Magnus
Active Member
9. Admin, ROI, Tax, Pensions and other tedious stuff
All the dull but necessary stuff that is handled by others, like HR, in regular businesses, falls down to you if you are freelance/small business/side hustle.
It it is important to keep on top of this because the last thing you need is a back tax bill or something like that. It differs a lot between countries, as to how you set up as this sort of business. So I am not going to offer any advice as it might not be relevant to your location.
If you are just dabbling in this, it might not be that important, e.g. you are only doing it for a bit of spending money, but if it is intended to be a major part or all of your livelihood then I would advise making sure you are keeping records, putting some money aside into a separate bank account for tax, etc.
My main business, writing, doesn't have any major overheads. I rarely travel to interview people nowadays, it's always over zoom. I have a subscription to Grammarly, need to keep my computers up to date, but essentially I have few overheads.
This isn't the same if you are selling on eBay or have a trade like a plumber. You need to know what your ROI is on jobs for both. There's the cost and time of postage and packing for eBay. Plumbers have the capital outlay of tools, and the consumables of piping, brazing materials, all sorts of stuff. If you haven't accounted for this and taken into consideration the 60% rule, (I mentioned the 60% rule...I hope you were listening!) then you will be underpricing your work.
If you have to upskill and do training courses, these will probably cost money: they will certainly cost time, and you need to budget for that.
So, when planning what you do, admin will need to be a part of it. You may like to programme a particular day or time to do this every week. That way you will be on top of it, and any remedial action can be taken swiftly.
It is really easy to put it on the back burner and think “I'll do it when I have a spare moment”, and get on with the – apparently more important, and certainly more interesting – aspects of the job.
I'd really advise against this attitude: this is another downside of freelancing, but you have to be on top of this, because there might be unexpected bills or commitments, and you need to be able to deal with them.
You probably need to put some of your profits away for tax, and other contingencies.
For example, do you have a reserve of cash if a vital piece of equipment breaks down? (Say a vehicle, or in my case a laptop – I had a disc meltdown when a newish laptop was only 13 months old = out of warranty and had to pay £350 = $440, €400, to repair it in a hurry, as I had deadlines to meet).
Finally, it is often useful to check out what business support activities are in your locality, e.g. Local Authorities, Chambers of Commerce, Better Business Bureau, etc. Sometimes they offer free services to new and existing businesses, and also it is good to network and perhaps find new clients that way.
All the dull but necessary stuff that is handled by others, like HR, in regular businesses, falls down to you if you are freelance/small business/side hustle.
It it is important to keep on top of this because the last thing you need is a back tax bill or something like that. It differs a lot between countries, as to how you set up as this sort of business. So I am not going to offer any advice as it might not be relevant to your location.
If you are just dabbling in this, it might not be that important, e.g. you are only doing it for a bit of spending money, but if it is intended to be a major part or all of your livelihood then I would advise making sure you are keeping records, putting some money aside into a separate bank account for tax, etc.
My main business, writing, doesn't have any major overheads. I rarely travel to interview people nowadays, it's always over zoom. I have a subscription to Grammarly, need to keep my computers up to date, but essentially I have few overheads.
This isn't the same if you are selling on eBay or have a trade like a plumber. You need to know what your ROI is on jobs for both. There's the cost and time of postage and packing for eBay. Plumbers have the capital outlay of tools, and the consumables of piping, brazing materials, all sorts of stuff. If you haven't accounted for this and taken into consideration the 60% rule, (I mentioned the 60% rule...I hope you were listening!) then you will be underpricing your work.
If you have to upskill and do training courses, these will probably cost money: they will certainly cost time, and you need to budget for that.
So, when planning what you do, admin will need to be a part of it. You may like to programme a particular day or time to do this every week. That way you will be on top of it, and any remedial action can be taken swiftly.
It is really easy to put it on the back burner and think “I'll do it when I have a spare moment”, and get on with the – apparently more important, and certainly more interesting – aspects of the job.
I'd really advise against this attitude: this is another downside of freelancing, but you have to be on top of this, because there might be unexpected bills or commitments, and you need to be able to deal with them.
You probably need to put some of your profits away for tax, and other contingencies.
For example, do you have a reserve of cash if a vital piece of equipment breaks down? (Say a vehicle, or in my case a laptop – I had a disc meltdown when a newish laptop was only 13 months old = out of warranty and had to pay £350 = $440, €400, to repair it in a hurry, as I had deadlines to meet).
Finally, it is often useful to check out what business support activities are in your locality, e.g. Local Authorities, Chambers of Commerce, Better Business Bureau, etc. Sometimes they offer free services to new and existing businesses, and also it is good to network and perhaps find new clients that way.