11 Keys to a Successful Freelance Career

Covering these essentials will make self-employment more enjoyable and more sustainable.

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Many a freelancer has plunged right into business without much preparation. Some swim, others sink.

A blind plunge might work, but it’s chancy. Nailing down the following 11 things before making the leap will help you stay afloat in your new venture.

1. A fat emergency fund

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An emergency fund is the rock-bottom basic thing you need. With no money to tide you over when work is thin — as it will be now and then — you can forget your freelance dreams.

What’s “fat”? Some financial advisers suggest a fund that can cover you for six months. Consider more, though. It can take 60 to 90 days or more to complete some jobs. That’s not counting how long it takes to land new clients, or to get some clients to pay you.

2. Steady nerves

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Freelancing is great for all the reasons you’d suspect: flexibility, freedom from office politics, less commuting and more job satisfaction are a few. But the insecurity never stops.

One freelancer I know likens the life to Tarzan’s: It’s great swinging from vine to vine but awfully scary when you’re hanging in midair and can’t see the next vine to grab. Be sure you can embrace the uncertainty before leaving a good day job.

3. Backups for your backups

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Redundant systems are crucial for freelancers. If a computer failure makes you miss a client deadline, you’ll look like a bozo. So, keep a dependable second computer for such events.

It doesn’t have to be a brand new MacBook Air with Thunderbolt display and 12 hours of battery life. It just needs to get you online and able to communicate and send files to client.

Back up your work, too. That includes at least a couple of years’ worth of work emails. Back up constantly, to both the cloud and to an external hard drive. It sounds like overkill until you — like me — have turned to your backup disk in a pinch and found that it was corrupted.

Also practice retrieving work from your backup systems so your IT struggles will be invisible to clients.

4. A wee bit of computer savvy

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Nothing makes you appreciate your last employer’s IT department like being up a creek without technical support. It doesn’t hurt to be a computer genius, but it’s not required.

When your machine or your software stops working, take a deep breath, think things through, check your connections and search the internet for solutions.

5. Business cards

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Old-school, sure. But depending on the business you are in, a few dollars’ worth of business cards goes a long way when you are sitting on a plane or in a meeting next to a stranger who turns out to be a potential client.

Start with just a few. Find deals at a local print shop or promo codes for online outlets.

6. Health insurance

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If you’re walking away from a company-paid health insurance plan, know in detail what will replace your insurance after the COBRA extension of your insurance coverage is up. Know how much the premiums cost, how much they could grow and how you will pay noncovered medical expenses.

7. An IRA or Solo 401(k)

An "IRA" egg in a nest with cashDon Mammoser / Shutterstock.com

When you leave the world of automated 401(k) contributions and employer matches behind, there is a temptation to stop saving for retirement “just for a while.” Don’t go there. Keep saving by funding an individual retirement account (IRA) or a Solo 401(k) plan.

8. A tax adviser who understands freelance life

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You’ll need a tax adviser experienced at working with freelancers. Even if you’re happy doing your own taxes, consider professional help for the first year so you understand the requirements, get the right start with bookkeeping and have help weighing whether to incorporate.

There are plenty of perks to freelancing. But one thing you’ll miss is your old employer’s contributions toward your Social Security and Medicare taxes. Now that you are both employer and employee, you’ve got to pay all of it. According to the Internal Revenue Service, the current rate for:

  • Social Security is 6.2 percent for the employer and the employee, for a total of 12.4 percent.
  • Medicare is 1.45 percent for the employer and the employee, for a total of 2.9 percent.

You’ll probably also miss the tax contributions your old company deducted from your paycheck and sent to the IRS. Now, you must file quarterly tax payments and master the rules for estimating what they should be. An accountant helps here, too.

9. A plan for having fun

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Many freelancers wear themselves out by neglecting everything but work. Don’t fall for it. The more tired you get, the more you spin your wheels.

Work discipline includes making and sticking to a plan for getting away from your desk, socializing and regularly exercising.

10. A budget

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Dealing with a variable income is one of the biggest challenges of freelancing. Your payments might arrive intermittently with long droughts between. So, you’ll need a budget structure that helps you plan confidently.

A one-person service business may do fine by adopting any of the personal budget products available.

Or, do this:

  • Calculate the minimum monthly income you can expect, and base your budget on it.
  • Identify all expenses and keep them as predictable as possible.
  • Refrain from spending any excess income. Instead keep it as a buffer against lean times and surprises.
  • Adjust your budget’s monthly income as earnings grow.

11. Child care

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Even with older children, you’ll need child care if you have to pull an all-nighter to meet a deadline or jet out of town unexpectedly.

At the minimum, make arrangements with a neighborhood teenager or a day care provider who’ll cover you for a few hours a day or during important phone meetings.

Line up backups, too, in case your regular child care provider has a crisis of his or her own.

Are you a freelancer or self-employed? How do you make sure you can survive the lean times and build your business? Share with us in comments below or on our Facebook page.

Marilyn Lewis
Marilyn Lewis
After a career in daily newspapers I moved to the world of online news in 2001. I specialize in writing about personal finance, real estate and retirement. I love how the Internet ... More

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