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For many people, freelancing seems like a relatively inexpensive path to becoming an entrepreneur. After all, you don’t need to finance a brick and mortar location. You rarely hear of freelancers stressing over finding investors either.
It’s true that becoming a freelancer nearly always has fewer costs than launching other businesses. The problem is that too many people overlook the costs that they will face. Then, they become overwhelmed and struggle to stay on top of their finances.
Don’t let this happen to you. If you’re interested in becoming a freelancer, do so with your eyes wide open. Here are six costs that you absolutely must consider before you take the leap.
1. Upgrades to your home systems
When you start working as a freelancer, there’s a good chance that the load you put on your home systems is going to increase pretty significantly. Your internet bundle may work perfectly fine for general home use, but it might not be equipped to handle your small business. You may also need an additional phone line to be dedicated solely to business functions.
There are definitely benefits to upgrading to a business class internet account. Your connection speeds will be more consistent. Most providers also give business customers enhanced customer support. Still, this will be an extra cost and you should add it to your budget.
2. Upgraded software and operating systems
In order to provide your services to clients, you may need to upgrade your operating systems and software to the professional grade versions. Many free or low cost versions of these packages simply cannot handle the demands of a freelancing business. For example, the free graphic design software you used for the occasional side job or hobby might not allow you work on multiple projects at once unless you upgrade.
Consider making a list of tools you will be using, then determine whether you will need to upgrade to a more robust version. Once you’ve done that, take a look at your operating systems. If you’ve been putting off any upgrades, you could run into problems.
3. Financial and accounting services
Freelancing brings some complex challenges when it comes to your finances and taxes. You have invoicing to consider, setting yourself up as a tax paying business, paying your taxes, figuring out your deductions, financial planning, retirement and growth. Some people manage perfectly fine with a decent accounting and financials package. Others rely on professional services to get the help they need.
4. Marketing and advertising
In order to build up a healthy business, you need to get word out. You’ll have to create a website, develop a social media presence, attend industry events, advertise your services, etc. Here are some areas of cost that can come along with that:
- Graphic design services for your logo, company letterhead and business cards
- Website design and hosting
- Paid advertising
- Blogging and social media outreach
5. Home office upgrades
It’s time to take a close look at your home office. It may seem perfectly fine now, but will it work for you as a freelancer? Right now, your office may be the place where you spend a couple of hours each night surfing the internet, paying bills and doing a bit of side work. That slightly uncomfortable chair, desk that’s just a bit too small and not so great lighting may not be a big deal now. The problem comes when you are faced with these annoyances eight to 12 hours a day, instead of two or three.
It may be time to upgrade to a new desk, chair and lighting. Then there’s your monitor to consider. Is it large enough? What about room temperature? Do you need a fan or space heater? Yes, you can probably make many of these upgrades over time. Still, these are all costs that you’ll need to cover eventually.
None of these costs should scare you away from freelancing. This is still the right path for so many people who want independence and the opportunity to create a business. The point is to understand the costs you will face ahead of time, then create a budget that allows you to cover these expenses as you grow your business.
December 13, 2018 at 07:01PM
Forbes – Entrepreneurs