Paul has asked me to write this outline of the talk I gave. I hope you find it useful.
The reason I did the talk was because I was concerned that a lot of young people in this industry are jumping into freelancing or setting up their own (illegitimate) companies without thinking much about the consequences. In a lot of ways, I was unprepared for the realities of working for myself straight after finishing my A-Level exams, and I wanted to give the opportunity for others to learn from my mistakes
Although a big part of me really enjoys freelancing, another part thinks I would have been better off if I’d gone to university, or if I’d got a full time job with an agency. Working for yourself isn’t easy, especially if you’re a teenager.
Young people typically have a poor representation in this industry, stereotyped as being arrogant and cocky, churning out bad code and designs for quick cash. But the majority of young people I know care a lot about improving the industry and the quality of work they produce.
Being young in this industry will open a lot of doors for you, but it will also be a barrier when you’re trying to win jobs because people still perceive us in this way. But if you just try and be the best that you can be at what you do, and keep your feet on the ground, it shouldn’t be a problem.
The Pros of Freelancing
You Are Your Own Boss
One of the great things about being a freelancer is that you are in charge of your own time, there’s nobody to tell you what to do, and if you fancy a day off, you don’t have to write a fake sick note.
Every day is different, and every project is different. One day you could be designing a website, the next you could be writing a CMS. You’re as flexible as your skills.
If you’re not a morning person, you can start work in the afternoon. You can also fit it around other things, and if you want to take some time off to go out with your friends, you can reschedule when you work.
It’s a challenge. You’re constantly learning new skills, and you can adjust your work to stretch you more depending on the projects you choose to work on.
You have the potential to earn a lot of money, which can’t be a bad thing.
The Cons of Freelancing
You Are Your Own Boss
Being your own boss may be a really exciting proposition, but working for yourself is not easy. If things go wrong, it’s your fault. You’re in charge of everything, your finances, all the boring admin stuff, not to mention it can also be incredibly lonely.
You don’t get to do what you love doing all day. Your typical day will consist of meeting with clients, doing your finances and taxes, writing proposals, and then doing whatever it is you actually work as. You have to be good at all these things, and not all of them are very interesting.
One month you could have lots of projects on and be up late every evening trying to meet the deadlines, and the next month you could be twiddling your thumbs with no work lined up. Freelancers typically have to work longer and more irregular hours than people employed by someone else.
Freelancing is hard enough for an adult with industry experience, but you’re going to be learning on the job, whilst learning how to work for yourself. And if you’re freelancing whilst studying, it’s even harder.
Finally, you have to think about money. If you’re employed by someone, you get holiday pay, there’s someone else to worry about your taxes, and you’ve got some protection if you suddenly find yourself out of work. With freelancing, you’re pretty much on your own. One important thing to bear in mind, and something that I’ve been struggling with, is finding somewhere to live. If you want to rent a house, or get a loan, credit card, mortgage, you’re more of a risk so prepare to be initially turned down for these things. Especially if you can’t prove your income.
Limited Company or Sole Trader?
This is your first dilemma. You have the option of setting up as a company, or a sole trader. A limited company means you trade under a name rather than as an individual, and a sole trader is basically another word for freelancer. Which one you become is something you’re going to need to work out for yourself because it depends a lot on the type of work you do, but here’s why I decided to become a sole trader. As a sole trader you don’t have to pay corporation tax so there’s also less paperwork. There’s less risk if it all goes wrong, it makes a lot of sense when you don’t have employees, and keeping accounts is a lot easier and generally cheaper. You can always make the transition from sole trader to limited company later.
As a freelancer you’re going to have to be lots of different people at once, doing all the roles that an agency would hire people to do. You may not be good or confident at all the roles, so it’s a good idea to learn the basics of all of them.
Even if you’re a developer, you’re going to have to do a bit of design work. This covers the sites or applications that you make, right down to the stationary that you produce. The way you present your ideas and work matters, so learn the very basics of design. Read Mark Boulton’s book,
The same goes if you’re a designer, you have to learn how code works so that you understand your work better, and client projects may demand it. Read Richard Quick’s book Web Design in Easy Steps
You’ll need to know a bit about finances to make sure your accounts and books are in order so you don’t get any nasty surprises from the taxman. Attend a free Business Link course on Bookkeeping and Accounts (UK only)
To be a good freelancer, you also have to be a good businessperson. You’re going to need to talk to clients, manage projects to make sure they don’t go over time and budget, and deal with all the legal aspects of freelancing. Attend a free Business Link course on Starting Up (UK only)
You’re going to need to be a good marketeer in order to win clients. Read this article by Paul Boag on Selling your Services
Fix Up, Look Sharp
Maintain your Profile
If you don’t have one already, make yourself a personal site. Keep a blog, upload your CV, and use it as a sandbox to experiment with. Don’t forget to keep your portfolio up to date with all the work you’re doing.
Keep a Contract
Writing a contract may seem really scary, but it’s probably a lot more simple than you think. If you want to know more about what should go in it, I’ve done an article on my blog about Writing Your Service Contract
I Get Money
You’ll want to set up a separate business bank account to make it easier to do your taxes. Each bank offers a different deal for setting up a business account – a lot of people like Abbey because it gives you free business banking for life. I like Natwest because they’re closest to where I live, and I’ve heard lots of people say good things about First Direct who are a purely online bank which offers 24 hour phone support. Which is good if you’re nocturnal.
You’re going to need a bit of money in the bank when you first start up to pay for set-up costs. This may include things like a computer, software, mobile phone, stationary, business cards and hosting.
Working out your rate
As the saying goes; time is money. If you value your time, charge more for it. The less you charge for your time, the less you appear to value it, and the less people will take your opinion seriously. A good way to find out the minimum you need to charge to break even is to use the Freelance Switch Rate Calculator. It’s really good and I recommend you give it a go.
Keep Track of your Money
You need to keep track of all the money coming in and all the money going out. This is so that you can work out how much tax you need to pay. Keep all your receipts and invoices.
Ask for money up-front
Don’t be afraid to ask for money up-front. It’s ok to ask for up to a 50% deposit before you start on the project. This means if the client cancels the project halfway through, you’re not out of pocket.
Taxes (This bit’s UK specific)
I can’t talk about freelancing without talking about taxes. I know too many teenage freelancers who are not trading legitimately, and it can lead to a lot of problems further down the line.
Why Should I Register?
You cannot call yourself a company until you are registered with companies house. You cannot call yourself a freelancer or a sole trader until you register as self employed. If you make money and do not register with the Inland Revenue within 3 months, you are trading illegally.
The Tax Trinity
I’m going to very quickly cover what National Insurance and Tax Returns are, but I thought I’d mention what VAT is since there are some lucky young people earning quite a bit of money. You only need to pay VAT if you’re earning £68,000 a year or more, although you can pay it voluntarily. This may sound like a dumb idea, but some people think you look more professional if you’re registered for VAT.
National insurance is something that your employer sorts out if you are employed by someone else. If you’re a freelancer, you have to do it yourself. You have to pay £2.40 a week for national insurance, and this covers things like your pension. This rate stays the same regardless of how much you earn.
A tax return is different. You pay this every year, and it’s based on a percentage of what you earn.
Doing your Self Assessment
I use an online app called FreeAgent. I upload my bank statements, and it works out how much tax I need to pay. It also creates invoices that I can send to my clients, and it has a big online community where I can ask questions. It’s still pretty daunting though, which is why it’s a good idea to prepare yourself for it.
Be Ye Not Afraid
The first thing you should do if you’re thinking about setting up is to call the Business Link. Just phone up and say “hi, I’m thinking of becoming a freelancer” or “Hi, I’d like to run my own company”. They’ll then send you a business pack, and you can go on free courses that will help you set up. The free courses are also perfect networking opportunities, because you’ll be in a room with people who are all setting up their own business, and will most likely be needing your services. You can also get grants and vouchers and free pens, so give them a call and see what they can offer you.
Mistakes To Avoid
Charging too little
In my experience, the majority of young freelancers charge far too little. Not only is this bad for you, but it is bad for this industry. It gives a misrepresentation of the value of our services.
Offering too many services
You don’t want to try and offer lots of services, because you’ll end up being mediocre at everything. I see a lot of young freelancers offering print design alongside web design, SEO and backend development. These are all completely different things, and to be really good at any of them, you need years of experience in that field. So stick to offering one service.
Taking on too much
Never take on more work than you think you can handle. While I was studying, I took on a fair bit of freelance work, and ended up burning the candle at both ends. It affected the quality of my schoolwork, freelance work and my personal life (which I didn’t end up having a lot of that year!)
Referring to yourself as “we” rather than I”
This one annoys me quite a lot. If you have a professional website for your work and it’s just you, do not refer to yourself as “we”. People don’t care if it’s just you, what they care about is the quality of your work. And if they find out it is just a one-man band, and you’ve been giving them the impression it’s more than that, they’ll think you’re being dishonest.
Linking from your professional site to your non-professional Twitter profile
The Internet is a powerful thing. Don’t badmouth clients on Twitter. They may be watching you, and prospective clients may be as well. Be kind to the hand that feeds you.
Not having a contract
Not having a contract when I started was probably the biggest mistake that I made. Because of your age and lack of experience, people will try to take advantage of you. If you don’t write a contract, clients can run away without paying, and there’s not much you can do about it. They can then take the work that they haven’t paid for, and sell it to others and make money off it. Not only does a contract protect you, it makes you look more professional.
Keep some business cards handy at all times. You never know when you’re going to need them.
Buy a laptop instead of a desktop
I recommend you get a laptop instead of a desktop. They’re a bit more expensive, but you can take them to client meetings, do work on the train, and if there’s a sudden powercut, you don’t lose half an hour of work.
Backup to the cloud
Make sure you backup all your work. An external drive is a good idea, but it’s no good if it’s in the same place as your computer. You should keep them separate in case they are stolen or your house blows up. I use Dropbox which saves my files to the Internet every time I make a change. It also means if I log onto a different computer, I can still access all my files. It’s free up to 2GB, and also lets you share files between other users. Much better than emailing big files to clients.
Get a Skype Number
To save a bit of money, get Skype, which lets you make phonecalls over the Internet. I didn’t want to give my mobile number out to clients because they will call very early in the morning sometimes, so I got a Skype number. This is just like a normal landline number (mine’s a London one), but it calls your Skype account and clients can leave answerphone messages.