The Dark Side of Freelancing
There’s no doubt about it, freelancing can be a great thing for both workers and employees. It’s no surprise that the practice has taken off over the past decade, with over 57 million Americans now participating in the gig economy.
But freelancing isn’t all sunshine and rainbows, and from what we’ve seen, companies are far more likely to discuss the benefits of freelancing over the drawbacks. These drawbacks certainly exist, and they’re issues you should put some real thought into before quitting your in-house job.
1. Unreliable Income
Don’t expect to collect regular paychecks when freelancing! Until you build a reliable base of clients who provide steady work, you’ll find that your income is less stable than at a typical job. There are also payment issues to consider. As your own boss, you’ll be responsible for setting the terms of each business arrangement and setting expectations for your clients. For projects like long-term web development that have multiple milestones, this requires some serious coordination.
2. Tricky Taxes
Typical employees get their taxes withheld from each paycheck in accordance with federal regulation, but when you freelance, it’s all left up to you.
You’ll need to get familiar with freelancer tax forms and learn how to calculate paycheck withholdings without someone looking over your shoulder. You may also need to start thinking about itemizing business expenses and other ways to reduce your tax liability. It’s not hard to do—but it does take some effort to get familiar with the process.
3. Another Responsibility: Marketing
You might be tempted to start freelancing after you’ve spent a few years in your field and feel like a pro—but be careful before jumping ship. As your own boss, you’ll be responsible for finding your own clients and winning their business. This comes on top of your usual creative duties, creating a busy schedule where you’re spending just as much time finding work “off the clock” as you do billing clients.
And while technology has eased this burden a little—50 percent of freelancers were able to find work within three days using online networking, according to one survey—it’s still a significant portion of time you’ll need to account for.
4. No Benefits
If you have a cushy dev role with insurance, PTO, and retirement benefits, you’ll want to put some thought into whether you really want to freelance. As an independent contractor, you’re your own boss—meaning there’s no organizational health insurance plan to buy into, no protections if you fall sick, and no employer matching for your 401(k). Doable? Sure. Ideal? Not at all.
A Full View of Freelancing
Despite these drawbacks, we don’t expect to see freelancing die any time soon. It offers great benefits to employees wanting to get away from the 9-5 grind, and it gives employers a great way to get work done without making significant investments in payroll and HR. Contact us at Urgenci if you’d like more insight into the freelancing process. It’s a great system for the right workers—but it’s not for everyone.