As the UK moves increasingly towards a gig economy and technology affords many people the ability to do their job from anywhere, freelancing is becoming the norm. A research paper from Kalido called ‘The Future is Freelance’ says that “64% of UK businesses currently use freelancers” and “39% of business owners predict that their use of freelancers will grow faster than their number of permanent hires in the next five years.” In fact, it says that half of all workers in the UK are expected to freelance by 2020.
Freelancing is creating your own job by offering specialist services and working on different projects for multiple businesses (who become your clients), as opposed to having one permanent employer. Freelancing tends to lend itself to work within the creative and media industries, or professional services, however, the roles and type of work done by freelancers are expanding the whole time. Here are some roles that are commonly freelance:
More and more people are choosing to make the move to the world of freelance, often citing the improvements in flexibility of when and where they can work and quality of life as the main reasons.
But another reason the supply of freelancers is increasing is that so is the demand. Employers are increasingly realising the benefits they can gain from the adaptability of freelancers and their work expertise. They may not need the resource for enough time to justify a permanent role. Other benefits to employers and reasons for them to look to freelancers include…
According to Consultancy.uk, there are now 5 million people self-employed and 2 million freelancers in the UK. 41% of the self-employed are freelancers which shows that freelancers and the self-employed form two separate groups but there is a definite overlap.
Freelancers usually provide their services business-to-business and work for several clients at the same time or with short-term contracts.
Contractors, on the other hand, are also self-employed but will often work for one client on a contract at a time (this is common in IT).
The rest of the pool of the self-employed who aren’t freelancers or contractors are likely to provide products or services directly to the consumer, like plumbers, hairdressers and cleaners.
Neither has a permanent employer unless they are freelancing on the side. ‘Side gigs’ are often allowed by an employer if the services you offer as a freelancer don’t overlap with your job. It’s always best to speak to your employer first for permission to make sure you’re not seen as moonlighting.
All freelancers are actually small business owners and they can choose whether to register as a sole trader or limited company. Talk to an accountant about the tax implications of each option. Some people don’t see it as necessary to become a limited company but others find that some bigger clients prefer it and the structure is already there if you ever decide to grow.
|In a recession, companies might be more likely to take on freelancers than commit to permanent staff.||You may feel you have less job security with clients who are able to end contracts/work with little or no notice.|
|The demand for freelancers is increasing, meaning more work.||The supply of freelancers is increasing, meaning more competition.|
|You can get great work satisfaction from a variety of projects and the chance to improve your skills.||There are fewer higher level opportunities.|
|There’s the chance to earn more the more you work and, on average, freelancers earn more per hour.||It can be hard to know what to charge and pay may start low while you build a reputation. You’re not guaranteed a regular income so cash flow can be a problem and you may struggle to get a mortgage.|
|You can achieve great work/life balance.||There can be enforced downtime when you don’t want it and lots of work that you don’t get paid for - pitching, networking, accounts, marketing, chasing invoices.|
|You can have the flexibility to choose who you work for.||There’s job pipeline uncertainty and you won’t get employed benefits like pension, healthcare, maternity/paternity leave, holiday and sick pay.|
|Generally, there is ease of entry into freelancing, particularly if you don’t need much equipment to get started.||It can take time to build a good client base.|
|You can have the freedom to work from home or wherever you want to which can save on costs.||It can be isolating and you can be prone to distractions at home.|
|There’s a great community of freelancers you can meet up with and chat to for support on social media like Freelance Heroes, and industry alliances like ProCopywriters.||It can be lonely.|
One of the big challenges of freelancing can be finding clients. The main ways that most freelancers find clients are…
Research by Kalido states that freelancers make an average of £50 per hour compared to £14.60 for permanent staff. More than a quarter (27%) of millennial freelancers claim to be earning to their full potential, with 6% earning more than £301 per hour.
Most freelancers will charge a day rate that can be divided down into a half day or an hourly rate if necessary. Clients usually want to be led on how long something is likely to take before the work takes place, so try and work this out as best you can. Make sure you are charging enough to cover all your time and to feel motivated to produce your best work. As well as your time, make sure you also take into account covering all of your costs.
Example list of costs a freelancer incurs:
You will need to pay income tax if you earn over the threshold for the standard tax-free Personal Allowance of £11,500 (2018/19). Limited companies are also required to pay Corporation Tax on profits. Read this article for more information on the taxes that you will pay.Read more
It’s best to find a good accountant for advice on tax and earnings and to make sure you’re not paying too much.Read more
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