What is a Freelancer?
Freelancers are self-employed and they offer services to support businesses – usually where they were employed in a similar role previously. Freelancers often work for more than one client at a time and can charge on a per-job, hourly or daily basis.
Essentially, they go and find work themselves on a self-employed basis meaning they have more freedom and control over how they work, who they work for and what times.
Some of the most common freelance jobs are within creative industries such as graphic design, copywriting, or marketing, as well as administrative like virtual assistants or bookkeepers, freelancers can work in almost any service-based industry, such as IT, legal, HR or other consultancy.
What are the pros of freelancing?
Having more control over your workload is ultimately the biggest benefit of freelancing. Freelancers choose who they work with, for what pay, what hours and where. The flexibility and often remote working suits many professionals around their current lifestyles. It could be a side hustle, to generate extra income and can be built up to be a full time wage sometimes with part time hours.
What are the cons of freelancing?
Whilst yes you are in control this also means there is less security and some moths you may feel stacked out where others you are struggling to make ends meet. You need to make sure you stay on top of your taxes, invoices, and there is no holiday or sick pay should you take time off.
Chasing invoices is a huge issue I see across social media from freelancers. All too often with the eagerness of completing a business transaction, you won’t think to put in place the legally binding terms that stipulate the basis of that business contract. You should not need to constantly chase unpaid invoices, ensure your terms agree to suspend services whilst invoices remain outstanding. I even come across some freelancers that accept their clients pay late, it works for them but for many others it does not. How can you plan your cashflow and your finances with clients that do not respect you?
Being clear on the terms of the arrangement
Far too many freelancers begin freelancing not considering the need for their own terms of business. Many may steal from competitors or use templated documents instead of getting their own documents professionally drafted, which is dangerous and ineffective.
Yes, you are a freelancer but you must treat yourself as a business. Every freelancer should have a standard set of terms that they use for each contract, if they are written correctly, they are written with your business processes in mind. The way your business operates from start to finish must be considered. Why you shouldn’t do business without terms and conditions goes in to more detail as to why this is essential.
Perhaps they have presented you with a contract to sign? Be careful here, we have reviewed a number of client contractor agreements and they are written very similar to an employment contract. This could land you in deep water should HMRC come knocking, check out our easy affordable document checking service here.
I wrote recently about the ‘secret contract’ and this is very important with this kind of working relationship. If you receive a purchase order for the works you have quoted, look out for the words ‘terms and conditions apply’.. you could well be agreeing to work on their terms despite quoting with yours. You may have agreed to 90 day payment terms or no notice cancellation periods, the list is endless to what could be hiding in that secret contract. Always always, check the small print.
Am I affected by IR35?
IR35 is a complex piece of tax legislation that even HMRC seem to not understand most of the time. It was first introduced in April 2000 with the aim to address tax avoidance by individuals working in the role of an employee through an intermediary, such as a limited company. It is aimed at people like you, especially if you were once employed by your client. Whilst there are changes nearing, unless you freelance to larger sized businesses the onus will still be on you and the fines will be payable by you.
It’s important you establish whether the contracts are inside or outside IR35. As a contractor, HMRC can investigate your arrangements at any time, and this can be time-consuming, costly and highly stressful. The financial impact of IR35 can be significant. If IR35 rules do apply to the contract, the fine would be the same as the Income Tax and National Insurance contributions the contractor would have paid if employed directly, rather than contracted to work through your limited company. HMRC can go back up to six years and evaluate past contracts to see if the legislation should have applied previously too.
There is no short answer to this question and is highly dependent on the working relationship you have, yes there are guidelines which are discussed in what you need to know about ir35
Does GDPR affect me?
Yes, if you are handling personal data on behalf of a client it absolutely does affect you. Even if it is just your own client’s contact details, you must ensure you are GDPR compliant. There may be a data processing agreement between you and your client, or perhaps you have access to personal data on your client’s behalf. Do not ignore your obligations under GDPR, if your client is in breach you will want to ensure that you have done what you can to stay complaint.
Can I use a template document for my terms and conditions?
The internet is full of terms and conditions generators and websites offering contracts for free or at a low price. Documents such as these are usually at a low cost, but relying on something like this to protect your business, could end up costing you more in the long run should a client relationship breakdown.
We all know that googling any health symptoms can turn a common cold into a life threatening disease by a click of a button, so why google important legal documents in relation to your business?
I could be here hours writing about all the problems I have seen with template documents and explaining why certain template clauses are so open to interpretation that they offer very little protection. It can be a worry when running your own business how much everything is going to cost, we don’t charge anything for just a conversation and we only ever charge a fixed price so you know how much it is going to cost you. We even have a freelancer package which includes everything you need for your business.