Personal Finance

5 Challenges of Being a Freelancer, and What to Do About Them

Man at laptop on rooftop

Being a freelancer certainly has perks. You get to be your own boss, work from whatever location you desire, and maintain a schedule that suits your lifestyle. But being a freelancer isn't all rosy; folks who work for themselves face numerous obstacles that salaried employees generally don't. Here are freelancers' five greatest challenges, according to data compiled by FlexJobs .

1. Finding clients

The gig economy has really taken off in recent years, so it's not surprising to learn that 65% of freelancers struggle to find clients. If you're having a hard time drumming up business, get better at networking . The more people you know and meet, the easier it'll be to spot new opportunities, and the more people you'll have to recommend you. But networking doesn't just mean reaching out to former co-workers and asking for their help; it also means going to industry conferences, attending meetups with professionals in your area, and joining online groups to expand your list of contacts.

Man at laptop on rooftop

Image source: Getty Images.

2. Unpredictable income

When you're a salaried worker, you can sit back and wait for your paychecks to come in on a regular schedule. When you're a freelancer, you're at the mercy of your personal workflow and the speed at which clients pay you. An estimated 64% of freelancers have trouble with a lack of a stable income. If you're one of them, do your best to build some emergency savings . You can do so by cutting back on living expenses temporarily or padding your bank account during months when you make a little extra. You'll have cash reserves to tide yourself over if you hit a period where you aren't paid for quite some time.

3. Handling the business aspects

When you work as a salaried employer, your company handles taxes, insurance, and other essentials. As a freelancer, that stuff is on you. It's no wonder, then, that 31% of freelancers have a hard time with this aspect of self-employment. One way to get some relief is to hire a tax professional who can help you navigate these often-complex issues. For example, it might make sense for you to incorporate from a liability and tax perspective, and hiring an accountant to set that up could save you money down the line. If you aren't going to seek outside help, at the very least, know that you're liable for estimated quarterly taxes on your income. Don't wait until the end of the year or the next tax-filing deadline to pay the IRS its share of your earnings, because you could wind up on the hook for penalties if you do.

4. Getting clients to pay

There's little worse than worrying about when you'll be paid for work you've completed. A good 26% of freelancers say that getting clients to pay is a problem, so if you've been struggling to collect, take steps to protect yourself. For one thing, map out a payment schedule that allows you to take in some income along the way, rather than wait for each project to wrap up before seeing a dime. Similarly, you might insist that new clients (or those with a history of late payments) put down deposits before you do any work for them. Finally, don't be shy about charging interest for late payments; there's nothing like a financial penalty to inspire delinquent clients to get moving.

5. Negative perceptions of freelancers

Most freelancers don't spend their days watching TV or strolling in the park. Yet 24% of freelancers struggle with the way others perceive them. It's not uncommon for freelancers to be accused of not really working, or for others to not take them seriously. If that's been happening to you, try letting the people in your life in on your work schedule so they're less inclined to disrupt you. For example, if you typically work from 7 a.m. to noon, make your friends aware so that they don't nag you about meeting for breakfast or ditching work for a morning shopping trip.

Being a freelancer isn't always easy, but in most cases, the benefits outweigh the drawbacks. At the same time, don't hesitate to address the challenges. The sooner you do, the more rewarding your arrangement will be.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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