost you hundreds of dollars, and if you don’t have savings and you don’t have many clients that month, it could leave you in a difficult spot.
Having a small business presents similar issues, but the surprise payments and bills may cost you much more. An article by Due reveals that some of the hidden costs of running a small business can be things such as taxes, the cost of the tools you use as a freelancer, and the price of computers and phones. More employees mean more equipment is needed, so if you’re making more money and need more powerful computers, that could all be very expensive.
Before you go from freelancing to a small business, you could create a fallback fund in case any bills are higher than you expected them to be. You could do this by waiting for longer before you decide to launch your small business and by putting some of the money from your freelance work into a savings account.
Ensure You’re Insured
When you work as a freelancer for another company, their insurance will often cover you too and so it’s something that you don’t really need to think about. However, if you are working with a larger number of people and are doing work that is making more money for you and your clients, you’ll want to get some sort of business insurance.
To get business insurance, you’ll first need to look at what you need cover for. Freelancers who mostly work online may want to get general liability insurance as this will cover you for advertising issues, which can be important if you produce creative content for your clients. If you run a freelance services business such as landscaping or decorating, then you may need professional liability insurance and auto insurance, which will cover you if you have a car accident or do any damage while doing your work.
Use an Accounting Tool
Hopefully, your new small business will make a huge amount of money and you’ll have so many new clients that you’ll need to hire several new people to help you. These all sound like good things until you have to track which clients have paid you and how much, which employees need to be paid, and how much you owe in taxes. None of that is easy, and as a freelancer just working on their own taxes, you may not have seen how difficult it can be.
If your business can’t afford an accountant yet, then are there business accounting tools that you can do that help you to keep track of things. Tools such as Bench Accounting, Zoho Expense, and QuickBooks Online have great features such as easy account management which lets you quickly edit and share accounts, expense reports, and apps that mean you don’t have to send people documents to get your accounting completed.
There is so much to running a small business that being freelance may not have shown you, and having your own company means that you will have to solve all of the issues that come up. It’s also incredibly difficult to know which issues you’ll face, but by planning as much as you can before you launch and by getting the right tools and insurance in place, you can spend more time working and finding clients if they do come up.