It’s tough losing your job. And it can be even harder when your employer, like Carvana or Better.com does it through a mass Zoom call. But as you start to get back on your feet, you might reconsider what you’d like your next step to be.
At Liquid, we see The Great Resignation as proof that the way we think of work needs to change, and it’s no surprise to us that over half of workers in the US will be freelancers in 2023. Working for yourself gives you the opportunity to join teams that cover the globe, work the hours you want, and choose who you want to work for.
If you’ve found yourself bristling at unnecessary meetings and rereading emails just to run out the clock, then a conscious uncoupling from your 9-5 may be just what you need to shake things up to turn your side-hustle into your main-hustle. (And while many of our existing articles refer to consultants, you should know that our experience translates to marketers, financial officers, and even writers).
Dipping Your Toe In The Freelancer Pool
If this is your first foray into being an independent contractor, it’s okay to feel like you might not know what you’re doing. Asking what to do next is already the first step, and Liquid’s got your back.
The first thing to consider is your business structure. A sole proprietorship is traditionally the easiest to start but comes with the least amount of liability protection. If you already have experience with your side hustle and know that limited liability is a good avenue to pursue then an LLC or corporation might be advantageous.
You’ll also want to file for an Employer Identification Number (EIN). This EIN functions like a second social security number that you can use for freelancing work. When you’ve worked your traditional hourly or salaried job, you used your W2 and your social security number. As a freelancer, you’ll use different forms to report income that you’ve earned, and that income will be subject to different taxes and expense deductions than W2 income. An EIN allows you to keep those two types of income separate, and while you can technically be a sole proprietor who uses their SSN, an EIN is painless to acquire.
When it comes to your rate, a basic rule of thumb is to take your annual salary and divide it by 2,000. However, it’s not uncommon to include a 30-50% buffer, and our guide on setting your hourly rate can help steer you in the right direction.
While resources for finding work can be unique to your skillset (LinkedIn, UpWork, WorkingNotWorking, etc), the simple fact is there are universal best practices for managing your clients.
Starting from the outset, you want to have a clear contract and scope of work with your clients. This means using clearly defined terms and project-specific details to describe the work to be completed, like an hourly or weekly rate, or an amount based on milestones, events, or deliverables. “Marketing services” may be too vague, but “writing copy for email campaigns and optimizing SEO on current website” are much more clear. Additionally, the contract should specify any client expectations like word count, draft reports, or other metrics the client needs met.
Once the contract is signed, you’ll likely need to provide your client with a W-9 and bank deposit information. Once work commences, it’s important to keep the lines of communication open with your client so that, as it continues, you’ll always be on the same page about what’s expected.
Invoices are a necessary evil when you’re an independent contractor. When it comes time for you to get paid, whether it’s based on a scheduled rate of deliverables, you’ll need to send an invoice documenting your work and the amount owed. If your employer expects you to document your hours worked (which would be a detail they should specify in the contract), this is where you would communicate those hours. At Liquid, we know that independent contractors are the backbone of the liquid workforce, and unlike websites like bill.com that charge a minimum of $39/month to send an invoice, Liquid allowed you to send invoices for free. In fact, Liquid contains a suite of tools to remind you when to send an invoice, generate invoices automatically, track your invoices across multiple clients, follow their payment status in real-time, and get paid —for free. Liquid never charges workers to receive payment or use vendor tools, even if your client isn’t a Liquid customer.
Scaling Up with Liquid
As you gain more clients and your work grows in size, you may find yourself needing to hire your own contractors to support your work. Liquid is uniquely created to facilitate both sides of the client/vendor relationship and help build strong relationships with your freelancers. And with Liquid to help you contract, onboard, manage, and pay your on-demand workforce, you have the tools you need to make it easy to hire your own contractors in 175+ countries.
But of course, first things first. Sign up as an independent contractor on Liquid today to start invoicing clients and collecting payments with $0 fees.