How to become a freelancer?

By karina scott

“Become a freelancer they said, it’ll be fun they said” – I constantly mimicked this every time I went onto Google to try to understand who, what, when and how.

In October 2019, I suddenly lost my job and had exactly 2 weeks to try and find a role! After a few hours of crying and drinking wine I regrouped and headed online.

However, despite attending numerous marketing SEO events who emphasize the importance of “answering your audience’s questions” apparently nobody had me in mind!

Most of which I read  was very generic when in fact I just wanted to read an article titled “How to become a freelancer so you can pay your mortgage and have money for Christmas”… Sadly this wasn’t clear  so I have decided to create my own top tips to start you on the way and hopefully answer your immediate questions.

How to become a freelancer top tips:

1.   Sign up to a recruitment agency to help you get your foot in the door – Literally a quick Google and you’ll find tonnes of recruitment agencies in your area that offer freelance/contracting work. Sign up, allow them to help you find at least your first role. They know who is recruiting after all!

2.   Decide on your day rate  – The recruiter will assist you with this but make sure you know yourself how much you are worth by using one of the many online salary calculators. The calculator will show you the hourly/daily fee you can charge based on your experience and location.

3.   Umbrella or Sole trader? –  This is your first big decision and one I found the most difficult. If you do work with an agency they will share a list of umbrella companies you can work with, however its best to do your own research, perhaps even chat with friends and family to figure out what’s the best step for you. As I had spent all of my working career as a PAYE employee when I started off freelancing I wanted the reassurance that someone would handle my payroll for me, for you this might not be the case.   

In basic terms:

    i. An umbrella company, a chargeable service. This type of company will look after your paperwork, national insurance and tax, you submit a weekly timesheet and wait for the money to hit your bank account. However an umbrella charge you for this service (based only on my experience this can be X% -X%)  so it’s worth asking each company to send you a breakdown of their costs to distinguish which one is the most cost effective.

ii.  Becoming a sole trader is widely recognised as the most tax effective way to work as a freelancer, you are your own boss and all the income is yours. However this does mean you have to ensure you continue to save for your tax and national insurance bills. 

4.   Set up a pension – I found the easiest way to pay into a pension was to continue paying into the old one I had in my previous permanent position. I just set up a monthly direct debit of an amount which was affordable to me. I am also saving on the sidelines but the pension is important for way way way (eek!) into the future. 

5.   Call HMRC  – Despite reassurances from both the umbrella company and recruiter confirming that everything is “sorted”  my advice would be to just check for yourself. Call HMRC before you start to ensure they are aware that you are starting a new freelance/contract role and to confirm you are on the correct tax code, trust me, you don’t want them to process your first pay with emergency tax 🙁

6.   Save your receipts and payslips – Even after you’ve received your expenses. It’s worth just keeping everything filed away for any type of “just incase” moment. Either pop them all away in a plastic folder or saved in a folder within your inbox. You never know when you might need them

7. Enjoy it – I can actually say that so far my freelancing life has been far and away more rewarding that the last 2 years of my working life. It has enabled me to finally gain a work life balance and to work with some highly experienced people that I am learning from too!

Like all advice I should declare that I’m not an expert so I would encourage you to undertake the research yourself but if you would like any advice then please email me.