Survival of the Prepared: Being a Freelancer

I postponed graduating as long as possible without seeming like I was the dumb one in a class of 20,000. I knew what life after college would look like, even for someone with a degree.

When I graduated in 2008, I spent about seven months looking for a job. After a while, though, I knew I was going to have to do something to make money. I had bills to pay, after all.

So, I went into the world of freelancing. I sold my services to whoever thought my rates were fair and my work was… decent. At this point I didn’t have an extensive portfolio (I was a freelance writer), so coming across jobs could be tough.

But that’s not what this is about. It’s not even about how freelancing is a great way to make a little money after college, build a portfolio, and support yourself after college. This is about how to survive being a freelancer. Here are my tips for financial success (and a few ways to keep from pulling your hair out) when embarking on a freelance career.

First thing is first

Freelancing is feast or famine when you first start. It can even be feast or famine after you get your feet under you. When I first started, I was getting one to two clients every other week. The money wasn’t great, but it helped pay the bills.

Secondly, your clients will be… interesting. Some of them will be great. There are clients that I still work with to this day, nearly four years after starting with them. But there will also be clients that make you want to stop working all together and just go live in a cave somewhere. DON’T do this. I promise… it gets better.

Thirdly, you’re going to need a schedule. When I first started, I thought, “Hey, this is great! I’m working from home, I can do whatever I want, yada, yada, yada…” Well, I am here to tell you that it is not all roses, my friends. Set yourself up on a schedule, work during your scheduled work hours on projects that are scheduled, and you’ll go a lot further and be more productive.

Here’s the most important thing, though – you’ve got to watch your finances. You have to. And freelance paychecks are pretty different from paychecks you get from large corporations or other jobs. They don’t send you a tax form (most of the time) and the paychecks won’t be steady. But you can do it with a few helpful tips, tips that I followed during my time as a freelancer.

Financial Tips

Set up separate bank accounts

One of the ways you can make the IRS and the government happy is by keeping business money separate from personal money. When you’re handing in deductions for items you bought with your personal account, they start to poke around a little bit more, which is why you create separate bank accounts.

Your clients will pay into this account directly (or you can take their check and deposit it). Even if you don’t have a “company,” you are still representing yourself as a provider of services, so it’s good to keep the separate bank accounts. But don’t worry, you can put yourself on “payroll”.

Put yourself on payroll

You’ve got to have money in your personal account somehow, right?

This is just another way to make sure your accounts stay separate. This will also give you a little help when it comes tax season, as most payroll companies provide payroll tax services. This will also help you hold a sense of control over your finances.

Get Healthcare

Most jobs out there offer some type of benefits package, but if you are a freelancer right out of college, chances are that you’ll need some type of healthcare. Now, there are all sorts of variables when it comes to healthcare, so if you need health insurance, pay attention.

If you’re like me, you need health insurance more than most. There are a lot of health insurance options out there, so you should be able to find something affordable. When it comes to health insurance, just think that in order to be the most successful you can be, you need to be healthy. If you’re not healthy, you’re not going to be as effective.

An option that is specific to freelancers is Freelancers Union. The thing to remember is that you have needs and you should prepare your healthcare options accordingly.

Ultimately, if you’re right out of college, try to stay on your parents’ health insurance as long as you can. Depending on their plan, you can stay on until you are 29.

Organize your receipts

Organization is going to be a very important part of your life as a freelancer.

Making sure you’re organized is mostly geared towards being prepared for audits or questions by the IRS – yes, they can happen. You need to document everything that you deduct, so it’s important to keep that documentation if you want your full refund.

It’s up to you how you want to save those receipts, but I usually just crammed them into different folder depending on what they were for.

Pay taxes

Duh, right? Well, yes, but you’d be surprised how easy it is to forget that you need to pay taxes. You’re not getting a tax form from an employer (most of the time), so it’s kind of an out-of-sight-out-of-mind situation.

What I usually tell people is that they should pay their taxes quarterly, rather than all at once at the end of the year. This will require you to set aside a little money from each payday so that you can pay that little to taxes. Usually, the standard amount to set aside is 10-15%. Hopefully, you’ll send them too much money and get a little back. To be most accurate, check out some form of online accounting software. Remember, organization is key for a freelancer.

One more thing – when you get ready to send in your taxes, be sure to check for deductions, which is where saving those receipts comes in handy. You can deduct certain things – things necessary for you to do your job – from your taxes. For me, this was things like my computer, my printer, any writing software I bought, etc.

Being a freelancer is a different lifestyle, but that doesn’t make it bad. It’s a great way to build a portfolio, make money, and do something that you are passionate about. The key to success is to plan for the future and be prepared for the present. You can do that with sound financial planning and an understanding of how the industry works.



Haylen Bradley is a contributor at She is also a consultant for Houston small businesses and an MBA student. Follow her on Twitter.

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