The Hard Truth: A Realist Take on Freelancing

While not all web worker are freelancers, a good portion of them are — and a freelance lifestyle is part of the appeal of working from home. The fact is, working as an independent contractor is not all wine and roses. Personally, I wouldn’t have it any other way, but there are some key facts people should consider before leaving more permanent work situations for the freelance world.

I spend a lot of time on this site talking directly or indirectly about why I love freelancing, or what makes it so great, but in the interest of being fair and balanced, I want to take a break from my regularly scheduled gushing to point out some very serious pitfalls about working on your own. Many may seem like common sense, but it’s amazing how often it happens that people forget to consider these downsides when choosing to pursue this lifestyle.

Every Day Off Costs You Money

I remember paid vacation. I remember being irate at the fact that I’d only get two weeks out of the year, at best. And yet now, I’d love for someone to actually pay me money to take two weeks and not do any work. It seems like some kind of fantastical dream.

Now, when I want to take time off, I either have to do a lot of extra work before and after to make up for lost revenue, work while I’m away, or just write the time off as a loss. It’s not only a burden on finances, but it weighs on your mind, too, if you’re the conscientious type. As a result, letting go and truly relaxing can be harder when you’re responsible for every dime you take in.

Convincing People and Banks to Trust Your Money is Harder

Try getting a mortgage when you have to tell the bank that your income is wholly derived from contracts you have with various employers that range from temporary to semi-permanent, but all of which could potentially end without much warning. It’s not easy. Some institutions offer special considerations for freelancers, but for the most part, these deals come with strings attached.

Even negotiating with landlords in high-demand markets is a bit of a challenge. When the landlord or property management company holds all the cards, they choose tenants carefully, and getting an employment letter isn’t always possible for freelancers. Basically, be prepared for every one to second-guess your ability to generate income on a steady basis.

Taxation, Expenses and Insurance Are Completely DIY

If you’re not used to keeping track of your own finances and preparing for tax time completely on your own, it can be a huge surprise when the time does come. Most employers automatically deduct taxation from your wages, but with freelance work, you’re often paid the full amount with the expectation that you will pay taxes when they come due. That means it’s very rare to get a return on your taxes. Instead, you’ll usually end up owing a hefty sum.

Preparing for that is a simple matter of putting aside an amount in excess of what you estimate your taxes owed will be, but that’s easier said then done. Money on hand seems like it’s there to be spent, especially when unexpected costs arise. If you’re not careful, tax time could find you seriously lacking.

Add to that the fact that health insurance is pretty much up to you, and you can see how what seems like a sizable income can quickly become a subsistence wage. Factor in insurance, retirement savings, and tax when you’re calculating your overhead for freelancing before you embark upon a career as an independent.

Weigh the Good and the Bad

If you’re dissatisfied with your day job and thinking about leaving the rat race for freelancing, you may not want to hear about the downsides to making such a choice, but knowing just what you’re in for is key to making a sound decision you can live with. And if you have very good reasons for wanting to go it alone, chances are the cons won’t outweigh the pros anyway. They certainly don’t for me.

Have you considered the cons (as well as the pros) of taking on a freelance career?

Image by toolfan.hess from flickr