Stepping into the freelance world, part 1: getting set up

02 Feb

Posted by Scott as Business, advice, career, consulting

So, you’re seriously considering making the jump into the world of freelance technical writing. It’s a big step, and one there’s a lot more to it than just giving up your day job and hanging out a shingle.

Here are a number of things that I think are important to consider before making the jump. Note that what follows is my opinion. It’s not professional advice, and your experiences, opinions, and mileage will definitely vary.

Experience

With (very) few exceptions, most potential clients won’t look at someone with less than five years of experience in the field. There are exceptions, as I mentioned, but those are few or just not worth looking at.

To be an effective freelance technical writer, you need to have a store of knowledge and experience. Most clients expect you to come in and get to work — hit the ground running and all of that. You’ll be expected to pick up domain knowledge quickly, and there’s little tolerance for someone who needs time to get used to using the standard tools of our trade.

There’s more to it that that, though. As I mentioned in a previous post, adaptability and flexibility are essential to being an effective freelancer in any field.

Finances and such

The nature of any freelance enterprise — technical writing included — is that it can be volatile. There will be periods when you have more work than you can handle, and there will be times when you can’t land a gig no matter how hard you try or how much you want one.

Obviously, having enough money during those times to cover your expenses is definitely a concern. It’s also a concern when you’re starting up, too. Usually, most contractors have a definite plan for entering the ranks of freelancers. That often includes having a gig lined up before giving two weeks notice.

Still, you never know what will happen. Maybe the company you signed on with goes belly up, or is bought out and the new owners don’t want to work with contractors. Maybe you’re let go because of an economi downturn or a change in attitude of management.

In those cases, you’ll still get paid. But what next? That’s why it’s recommended that you have three to six months worth of expenses saved. You never know when you’re going to need it.

Banking

Of course, you’ll want a place to put that money you’re earning. It’s best to have a separate bank account for your business. It make things easier when tax time rolls around, and allows you to automate your payroll. That might cost extra, but it is worth it.

On top of that, consider setting up a tax account (also called a contingency account). That’s useful when it comes time to pay the government its due, even if you don’t think that the government is due anything. Once again, you can automate this.

Benefits

Benefits are one of the main reasons many don’t make the jump to freelancing. They like the health care plans and retirement fund contributions made by their employers. They enjoy the two weeks (or more) of paid vacation.

Those are undeniably wonderful things, but they do come at a cost. Look at your pay stub. Chances are that there are deductions made for health care and other benefits. Why not pay those costs yourself? Admittedly, it’s easier in Canada (where Aaron and I live and work) than it is for our colleagues in the U.S. Whereas you can get decent health coverage for a family of three of around $150 (Canadian) a month here in the Great White North, I’ve heard of people in the United States paying $600 or more a month for a similar plan. On the other hand, you can use that as a business expense (I’ll talk more about this in a moment).

As for paid vacations, I don’t miss them too much. Sure, if I don’t work I don’t get paid. But how much is my health and mental well being worth?

To incorporate or not?

That is the question. I don’t think that I can give any definitive advice on the merits of incorporation versus sole proprietorship. Because DMN Communications is a partnership, incorporation made a lot of sense. It allows us to do more through the corporation — everything from drawing salaries to charging business expenses to general flow through of revenue. Incorporation also limits our personal liability, and has a number of tax advantages.

If you’re unsure about whether or not to incorporate, consult a professional.

Finding professional help

A good professional — an accountant or a lawyer, for example — can give you a lot of good advice on running your business, and on whether or not it’s worthwhile to incorporate your business. That advice costs money, obviously, but it can be money that’s worth spending.

Chances are you’re a good technical writer. At least, I hope you are. On the other hand, you’re probably not a great accountant. Sure, you might be able to do simple bookkeeping but you probably don’t know the ins and outs of the tax system and how a freelancer can benefit from it. That’s where a good accountant comes in. S/he can help you in ways you can’t imagine. If you’re in the Greater Toronto Area and are looking for a good accountant, contact us and we’ll put you in touch with the accountant with whom we deal.

Getting kitted out

Chances are you’ll be working at a client site using the client’s hardware and software. But that’s not always a given. There may be time when you need to work from home, or lug your laptop into the office.

In those cases, you’ll need your own hardware and software. A good desktop or laptop. The tools of your trade. And that will cost. If you’re incorporated, though, you’ll have an easier time claiming those items as a business expense.

If you have anything to add, feel free to share it by leaving a comment.

In the next installment, some advice on finding gigs and getting paid.