Statistics Canada says nearly 2.8 million workers were classified as self-employed in 2016. But with the freedom and flexibility of self-employment, freelance or “gig” work comes other risks.
First, a regular paycheque and benefits are no longer guaranteed. Second, while some costs remain fixed, making it easier to budget, others may change and a lack of regular payment will make budgeting more difficult. Also, managing cash flow and keeping track of accounts, receivables and business expenses becomes YOUR problem — not someone in HR or accounts receivable.
These issues should not scare you away if you have a solid idea and the determination to strike out on your own. Here are some billing tips to help with the move:
- If you are still working, make a proper assessment of bills and expenses and how you would budget for them before your freelance work has the chance to decrease.
- Consider part-time or other work arrangements while you are getting a foothold on your business. This can keep regular cash flows, helping with your transition.
- Once you have made the commitment to work for yourself, tell everyone you know and any business contacts you have. This advertising can speed up the process of securing gigs now and down the road.
- Stay focused. Don’t assume you can get a few projects and live off of that. There will be good and bad times. So keep selling yourself even when you feel “comfortable.”
- Change your spending habits. Take the time to budget the micro-aspects of your life (as opposed to the bigger items like fixed costs or big ticket items). The feeling of a regular paycheque will disappear fast if you keep up with your daily Starbucks and other little treats you’re used to.
- Don’t feel trapped. Sometimes freelance doesn’t work out. Keep your options open and your contacts close. If you need to get back into full-time work you will have a leg up on your competition if your connections are well-maintained.
- Talk to others. You probably already know people in a freelance situation that can advise you and assist you when things are getting tough. Use their knowledge and experience and see if it relates to what you’re experiencing.
In the end, striking out on your own doesn’t mean the responsibilities fade away — they just change — and in some cases grow. Arming yourself with knowledge and tools will make the transition that much easier and rewarding.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.