Many people are attracted by the flexibility of freelance work but quitting your salaried job may not be right for you.
Here are some pros and cons of freelance work.
The pros of freelance work
- You control your schedule. With freelance work, you determine how much work you are willing to take on at a given time. Depending on the nature of the work, you may have significant flexibility with hours worked per day and deadlines.
- Work often goes where you go. You need to commute!
- You can often deduct your office space, certain utilities, your health insurance and more from your taxes.
- There is the option to work for multiple clients at the same time. With traditional work, if your employer lets you go, your income stream is gone overnight. With freelance work, you can lose one client while still having income from several others.
The cons of freelance work
- The compensation rate clients are willing to pay can easily be impacted by overseas competition. While you may be offering quality work, some clients are looking at bottom line
- Freelancers pay the full amount of their social security and Medicare taxes. In a traditional job, the employer would pay half. This can feel overwhelming come tax time.
- Many freelancing websites take a large cut of what you make. The industry standard is around 15 percent.
- You are on the hook for all business expenses. While these are tax deductible, you will be left paying them up front. This can be difficult to manage even if you get the benefit of paying less when you file your taxes.
- Job security can be shaky. In the freelance world, it is not uncommon for a client to terminate your job without giving notice.
- There are no benefits packages for freelancers. Vacation days mean rearranging your schedule so you still get paid.
If you feel like freelancing is right for you, there are steps you can take to lessen the drawbacks. Start by working with an insurance broker to find insurance policies that offer the coverage you need.
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