saving for retirement

When you are a freelancer your income is literally what comes out of your head, through your hands, and into a computer. What you think and type is your source of income.

There are many pitfalls that could threaten or even end your work and your income as a freelancer. Because your income comes from what you dream up and translate into words you need to know how to protect your freelance business.

1. Set up Contracts

Trusting a client’s word that they will pay you for a small job is one thing. If that client pays most or all of your monthly income, however, you really should create a contract with them. Your income could depend on it.

The contract should clearly define what each party agrees to, including revisions of any work done. Having it increases the chances you will get paid. It also gives you protections that may enable you to take legal action against the client who refuses to pay.

It is unfortunate that there are people in this world who won’t hold up their end of the bargain. But you don’t want to be left holding the bag when that happens.

2. Diversify Your Services

Another way to protect your freelance business is to diversify your services. This way if you lose a client you were writing for, you have other clients and other kinds of work you can turn to.

Some businesses hire people to edit, proofread, and format work that has already been done by them or someone else. Or, they may need someone to make changes to the style of writing so it fits their business better.

Being a website manager is another service you could offer to clients. Some just don’t have the time to oversee their site and need to hire help. You could schedule posts and manage writers for the business owner, among other things.

You could also take on the role of virtual assistant for other businesses. Some don’t need full time help but do need certain tasks done by someone else. For example, you may manage their social media.

3. Do Large Jobs in Installments

To further protect your freelance business so you actually get paid, do large jobs in installments. Do a third of the work and bill the client. Once they pay that portion do the next third and so on until the job is finished.

The advantage is that you don’t complete the job without getting paid. At the least you might not get paid for the final third of the job, which is better than getting paid zilch. Whatever agreement you make, halves, thirds, etc., put it in your contract.

4. Make Invoices Understandable

Getting paid from your clients will be more likely if you make your invoices to them easy to understand. This is another good way to protect your business as a freelancer and make sure you get paid.

Consider using an online payment system to make it easy for clients to pay you. Send statements timely and regularly. Make due dates easy to see and add a statement about interest or turning it to collections if left unpaid.

5. Take Action Against Non-paying Clients

When clients don’t pay, send a certified letter asking for payment. This can help you if you end up in court.

Keep good records including copies of all correspondence, texts, and phone calls. Have an attorney whom you trust and are honest with in case you end up in court.

6. Keep Business Records Separate

To further protect your freelance business you should keep your business records separate from household records. When everything is mixed together it’s harder for you and your tax preparer to sift through everything.

Taxes and other financial transactions are harder to handle when everything is jumbled together. In addition, if you are sued, you could lose both your personal and business assets.

To avoid this, think about hiring both an accountant and a lawyer who can advise you on safeguarding your freelance business.

7. Pay Your Taxes

Protect your business as a freelancer by paying your taxes when they are due. You might be paying quarterly self-employment taxes and they could be steep. But paying regularly avoids you having to come up with thousands come tax time.

Paying your taxes timely also avoids penalties and late fees that could jeopardize your business. Set aside a portion of your monthly income to guarantee you can pay taxes when they are due.

8. Use Cloud Storage

If you spill something on your computer what would you do? Or, say someone steals your laptop. What then? How would you produce your income?

One way to protect your business as a freelancer is to use cloud storage for your files. You can access them from another device anywhere. If your computer is stolen, ruined, or not working you can log on through a different one.

9. Buy Insurance

Having insurance is another way to safeguard your freelance business. It can protect you in a legal battle and even cover some legal fees.

Liability insurance covers things other than just the occasional slip and fall. It can also cover errors and omissions. This type of insurance can protect your freelance business in the event you are sued.

It is possible to protect your business as a freelancer from the different pitfalls that could threaten it. Take these measures to make sure your income and personal assets are protected both now and in the future.

Kayla is passionate about helping people get their finances in order so they can pursue a life of freedom. She quit her job to work for herself with over $148,000 of debt and swears it was the best decision she's ever made!

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