Elizabeth G. Olson 07.09.08
U.S. corporations are chopping heads right and left–438,000 in the last six months, sending the unemployment rate to 5.5%, the highest since October 2004. For some resourceful castaways, the recession may provide the jolt needed to jump-start their entrepreneurial engines as contract or freelance workers.
For those thinking about taking the plunge, you have plenty of company. Whether it’s baking, graphic design, plumbing or writing, there are some 18 million “sole proprietors” in the U.S., according to the Census Bureau.
“Each one is president of the company,” says Gene Fairbrother, consultant to the National Association for the Self-Employed. “That means being in charge of marketing, finances, accounting and everything else. If you don’t know this, you are headed for a tumble.”
Freelance work doesn’t breeze through the door, so you’d better go find it. This first step isn’t just the most important, it’s also the hardest; iron skin helps. You can pay for listings in local business directories and online job boards; send out pitch letters or postcards; troll fairs and trade shows; post a video on YouTube; write a blog; and, of course, network like mad.
Nashville’s Yvonne Perry, 48, knows the drill. In 2003, after years of working executive-assistant jobs, Perry figured she’d strike out on her own as a scribe for hire. She had pumped out many press releases for her employer, a financial services company, and she was determined to parlay what she liked doing into a paying gig. When it came to scaring up work, “I tried it all,” she says, “but online is where I started to build my portfolio.”
Perry found leads for ghostwriting and editing gigs through guru.com, where freelance writers can bid on projects. She also joined a local chapter of a writers’ group, which yielded some referrals. (Local chambers of commerce are a good way of padding a Rolodex, too.) Five years later, the work is pretty steady, though Perry still relies on her husband’s health insurance to cover all the bills.
As for ginning up marketing collateral, Web sites like allfreelance.com offer templates for everything from business cards to brochures. NASE’s Fairbrother advises signing any letter in blue ink so recipients know you signed it personally.
Once you land the work, you’ll need a contract to make it official. It helps to have a lawyer when papering a work agreement, but in many cases you don’t need one. Keep the document simple (even an e-mail exchange can work); define specifically the service you will provide, the fee being charged and timeline for payment. If you want the rights to the work in the future–say, the ability to slap a collection of columns into a book–hash out those points, too.
For a dash of formality, check out legalguru.com, purveyor of standard contracts; the site also provides legal advice for those who write in with specific questions. NASE members, too, have access to the Legal Club of America for free legal counseling.
How much should you charge? A recent survey by sologig.com, a freelance job-matching site run by Careerbuilder.com, found that more than half of U.S. companies use freelance or contract workers–and one-third are willing to pay $50 or more per hour for such work, versus the $19.95 national average wage. (That amount, of course, does not include health benefits and paid vacation.) If consulting is your game, check out “How To Price Your Consulting Services.”
Then, of course, there’s dealing with the IRS. Print up a stack of W-9 forms from irs.gov (a W-9 is freelancer’s equivalent of the employee W-4 form). Send one of these to every client to make sure your earnings are credited to the correct Social Security account and your check goes to the right address. Companies that contract for $600 or more in services are required by the IRS to send you a 1099 form stating what they paid you.
Those looking to sock away for retirement should get an “employer identification number” from the IRS. This identifies you…
