A few times a year, friends and acquaintances ask me about how to get started as a freelancer. Is it hard? Where do you find work? How do you decide on a rate and handle taxes? The first enquiry kicked off a short essay of an email, and over the years, as more questions were asked, it evolved a bit. Now, it’s the email I tweak and send off every time someone asks about freelancing.
I thought I’d share the Readers’ Digest version of it here, and, because I’ve thought about writing a series about the whole process, I might expand on different sections later.
Where to Find Work
This isn’t something I’ve actively done for a while, but a few of the sites I found extremely useful were:
- Authentic Jobs
Excellent site, with great quality jobs. Design and dev.
- Studio – Envato
This used to be FreelanceSwitch by the same company Envato in Australia. I got a couple clients from there, but I haven’t used it since it changed to Studio.
- Jobs – Stackoverflow
Like Authentic Jobs, there are some good quality job ads from well known companies and a variety of countries. I’ve had some success here, too. Design and dev.
- Programmer Meet Designer
Variety of jobs to help Entrepreneurs, Programmers and Designers hook up. I tend to ignore any of the ones that are Entrepreneurs looking for Programmers though, a lot are people with The Next Big Thing wanting some code monkey to help them build it with a promise of small amounts of money after the business launches. No thanks.
- We Work Remotely
Used to be Jobs 37signals. Haven’t used them since they changed name, but there were some quality jobs found here too. Mostly US, but generally has a good range. Design and dev.
- Smashing Magazine
A lot of design related jobs, but dev jobs also pop up.
Mainly design, some dev.
There are likely other online sources now, but as a general rule, I avoid job bidding sites. You’re pretty much guaranteed payment because your payment is held in escrow before you start the job and released when the ’employer’ approves the final product, but they’re also filled with a bunch of what appear to be sweat-shops who underbid everyone for obscenely pitiful amounts of money. Too much effort unless you’re doing this as a hobby and happy to just throw in a bid from time to time to try your luck. Only a few people will aim at the higher bids straight off the bat. If you’re interested in dabbling however, take a look at Upwork and Elance.
You can also take a look at places like SEEK for conventional jobs, but the closest you might get there are contract positions rather than freelance. Most will be permanent and on-site, and it also puts you on the recruiter radar which may be more time-consuming than fruitful. Personally, I’ve had very poor experiences with recruiters, but I have had one remote contract position come up which lead to a returning client. YMMV.
Applying for Work
You’ll want three things on hand to cover your bases:
- PDF and Word version of your CV
- A portfolio site with a digital version of your CV and portfolio
Even for devs, try to provide screenshots if possible, or brand placeholders if you can’t
- A populated LinkedIn profile
These will generally contain identical information, but some companies only want a (Word) document, some want a link, and some specifically ask for LinkedIn.
A GitHub and/or BitBucket account with links to personal projects or OSS contributions wouldn’t go astray as well, as some will also request code samples. If like me you really haven’t had the time in your work career to contribute and create to all the OSS you wanted to, when asked, I’ll offer to do a coding test instead of submitting a code sample. I have cited that my past work has been proprietary for the client or employer (actually true) as the reason for not having that available.
Depending on what you’re after in terms of work, I also don’t have a contact form or have my contact details on my online profiles because I don’t want randoms I can’t screen asking me to do work for them. On some job groups, I’ve had creepers and people asking me to ‘donate my time’ and that was time-consuming enough. The lack of information hasn’t stopped at least two industrious people from clicking the crap through my external links to find a way to contact me directly anyway. So I see this as a positive method of quality gating.
This can feel tedious, but having a few template cover letters you can tweak for each application will speed things up. Try not to feel disheartened by the gaps, and try to make sure you are covered financially for a few months of unemployment or low income at all times. I’m a pathological saver, but if you’re not, start.
Hearing Back About Your Application
If you apply for US jobs for telecommute or otherwise, most of them won’t tell you you’ve been rejected, this anti-communication phenomenon also seems to have spread to the rest of the world as well. If you follow up on the silence, don’t be surprised if you’re told ‘they’re still screening’ or ‘they can’t discuss’. And if you’ve been told or figured out yourself that you’ve been rejected, you also can’t ask what you were lacking or what you can improve for future reference etc, the way they encourage you to ask for feedback (if you’re in Australia at least). They’ll either not respond at all, or just say it can’t be discussed. Apparently in the US they won’t give you feedback in case you use that information to sue them. Can’t say I’ve ever wanted a job that badly.
Also don’t be surprised if you apply for something and don’t hear back for months. I’ve had a few applications I’d written off come back to me 6-9 weeks after I applied. One I ended up working for on contract, the other two were rejections, one saying they are interested in my skillset and will keep me on record but I wasn’t suitable for the job they needed the resource for, and the other saying I was in the wrong time zone. Just keep spamming out applications. I sent out 60 in my first month of freelance, and then anything from 25-40 in the subsequent months until I had enough work to keep me occupied.
Determining Your Rate
This one is a bit tricky, and a little how long is a piece of string. Whatever you do, don’t set your initial rate to your hourly rate at a full time salary. You need to remember that you now have to cover your own superannuation, holiday and sick leave, taxes and any other financial benefits you had at your salaried position.
I found this hourly rate calculator a pretty good start. You can try googling for others if you want to get a few figures to work from.
If you want super rough math:
Take your intended gross annual salary + superannuation rate (salary * 1.095) (S)
Take the number of weeks you will work a year (usually about 48 which accounts for leave, 46 if you include sick days) (W)
Billable hours per week about 37.5 less about 20% (for comms/admin) (H)
S / W / H = your base work hourly rate.
Note that this is your rate with the expectation that you are working that full number of hours a week for the max number of weeks per year.
If you’re doing freelance or short contracts, account for the time you won’t be working as well. eg. Only able to get 3 days of client work a week? H is now about 22.5. Think you’d only be able to get 6 months of fixed contract work per year? W is now about 24.
Don’t forget in your estimates and rate that that includes time it takes to quote, comms, etc. That’s why your billable hours will be less than hours you may work a week. The 20% is arbitrary, if you know you spend more on that, adjust accordingly.
If you’re not in a hurry, it’s okay to set your rate higher and lower depending on whether you’re in a time of plenty or scarcity. If you just want to get work, personally, I think it’s okay to go a bit lower and then raise it when you’ve got a couple regular clients or have too many offers. How you handle existing clients when you set a new rate is up to you. For me, new ones get my new rate, regulars just get a bump periodically.
Also be prepared to have one rate for intermittent work, and a lower rate for ongoing stuff (a fixed number of hours a week or contract, part time/full time). Don’t offer the lower rate unless they ask or you think you want the job enough to offer it.
Your key bits of software are going to be a time-tracker and an invoicer. I use MarketCircle’s Billings Pro. I was on their old version previously because I was anti-subscriptions and had no real need for the cloud feature, but after my laptop was stolen in a break in, I suddenly saw the benefit of paying to have my billing stuff off-site. 😛
There are several other services that have these sorts of offerings, most are much of a muchness, and it depends on how much you want to pay. If you need a free accounting app with invoicing software, and the ability to take credit card payments, you can also try WaveApps, but you’ll need to do time-tracking with something else.
For domestic clients, bank transfers work fine. For international, PayPal or Stripe work. How you request payment will depend on how much work you’re getting. If you use Paypal, they take 3% of every payment you receive, free to withdraw (in Australia). Not bad if it’s up to a few hundred dollars a few times a year from the same client. At full time hours it’s horrible, ask if they can SWIFT it to you (you’ll need to ask your bank for the necessary international bank transfer codes). The sending and receiving bank will hit you for a fee, in Australia about $40 (varies between banks). Make sure the payer doesn’t hit you for their end’s fee as well. And in that case a monthly payment is a good balance of getting paid and minimising your fees. Bank and PayPal fees might also be part of your deductions at tax time.
Disclaimer: Usual disclaimer about financial advice, talk to your accountant etc. This is just a rough idea of how I do mine.
If you’re earning less than about $75k in domestic income (check ATO site in case threshold has changed), you will not have to be registered for GST. If you’re not sure how much you’ll be earning, just keep track and once you approach the threshold, register then. Also, ff you are not registered for GST, your invoice cannot have the title “Tax Invoice” and must state “No GST has been charged” somewhere near the total. The specifications for Tax Invoices is available on the ATO site, and is pretty easy to search for.
Speak to your accountant about this, but having an ABN to register your income and deductions against isn’t strictly necessary. In most cases, you can just file it as part of your personal income tax.
And for all your receivables, set aside the tax portion for the bracket you think you’ll hit. Check the ATO site for the tables, and keep an eye on your receivables to know what bracket to set aside for. Before I had a mortgage, I set aside the full 40-45% to be safe. Now it sits in my offset account to reduce my mortgage. If you can’t trust yourself not to spend it, try a high interest term deposit account that lets you feed funds, and you can earn interest on it as an extra bonus. I quite like the HSBC Serious Saver for this, no monthly fees, and you get interest for the months you don’t withdraw.
If you are fortunate enough to start earning over a specific threshold in total domestic and overseas income (not sure, about 100k) then the ATO will start asking you to submit quarterly PAYG so you don’t end up paying a tonne of tax in one hit. These are inconvenient to fill, but not horrible.
And that’s pretty much it for my freelancing primer. If you have any questions for things I haven’t covered here, feel free to leave a comment.