> Your first interactions with anyone will set the tone for the rest of the relationship. If you crush the first emails, phone calls, or meetings, your reputation will be solidified for the long-term.
It is a weird world. The above has been consistent in the following:
1- In high school. If you just meet some new kids for a first time and mumbble stupidly, they'll think you are retarded and it'll be hard to change that view.
2- If you fail to impress your potential date in the first date, you are pretty much over. I think as a guy I'm more tolerable with girls but I might not be accurate or maybe an exception.
3- It still applies in adulthood. I think that's why doctors care a lot about their medical offices. I mean if you check a doctor with a messy office, no secretary and not so expensive equipment.
It sucks: The first impression matters a lot. You are allowed to suck (within limits) afterward but the first impression is a must.
> Until you’re sure of your effective tax rate, set aside a minimum of 25% of every dollar you earn for the tax man. Put it away, don’t touch it.
Try to maximize your business expenses. Can you make your gym as a business expense? Your "personal" car? Your mobile phone bill? There are lots of things you can expense. Check with your accountant. Have a list and let him check what can be checked to the business account.
My advice will be: Don't touch the business money until next fiscal year. That might be hard if you don't have a full year reserve but you can do the math and "borrow" from your company.
I would be interested in hearing more from freelancers about tax tips they've found useful. One interesting thing I learned this year is it's common to setup a S-Corp LLC & then pay yourself a fair & reasonable wage. Anything over that you can pay yourself as dividends every quarter. Besides dividends being a huge tax savings (in the US) they also act as a sort of bonus. This also seems to help a bit with budgeting.
LLCs that elect S-Corp tax status (in the US) issue distributions and it can be at any interval you like. We do it monthly. The distributions are not subject to FICA(Social Security or Medicare) taxes, which is where the savings exists over W2 income. Outside of those taxes distributions are just earned income and treated as such by local, state and federal governments.
It gets tricky when your profits get high and the effort of setting up and maintaining an S-Corp becomes more questionable. The 12.4% Social Security stops at $132,900 (2019) in income so if you want to max out a solo 401K (assuming a 25% employer contribution) you'll need to have $148,000 in W2 income ($19K from the employee and $37K from the employer to hit the 2019 limit of $56,000).
So at that point you've already paid all of the Social Security tax possible for the year and the S-Corp advantage is greatly minimized as you only continue to save on the 2.9% medicare tax. That's still something though as there is no cap on that tax.
S-Corp is significantly more work than a standard LLC. You'll have a separate corporate tax return and use the K1 for your personal taxes. You'll have to run payroll as you as an owner will now be a W2 employee and deal with workers comp, unemployment and all sorts of other fees and taxes depending on your state (for example here in WA they just started a paid family medical leave tax on gross wages up to $132,900). Some you'll be exempt from as an owner/employee and others you won't.
There is a lot more to the subject for sure, but those are a couple of highlights to dampen the mood of the idea of huge tax savings...
> S-Corp is significantly more work than a standard LLC.
Honestly - it's not. I pay Quickbooks ~$50/month where I click one button every month and it pays me my "salary" and then pays social security. I then pay my accountant to do all of the tax prep (which I would do S-Corp or not).
I suppose it depends on the setup of the business so I shouldn't make a blanket statement that S-Corps are more work for everyone. For me specifically, after 13 years with standard LLCs, it's definitely more work. The bulk of it being the initial setup, but there is still quite a few additional monthly tasks.
- The change to a W-2 employee for my partner and I meant setting up a proper accountable plan for expense reimbursement. So submitting expenses to the company, recording proof of purchase, etc. and that being processed as non-taxable income via payroll.
- We had to switch from our individual SEP IRAs and setup a Solo 401K. Not a huge deal to set up, but definitely more work as contributions on the employee and employer side are both done manually every month for each of us.
- Instead of a single check per month now there is compensation via payroll and I have to separately calculate and process the distributions for each of us afterward.
- HSA and medial insurance reimbursement is a total pain. We use Gusto and we have to have them make a manual adjustment to the W-2s at the end of the year in order for them to accurately reflect this reimbursement as it can't run through the accountable plan and their system cannot properly process this type of reimbursement. I actually had to have them issue my W-2 3x this year because they did it wrong the first two times. This is another perk of the S-Corp that I forgot to mention earlier though as healthcare reimbursements are counted as W-2 income, but are not subject to FICA taxes. So that increases the income eligible for contribution to the 401K without FICA being paid on it. $7,000 is the 2019 limit for HSA (for a family) and the health insurance is whatever it is in addition to that.
- The setup was definitely a major hassle for me. We had to register with various city and state agencies even though we are exempt from many of those taxes as owner/employees. It took us around six weeks in total to set all of this up.
- One last addition. In order to divert more pre-tax dollars into investments I hired my wife to help part time to work enough to max out her employee contribution to her 401K and then the company adds 25% to that since all employees must have the same employer contribution through a solo 401K. That's not specific to an S-Corp, but it is a good way to save another chunk of pre-tax money for those that are married and in a position to do so.
My best advise and tip is also my simplest. Get a very good tax professional, pay them, and listen to them. Seriously. It took all of the guess work out of taxes for me and made me far money than I spent. (And their fee is a tax write-off!)
It is the same in the UK, dividends attract a lower tax rate. You can even pay a monthly dividend if you need the cash! You have to make sure that you are paying yourself minimum wage however, or you can get a fine.
Making your wife/husband a shareholder is common too. In the UK you get a personal tax free allowance plus a certain amount of tax free dividend. If your spouse doesn't work (or pays a lower rate of tax than you) then you can make a big saving this way by paying some money to them instead of you. Maybe they can get a job as your bookkeeper? This can serve to pull you out of the top tax rate bands, or at least pay the higher rate on less of your income.
I operated as an LLC for 3 years and then switched to an s-Corp at the recommendation of an accountant I stared using to do my books and taxes. It’s really worked out well and I think it’s the better way to go.
I suppose this only applies to my country. In Sri Lanka, all foreign income upto 100K is exempt from tax. It's important to receive the money to a foreign currency account, which you can then turn to a regular local currency account.
1- Push as much expenses as legally possible to the business. Lease (buy a car on a lease). Depending on the country, there might restrictions on how luxurious the personal/business car is. By leasing you deduct the interest. So there is literally no reason why you'd not do it.
2- Only "pay" yourself the minimum required. That is, how much is your personal rent, food and other. Pay yourself that. Don't pay yourself from dividends. Make yourself a salary. That can be helpful if you are getting a loan on the business and on your personal account.
3- Do not pay dividends if you made profit. Always re-invest or suck profits on some way or another. This will make your tax rate effectively 0 but you'll notice that the government has always ways to suck in taxes.
> Lease (buy a car on a lease). By leasing you deduct the interest. So there is literally no reason why you'd not do it.
It is almost guaranteed that I pay less to drive my 2005 Honda CR-V (paid entirely with taxable dollars) than a business owner pays to lease a newer Honda CR-V paid with pre-tax dollars. (So, that's one reason why you might not lease a car for your business.)
Plus, you are likely to fall on the wrong side of an audit of you expense your vehicle as a freelancer. Even visiting clients is not going to be considered a deductible use, just as an employee, going to and from work is not deductible.
Yes, I should have specified that I was speaking in the context of someone who is working at client's offices on a regular basis (in which you would have enough mileage to make a difference when it comes to deducting the expense). If you primarily work at home and you occasionally visit clients for meetings and updates or sales calls, then you should be fine deducting the mileage.
But if you are the type of freelancer that goes and works on site on a regular basis for your clients, then the IRS will likely try to assert that your client offices are actually your "place of work" and driving in to see them is merely a non-deductible commute.
1) This may not be true. In most countries you would get a capital allowance that means you could make this saving even if you buy the car outright. There are also different kinds of lease that have different tax effects. In the UK VAT on a contract hire is 50% disallowed if you use the car personally for instance. Another reason this might be a bad idea, driving the companies car for personal use may be a 'benefit in kind' and taxable at a high rate. In many situations it is better to buy the car personally and record business miles and claim it on expenses at a government approved rate per mile. Talk to an accountant, it depends on several factors.
2) Many countries have minimum wage legislation. Don't pay less than that!
3) This is far too general to be true. If you can afford it and are planning an exit then leaving profits in a company can be great. This presumes that there is no better user for the money, which is not something you can generalize about.
Disclosure: I'm in Finance, but not a tax specialist.
> The national minimum wage does not apply to company directors unless they have contracts that make them workers as defined in section 54(3) of the act.
I suggest if you are a single freelancer in the UK you may easily fall foul of that. Remember employment contracts can form without you writing them down. I know of cases where this has happened. If you only come into work for board meetings then sure, avoid minimum wage.
But then if you are a single freelancer in the UK you will already be talking to an accountant to discuss IR35...
I'm not overly worried about an implied contract between myself and the company I own and direct. It's also generally the advice of accountants and legal professionals that it is fine to operate this way.
Also, snark aside, I get my contracts reviewed by QDOS, act outside and have an accountant. Anyone considering being a freelancer or contractor in the UK needs to be aware of IR35 and should get an accountant. Mines is https://www.maslins.co.uk/
First impression with auto body repair, however, is counter-intuitive. A shop with a nice office, ample parking, branding and so forth will charge more than a shop without the overhead. The low overhead shop stands as much a chance of restoring a car as the high overhead shop when the proprietor leads repairs.
I hit a deer at the front center of my car. Estimates varied from 1600 to 3300. Guess who I used, despite my intuitions? The low overhead, proprietor-led shop. The restoration was perfect.
I know they are just examples, but pretty much guaranteed, in the US at least, you cannot deduct your vehicle expense. And definitely not your gym membership. Probably could your cellphone though.
The same criteria will apply. Except in the case of your company owning the car, they will need to show the non-allowed usage as income to you, so that you can pay tax on it.
There is so so much good stuff in this article. A++ content. Incidentally, my hunch is that one way to build trust with clients is to write articles like this. I can tell you know what you are doing if you can write something like this.
> I’d estimate over half of freelancers disappear before delivering their projects. Good for you: Finish your projects and you’re already in the 51st percentile of freelancers.
This matches my gut as well and I've been somewhat shocked at how many clients compliment me on answering my email in a timely manner! Clients seem to understand almost any mistake you can make if you are upfront about it and work with them to solve the problem and don't disappear. Though, I definitely agree on being very very careful about code that charges money (or sends email for that manner).
I've been remote freelancing for ~20 years. Some good advice in that post but I would add in:
1. You definitely don't need to form an LLC. I'm still a sole proprietor all this time and it's working out fine.
2. Personally, I'd hold back 35%+ of your income for taxes and expect to pay taxes every quarter.
3. 2 months of savings seems really low. People are wired different but I know a lot of people (myself included) who can't function with less than 6 months of runway when being self employed. It's not fun being in a position to take on low quality work because you absolutely need it.
4. Billing style really depends on the job you're doing. A lot of my work is billed hourly due to the nature of what I'm asked to do.
>> You definitely don't need to form an LLC. I'm still a sole proprietor all this time and it's working out fine.
This is bad advice. It has worked out for you so far because, I'm willing to guess, you have not been put at risk for any sort of substantial liability.
Forming an LLC creates a separate legal entity which is itself responsible for its own debts and liabilities. It isn't expensive or difficult to form an LLC, and you don't need a lawyer to do it. For most US states, it's a short form and an online payment.
There are some important rules to follow to ensure that your LLC will be viewed by the courts as a separate entity from yourself in the event that some potential liability arises. Perhaps the most important rules is to separate the finances of the LLC from your own personal finances. It's easy to open a checking account for your LLC - someone at your bank can help you do it. When clients pay you, make sure the check is written to your LLC, not you. Pay yourself from the LLC account - don't use the LLC's debit card for personal purchases and expenses. The goal is to create a clear line of separation from yourself and the LLC so that if someone sues, liability stops at the LLC and does not extend to your personal assets.
Much of the advice given in this thread should be qualified with "at least in the US". For example, the liability problems are much less of an issue in the EU, and forming an LLC equivalent in most countries will not protect you from liability if you are the sole owner and you manage the company.
When I was considering it here in Germany my tax advisor told me a UG[0] will mean a lot more bookkeeping and associated higher costs compared to remaining a sole proprietorship & that it will practically not likely to have any benefit in my case[1].
I can imagine less bureaucratic countries like the US & UK impose less of an overhead tho. For the life of me I can't understand why the German authorities are so resistant to entrepreneurship.
"Personal liability" is an overly broad term. In the EU a single baseless lawsuit does not bankrupt you, so if you feel you have your finances under control, it might turn out that sole proprietorship is not a problem at all.
This is what I meant by "liability problems are much less of an issue in the EU".
> 1. You definitely don't need to form an LLC. I'm still a sole proprietor all this time and it's working out fine.
I did this for a while, but it starts to hurt around tax season. There are advantages to being incorporated and then hiring yourself as an employee for a minimal wage. With the way you're doing it, you're paying employment taxes on your entire income. With an LLC, you can pass the majority of it through without paying that.
> 2. Personally, I'd hold back 35%+ of your income for taxes and expect to pay taxes every quarter.
That would be the responsible thing to do. I just end up paying yearly, paying the interest penalty, and using January+February+March for taxes. Probably should get my house in order at some point.
> 3. 2 months of savings seems really low.
Agreed.
> 4. Billing style really depends on the job you're doing. A lot of my work is billed hourly due to the nature of what I'm asked to do.
Yes, but I do pretty much everything I'm able to not bill hourly. Fixed Budget > Monthly Rate > Bi-Weekly Rate > Weekly Rate > Daily Rate > Hourly.
> I did this for a while, but it starts to hurt around tax season. There are advantages to being incorporated and then hiring yourself as an employee for a minimal wage. With the way you're doing it, you're paying employment taxes on your entire income. With an LLC, you can pass the majority of it through without paying that.
I'm not exactly sure what you mean by this, but LLCs are pass through entities for tax purposes. That means your tax treatment is the same for an LLC as it would be if you were a sole proprietor without an LLC.
The reason to create an LLC is to separate your personal assets from your business assets and to protect you from liability for your employees actions. If your LLC signs the contract, in most cases the client can only go after the business, not you personally.
However, almost all lenders require a personal guarantee and an LLC doesn't protect you from your own negligence. Only from the negligence of your employees.
So basically - LLCs are unnecessary if you are the only employee.
The tax benefits come from electing to be treated as an S corp for tax purposes, not from establishing an LLC per se. But as far as I'm aware, you need to establish an LLC or other corporate entity in order to be taxed as an S corp.
It's true that creditors can come after your personal assets if you personally guarantee a corporate entity's debt. But establishing an LLC does limit your personal liability in any instance where you don't provide a personal guarantee. I suspect that many individual freelancers who establish LLCs never take on debt or other liabilities that require personal guarantees.
> So basically - LLCs are unnecessary if you are the only employee.
This is not true for many reasons, primary among them being taxes and healthcare.
I'll explain taxes below. For healthcare, I use Trinet as an HR provider (since I am a company) and they allow me to get benefits (including healthcare) at corporate rates. You need to be incorporated for them to even talk to you.
> I'm not exactly sure what you mean by this, but LLCs are pass through entities for tax purposes.
Happy to explain. When you are self-employed, you pay SECA taxes on your entire income.
For self-employed, that means both the employer and the employee portion. Let's say you pull in 300k. You're going to pay SECA taxes on all of that.
If I create an LLC, do an S-corp election, then retain myself in the LLC for say 50k, I will only pay those taxes on the 50k. The other 250k will be passed through to my personal income and I will only be responsible for the standard income taxes.
Please correct me if I'm wrong, also I assume you are in the US...
I did this for a while, but it starts to hurt around tax season. There are advantages
to being incorporated and then hiring yourself as an employee for a minimal wage. With
the way you're doing it, you're paying employment taxes on your entire income. With an
LLC, you can pass the majority of it through without paying that.
So you are paying corporate tax rate on the profits of the company, then personal tax rate on your "minimal wage". How does the money from the company get passed to you without any tax hits?
He's likely an llc taxed as an S-Corp. You don't pay taxes out of your business, profits after write offs are added to your return with a K1. You're likely thinking of a C-Corp.
Yes, that's exactly it. As an S-Corp the corporation doesn't pay any taxes. Well, in my case my state (New Jersey), has a minimum tax based on revenue. I pay that, but it's minimal. If it really bothered me, I could re-incorporate as a Delaware or similar LLC. All profits are passed to your individual return and you pay taxes on that.
With the K1, you will be adding the passed through income to your personal income and still paying tax on it. I'm not seeing the benefit of an S-Corp here.
1. I'd be terrified to run as a sole proprietor for anything more than getting started. I work on medical software, and if someone dies during a procedure - even if it's not my software's fault - I don't want my personal assets to be liable.
2. I started at 35%, and moved back once I saw what I was actually paying. Depends on your state in life, state within the US, and charitable giving state-ments.
3. Yep, 2 months is low. Just enough to weather a storm, but more = better.
4. Funnily enough, I'm switching to hourly billing for much of my work. But I think many freelancers (particularly US-based) don't even realize "day rates" are a thing - we're fixed on hourly pay, for some reason.
> Members can also be held personally liable for court judgments against the LLC if the member has personally and directly injured someone or caused financial loss in the course of business, or has knowingly done something illegal or reckless.
> ...
> Courts usually require three elements to be present before they will allow the veil to be pierced and a member to be held liable for the financial losses of an LLC. First, the person bringing the lawsuit (the plaintiff) must show that the LLC was controlled and dominated so completely by the member in question that the LLC was a mere instrument of that person and indistinct from her. The plaintiff must then show that a breach of duty occurred -- for example, that the member committed fraud or failed to keep adequate records. The final element is that the control and the breach of duty must have caused injury or loss to the plaintiff.
Those aren't very high standards if a successful lawsuit is lobbed your way for software you have been contracted to right.
Edit: Not that using an LLC isn't a good idea, I just think the "legal shield" benefits are often overstated and misunderstood.
The "breach of duty" condition as defined there seems awfully ambiguous given that that article doesn't detail what duty is owed. Nolo [0] restates the same condition as:
> The company's actions were wrongful or fraudulent.
which seems like a fairly stringent requirement. Though it also notes [1]:
> [Single member LLCs] are also susceptible to "piercing the corporate veil," which occurs when the courts find that the entity and the owner are not really separate and thus the owner is personally responsible for the business’s debts. The easiest way an opposing party can prove this is by demonstrating a lack of adherence to the LLC operating agreement or that the operating agreement is riddled with errors.
which seems like a more significant concern for well-intentioned freelancers.
I think this shows the fixation on hourly rates. Why does there need to be a translation to hours.
A day is a day. When I was freelance I just billed a day rate. The point for me is that I simply don't count the hours. It just meant I would spend the day working on that clients project only. Typically I'd do something like around 9-17:30, with around an hour for lunch. So that works at 7h30. But sometimes I stopped earlier. Sometimes I worked later. I still billed the same.
I never pro-rated the invoices for partial days. My minimum billing increment was half a day on the odd occasion I needed to run an errand that was going to require less than a full day off.
That is what I do. Have a daily rate, but can bill half a day.
I don't really do classic 'projects', I'm more an ops guy having seen/experienced the dev side too, and profiled myself as being a bridge between those 2 sides that don't always fully understand each other. At a client I'm usually involved in multiple projects and 'the bigger picture'.
You cannot place an estimate on 'fixing' stuff like that, and it also hugely depends on the internal politics. My contracts are usually for 3-months, and can be extended 3 months at a time, which define a daily rate, state a day is 8 hours, and I can bill a maximum of 40 hours/week. Contractually I cannot terminate the contract, only the client can - but I can simply decide to stop working for a client, and simply don't bill them until the contract expires.
This allows me the flexibility to work for multiple clients, bill half days, work when I want, and can stop working for someone if I decide it's not working out for some reason.
You get my productive output for normal working hours, typically an 8-9 hour range, but I'm not tracking time spent on potty breaks, eating lunch, or taking a walk outside.
> "Take your finely-calculated estimate and 3x it, both in time and money.
You should get really comfortable with “no”; Both saying “no” to bad fits, and hearing “no” from clients who can’t afford you."
Two quick thoughts:
1) "It always costs twice as much and takes twice as long" is a benchmark that has never failed me. 3x? Probably could have helped 25% of the time.
2) The key to freelancing or even being an agency is...avoid the time sucks, the bad clients. It's not finding grand slams or hat tricks. Sure those are good to have. But the killer is the bad ones, the really bad ones.
> It gets pretty dang lonely sometimes, particularly if you’re working remotely. I don’t care if you’re an introvert or extrovert, it’ll affect you either way.
I'm an introvert. I was lonely. It does affect you.
> But for maximum productivity, your routine should involve getting dressed, brushing your teeth, and treating it like a “real job”.
I had to do this. If I wasn't wearing street shoes, I wasn't "at work."
FWIW, I've been married the whole time I've been a freelancer, and the loneliness didn't settle in until year 5 or so. Your spouse will probably not want to talk shop all the time, and those types of conversations (tech, business, etc) were what I missed the most. But maybe I'm just excessively sensitive!
I've found tech meetups scratch that itch a little bit but I'm 2 years into remote (with a wife and 2 kids) so maybe more is coming... Just curious if you tried that and if it worked or not for you?
I've only started going to tech meetups recently, as an attempt to socialize. It's definitely helped! I basically avoided it for the first 6 years, so I'd recommend it very much.
I get what you mean... I'm a freelance and work mostly on location. Partially because getting people together and convincing/guiding technical people is a large aspect of my job - which is virtually impossible to do remotely.
I'm also actually pretty introvert, and could lock myself up for days or weeks without seeing anyone - but that's on my terms. When it's not and there's no clear light at the end of the tunnel, that simply wouldn't work for me. The niche I found currently offers a nice balance - but I have to push myself for the social interactions that are required for the thing I do.
The main thing that sticks out is that the author mentions how referrals are the number one source of leads for basically every freelancer. The problem is that he only mentions it. Ok, that's great. How do I get referrals? The issue is that none of the other stuff matters if you don't know how to get referrals.
The author did a good job with the post, but I can't express how important it is to be a people person when freelancing. In order to get referrals you have to get projects. In order to get projects, you have to leave your house and meet other local business owners. That's very hard for freelancers to do and I think the post would be 100 times better if the author spent a little more time on that aspect of freelancing.
> In order to get projects, you have to leave your house and meet other local business owners.
And so we come to one thing that rarely gets explicitly discussed in articles like this - the location. I don't blame authors for that, your environment is usually something you take for granted.
But if I were to go and talk to local business owners where I live (eastern Europe) they would invariably fall in the category of extremely-and-then-some-price-sensitive.
So most of the contracting around these parts is done under the umbrella of various agencies or Toptal. These have ongoing relationships with foreign clients and take advantage of the fact that local market prices for IT folk are nothing compared to western Europe and (especially) US. Not a bad deal, but not as good as fostering relationships with the clients yourself (and these clients are usually at least moderately price sensitive, as otherwise they would probably hire contractors at their location).
I'm sure there are plenty of people that freelance without middlemen where I live, it just seems a lot less prominent than in better developed economies. I know maybe one or two.
>> In order to get projects, you have to leave your house and meet other local business owners.
> And so we come to one thing that rarely gets explicitly discussed in articles like this - the location. I don't blame authors for that, your environment is usually something you take for granted.
Isn’t that what conferences are for? Or content marketing? Patio11 went from not consulting to charging $10,000 a week while living in the Japanese equivalent of Iowa by writing blog posts but IIRC the best channel for his particular consulting was Microconf followed at some distance by cold emailing.
If you live in Romania you can afford to attend a Western European conference once a quarter, right? You can definitely afford to blog.
Sure, I did not mean to imply that it's impossible. I was kind of thinking out loud about how it's whole different kind of game when you have access to good clients locally compared to situation when you don't.
I personally haven't tried to seriously make a jump to freelancing but I have been thinking about it lately, so these kinds of considerations are on my mind.
Sure, the article is applicable primarily to US-based freelancers. YMMV in other places.
If it's any consolation, I live in a tiny town in the US and have rarely met my clients in person. Many of them have no idea where I work from or that I occasionally wear pajama pants on video calls, because my webcam is from the waist up.
> I live in a tiny town in the US and have rarely met my clients in person
This is awesome. I feel like it's more of the exception than the rule though. Just out of curiosity, I assume you primarily work off of referrals now, but how did you get your first few clients? Or I guess a better way of asking is how did you get enough clients to where you had enough referrals coming in?
1. Premium job boards. AuthenticJobs used to carry much more freelance work, but basically I'd find places where people had paid to post a job, and I'd do my darndest to impress them with my opening email.
2. My professional network. A couple of old contacts referred me to excellent agencies. Those connections still pay dividends today.
Hope that helps. These comments are giving me ideas for "Everything I know, part 2".
Just chiming in to add a similar but different experience. Been freelance for nearly 20 years and I've always lived in major US cities but very rarely do I take on local clients. This is absolutely intentional. I don't care if the client is on the other side of the planet or 6 blocks away, I work when and where I want with no expectation of "on-site".
Of course, if I happen to like the client personally, that's another story. But those visits are off the clock.
When I started at University I wanted to work in advertising. I was curious at how these huge agencies got accounts - like how do the JWT's and Saatchi's of the world get their clients?
It was something that is never spoken about or really talked about at University, but so much of it is you just need to be in front of the right people and ask the right things.
For referrals, you have to leave your comfort zone and ask - "hey, you're a CTO at a mid sized Government agency and need my services...do you know anyone else I should be speaking with".
Like most things in sales, it's deceptively simple. It's a conversation. Probably over a beer or a coffee or lunch or something.
I'm not a consultant, and I'm not sure if this is illegal/not allowed in some way, but I can imagine taking a business contact out for a $200 dinner and leaving some nice chocolates at the end of the contract is a good way to squeeze out some referrals or ensure repeat business.
I think there are some rules (especially when selling to the Govt) but we frequently take people out for meals, give out nice bottles of scotch etc as a way to say thanks.
Sales is something you can (and should!) learn to do. We're all selling, all the time. Even now, over the internet, I'm trying to convince you of something - that's all sales is. Want to switch a programming language at your company? You'll be doing some selling.
Contrary to popular perception, sales (especially B2B sales) is not at all about using the "magic words" or "tricking people" into buying. Sales is about effective qualification - that is asking the questions that give you confidence that you'd be able to complete the project you're speaking about, while also ensuring that the person you're speaking to is convinced that you'd be able to complete the project.
If you have a technical background, you have a massive advantage over someone with "sales skills" when it comes to selling whatever your technical expertise is. You can answer the hard questions! You know how people in that role think. This is a huge advantage.
I have a technical background with many years in development but ended up working at a sales office late in my career. I worked with sales managers who did the "sales stuff" while I did the technical pitch. The very best sales people were not all that technical. But they were very good at understanding business needs, supply line management and handling mad customers. I was amazed more than once when we went into a meeting with senior management at an irate customer, took terrible abuse due to some failing in delivery or quality, and walked out with an even bigger order. One of the best sales managers was the nicest guy. He said that when you have a mad customer the worst thing you can do is avoid them. You have to stay in their face, let them beat you up until their anger is spent, and then proceed to solve their problems. I once saw him explain to a customer how they could recover from a major production line hiccup we had caused by rearranging some inventory and placing an earlier than planned order for additional pieces. He knew their production flow better than their own management. It was grueling and I thought we were done for sure at that customer. But we walked out with a huge order that more than made our office's sales quota for the quarter.
Really good article filled with excellent advice! I actually started out down a similar path after leaving Netflix. For me, the biggest challenge for software engineers that want to go freelance will always be finding work (aka sales). It's just really scary to know that if you don't find another gig, you don't get paid.
Shameless plug: I ended up starting a company[0] to help freelancers/contractors with this. We are the sales and collections team for you. We focus on high-quality clients that can afford to pay for senior engineers. You pick jobs that appeal to you. We currently have way more openings for contract + remote jobs than we can fill and the clients are good (Vizio, Disney, Colliers). It's a great way to transition from full-time to consulting.
US and Canada only right now - gotta start somewhere. But we plan to expand outside as soon as we are ready. If you are interested, but outside US and Canada, you can sign up and we'll put you on a waitlist.
This would be great. Highly considering a move back to Australia from the US and would be great if I could use my Microsoft experience to help fetch freelance work.
Great content. I've been doing freelance machine learning work for a while, and it's hit or miss. Some clients are great, others are a complete pain.
Most recent gig I had, the client cut hours and then rates... all due to the fact that the CEO didn't manage the project properly from the outset, and they were hemorrhaging cash. That fell squarely into the "not my problem" category, so I quit.
It's a tough business, and one I've not completely figured out yet.
I have been a freelancer for 10 years now, and I noticed that machine learning gigs are a bit harder to find because they is usually proprietary info and they want to keep the "models" in house.
Gigs seem to fall into a couple categories: one group of clients has heard all the buzz and wants to get in on the action, without really knowing much about it.
The more serious types are indeed protective of their data, intellectual property, and processes. I have even seen paranoia around leveraging open source frameworks (Tensorflow, Pytorch) out of fear of their sponsor corporations coming for the client... not sure I see the logic on that one, but whatever.
Whenever I don't have much success in a venture, I try to look inward to see what I'm doing wrong. I suspect that there is a fair amount I have to learn about getting good gigs and being successful in the freelance game. Unfortunately, it's one of those "have to learn the hard way" type of things.
"If a client previously posted their projects to Fiverr or UpWork, it’s a signal they don’t value expertise."
I disagree with this. Some clients just don't have any idea where to get something done other than a "site" they heard about or found on the internet.
But these clients usually are fairly technically clueless and require a lot of hand holding and/or have unrealistic expectations. Come to think of it I sort of have to agree with the authors basic point... not a great signal (although for different reasons).
I hire a lot on Upwork, and have found excellent talent, with extensive experience, for my projects.
I've learned how to qualify candidates with a minimal process that has weeded out the "waste of time" people that I sunk a bit of time into when I first went there.
So count me as someone who's posting there that counts on expertise, and has been very happy with what I've found. That said, my clients would probably not know how to use Upwork effectively. Hence, me.
Some basics, and it varies a bit depending on whether you're hiring in India versus Europe/Eastern-Europe. I have found that a certain subset of candidates in India will be very aggressive with the frequency and obtuseness of communication. European and east-europeans candidates, in my experience, will often disqualify themselves by being presumptive about requirements or solutions, or dismissive about confounding aspects. I'm not generalizing overall, but in first/second interactions with remote freelancers on Upwork. This has been very consistent.
(I'm in North America, but have lived and worked in 3+ Western European countries).
Beyond basic technical qualifications, these additional steps have helped me onboard a good sized team of part-time and full-time freelancers around the globe:
* Include 1 very broad, and 1 very specific question in the job posting (don't make them required -- see who answers them of their own volition). You'll get a sense of reading comprehension, and the care someone will use in responding. The questions should not require an essay in response, but neither can they be fulfilled by a templated response.
* For higher level candidates, offer to get on a 5 minute video call and share a calendly/youcanbookme link. Ask for a problem synopsis and see how complete it is, and check how many unclear potentialities get called out in response.
* For lower level candidates, look for 5, hire and onboard 3. In a slack documentation channel, include an on-boarding document with 3-5 steps (update avatar, include available hours in spacetime, post a hello and basic introduction in #general, add themselves to #somechannel, etc). All my keepers very faithfully followed really basic requests. The people who most vociferously wasted my time could've been disqualified at this stage of the game.
For this last step, pay for their time and set a 1 or 2 hour max budget at the start. Don't train or lead anyone through this process. That's not a road you want to spend any time on, because it will become an expansive sinkhole.
I've found that there are plenty of talented professionals out there, but those who can be useful, engaged, remote resources are a special breed. You want conscientious forthrightness.
[By the point I'm spending five digits figures on Wordpress add-ins, I might as well hire a crew to make me a new product with React or Angular or ClojureDjango# -- whatever is en vogue right now and likely to remain so for a while.
Wordpress might have improved a lot since I last looked at it in 2008/9; but I recently made a free wordpress.com blog and it sure feels like a monocycle mounted on an elephant mounted on a Chevy carcass mounted on an electric scooter.]
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Am I wrong? A little wrong or out of whack entirely?
It depends on what you're doing and how much of the site it is. An add-in might be an almost totally separate product already, just one that's leveraging the existing infrastructure of WP such as logins, permissions, theming, etc. If it's just leveraging those things (and thereby changing appropriately if you change appearances) then how important is it if it's written in PHP?
I will say that if you're spending 10k+ on add-ins that you should probably make sure you've looked into what you're doing and how. That sounds like the kind of pricing I'd expect if you're having a custom add-in developed rather than what I'd expect for a commercially available one. Something custom may be appropriate, but unless your needs are unique it may not be the best approach.
If the client is posting there because they're cheap and are going to nickel and dime and second-guess every decision then they may not be worthwhile (possibly unless you factor in billing for your time discussing every. little. thing. with them).
If they're posting there because they don't know where to hire someone to do contract work for them then you may well be able to work with them - particularly if you're personable and willing to spend some time handholding and making them comfortable. For that matter, if they've done something on one of those places and been burned by poor quality, poor understanding, language issues, whatever then it may make them more likely to work with you if you don't have the same problems.
It's a question of making sure there are realistic expectations on both sides. If a client is going to need concierge service beyond the raw design and coding and you're able to provide (and get paid for) that then you may be in a good position.
Well, it's definitely helpful. Let me tell my story, I had been working as a freelancer for 2 years. I mainly worked on Upwork. Most of the clients are cheap and micromanagement. And most of the jobs are short term. I think the big problem is how to find a good client? If you are an American, you may have networking. Your friends can refer you a good job. Or you can go to the events, and try to sell your business. But if you are not an American, you may struggle to find a good client. So I think this post is for those who are living in developed countries, not developing countries ( third world )
> "If a client gives you a design to implement, make your implementation pixel-perfect. It’s crazy how sloppy some developers are; the client put together that PSD for a reason."
Shamefully have to admit this was me when I started -- my mind says "the tool does the thing!" and the client says "it looks nothing like my design". Can't be afraid to charge for CSS.
"If a client gives you a design to implement, make your implementation pixel-perfect. It’s crazy how sloppy some developers are; the client put together that PSD for a reason"
Even when the various mockups are in conflict with each other? Dealing with internally inconsistent state?
Building full web applications off of a PSD file is often a bad start. Things like menu/toggle state, hovering, accessibility, etc - these are - in about 95% of my experiences - ignored or broken in "designer-led" design stuff.
Yes, they had an idea that was translated to graphic state, but when things don't comport with reality (no, browsers can't actually represent everything you just in your PSD, or no, we can't make 9 point fonts usable in pulldowns with the same font your designer used, and no, we can't use that exact font because it's $1500, etc).... you have to use your judgement - and you can do it collaboratively with the client(s), but do not spend hours/days/weeks trying to chase down pixel-perfection based on PSDs that were likely based off $30 templates themselves. When chrome does an autoupdate and things are 3 pixels off... what do you do then?
> It’s crazy how sloppy some developers are
It's also crazy how un-aware of what browsers actually are and how they work some designers are.
I would first evaluate how much work would be involved with making their design pixel perfect. There are some platforms where making certain things pixel perfect is extremely difficult (Sharepoint customization for example).
I would also give my customer feedback on whether the UI helps them achieve their goals. Sometimes people zero in on a visual design that has poor usability, and all you're doing is taking them further down a bad road.
Yes! If you see a problem with the design, share your expertise (politics carefully navigated). This is how you become even more valuable to your client. But if you've settled on a design and you're the implementer, make it look like the specs you got!
> Don’t work on promises. Get projects down on paper with clear terms, and have your clients sign. Until you do so, all the talk in the world is worthless.
I wish it expanded more on this. Some questions:
- when you're remote, do you print the contract, sign it, scan it, send it, and have the client do the same? or do you send 2 physical copies via DHL or something? or do you just rely on a "looks good!" reply to an email detailing the terms?
- what's the typical practice in the freelance market on using contracts? I mean, when you're working remote from a country different from your client's, I imagine it's pretty difficult to write good enforceable contracts since they involve 2 very different jurisdictions. Do people typically bother trying to make good quality contracts, or are they used on the assumption that both parties will act in good-faith?
- when you're just starting out and can't really afford the services of a lawyer that can write international contracts, how do write such things on your own? some tips?
- are there standard clauses in these contracts that people expect or are they really diverse?
It would have also been cool if this talked a bit about how the interactions typically are between a freelancer and a client. I mean, I imagine there's a general protocol, right? I imagine the freelancer should guide the interactions, but what are clients' expectations? For example, what's typically used for communication? skype? plain email? Are there some etiquette rules specific to freelancing?
In the US, email agreements can be enforceable contracts, but I always take the step of getting an eSignature.
My take on international contracts: Working internationally, it's pretty much all based on trust. Once you get to the point where you have a large enough contract, sure, hire lawyers then. But how is someone going to pursue, for example, a Romanian developer for $10,000? It's just not worth it.
So, if you're unsure of the client and you have no way of enforcing a contract, you could "ramp up" your agreement: Get 50% up front, do a small project or 2, break larger projects into smaller chunks paid incrementally, etc.
I've never dealt with a large client flaking, so this is all speculation from me. I hope it helps.
> If a potential client tells you how something should be implemented, they don’t want you to think too much and don’t value your expertise.
Not necessarily. My team has recently inherited a system developed by an outside contractor that has absolutely nothing to do with our stack, and taking over its operation ended up taking much more time than if we had developed the functionality from scratch.
Yes, if you are going to work as a contractor and the company is telling you precisely what stack or technologies you need to be working with, that's not a red flag.
To me this was a well written, no bullshit, super helpful piece. My thanks to the author, from someone relatively new to freelancing. I feel extremely lucky to have landed an 80-hour monthly retainer as one of my first gigs, but this article gives me plenty of ideas on how (and how not) to make sure things are going in the right direction over the next few years.
I have experienced almost each and every point listed on your blog in my 9 years of freelancing. Learned a few today. :-)
Thank you for keeping track of all those points/experiences and summarising for all the freelancer buddies out there.
It is a weird world. The above has been consistent in the following:
1- In high school. If you just meet some new kids for a first time and mumbble stupidly, they'll think you are retarded and it'll be hard to change that view.
2- If you fail to impress your potential date in the first date, you are pretty much over. I think as a guy I'm more tolerable with girls but I might not be accurate or maybe an exception.
3- It still applies in adulthood. I think that's why doctors care a lot about their medical offices. I mean if you check a doctor with a messy office, no secretary and not so expensive equipment.
It sucks: The first impression matters a lot. You are allowed to suck (within limits) afterward but the first impression is a must.
> Until you’re sure of your effective tax rate, set aside a minimum of 25% of every dollar you earn for the tax man. Put it away, don’t touch it.
Try to maximize your business expenses. Can you make your gym as a business expense? Your "personal" car? Your mobile phone bill? There are lots of things you can expense. Check with your accountant. Have a list and let him check what can be checked to the business account.
My advice will be: Don't touch the business money until next fiscal year. That might be hard if you don't have a full year reserve but you can do the math and "borrow" from your company.