Freelancing has never been more prevalent –– or profitable –– than it is right now. In addition, most prognosticators forecast that freelance work will only become more common in the coming years. Though thousands of new professionals are taking up the mantle of the “side hustle,” there are some major drawbacks to freelance work that few seem to consider. Indeed, while freelancing can certainly prove lucrative, it can also present financial pitfalls to inexperienced pros. With that in mind, today we’ll take an in-depth look at the fiscal side of freelancing and answer the question: is it really a good idea?
Advantages of Freelancing
Perhaps the most attractive element to freelance work is the autonomy it offers. Freelancers only work as much as they want to, they can turn down any job that doesn’t suit them, and they never have to answer to a boss breathing down their neck. What’s more, they can set their own schedule and complete tasks at their own pace. On the financial side, veteran freelancers can also charge a premium rate for their services. When taken on a piece-by-piece basis, freelancers can make more money per project than their counterparts in nine-to-five positions.
Drawbacks of Freelancing
Freelancers enjoy the freedom of working on their own, but they also have to reckon with the uncertainty that comes with that luxury. First-time freelancers may struggle to build up a reputation within their industry and could find opportunities sparse. Additionally, since freelancers operate independently they often lack the resources and support regular employees enjoy. Considering that one day freelancers may have to design a web page about monster trucks and the next write a detailed analysis on a new type of streptavidin plate, not having a team to fall back on can be a major hindrance.
In terms of dollars and cents, though freelancers can certainly carve out a living for themselves, they also incur a variety of expenses that nine-to-fivers don’t have to worry about. Most freelancers have to pay higher rates for insurance, since they can’t opt into a group-work plan. They also have to pay higher taxes (normally) since they function as independent contractors.
The Bottom Line
As you may have already surmised, whether or not freelancing is a good decision depends on your individual preferences and personal situation. If you can comfortably manage the trickier aspects of forging your own path in business, then freelancing can help you achieve a better financial status. However, professionals should think long and hard before ditching their “day job” in order to freelance full time, because it’s not as simple –– or as remunerative –– as it may appear at first blush.