3 years of freelance
I’ve been procrastinating with writing this post since the start of the year. I’ve never really done a public evaluation of self-employment, and around Christmas I came to the realisation that my self deluding belief that I’m transparent with my work is far from true. I think I kidded myself a little that a public day rate on my website and the odd discussion with friends in the industry = total transparency, when there’s a hundred more things I can talk about publicly that’ll hopefully benefit a handful of people at least. I’m not going to present this as gospel, only observations and a few opinions from my own personal experiences. While I’m chuffed I’ve made it to three years, it’s still only a short amount of time to learn about a career.
I’m super glad I procras — waited to write this post though, for two reasons:
- I can use that neat, click-baiting post title as it literally is 3 years now.
- The last few months of self-employment have been pretty terrible and it’s produced a few realisations.
But that’s an overly gloomy note to start on. It’s really not the theme here. My overall point (for anyone looking for a too-long-didn’t-read summary), is that 🎉 freelancing is definitely easier than you think. 🎉 Specifically, it’s more accessible, less complicated, more profitable, and more relaxed (often more so than a full-time job) than popular opinion states.
I’m a designer first and foremost, so this post will naturally be most accurate when applied to freelance design careers, but I guarantee there’ll be plenty of relevance for freelance development, and other freelance roles in tech like marketing and copywriting. Hell, hopefully freelance anything.
I also hope this will be a little different to what “freelance advice” (eurgh) articles/books/talks generally are, as I’ve kinda found what people talk about most of all hasn’t been too relevant over the last 3 years. What people generally talk about being:
- Client relations
- Selling to clients
That’s not to say you shouldn’t research these things. The fact I did before starting may be exactly why I’ve avoided the majority of issues in those areas. I can recommend Design Is A Job by Mike Monteiro for lots of lessons on dealing with clients, self-employment, and design as a whole. While my friend Scott Riley recently put together two posts on freelancing, the main focus being on client relations — Freelance is gr8: Part 1 and then Part 2 (which particularly focuses on clients).
So, to continue that summary, here’s a few more of my generalised opinions to grab your attention:
I believe self-employment in tech is easier than you think because of:
(Click the anchored links to scroll to the relevant section, but it’s way better if you stop working, read the whole thing through, and get sacked for wasting time).
- High freelance rates. Convert to full-time earnings and it’s not unusual to double what you were making in a full time job.
- …which means time off should be nicely affordable. The “crazy long freelance hours” are largely a myth. Alternatively you can have less time off and continue spending £400 on shoes.
- You can comfortably make a living while rarely putting a sales hat on.
- Accounting doesn’t need to be that hard.
- There’s so many jobs in tech right now — freelance and full-time.
- Even more so if you live in, or can commute to a populous city, especially with a strong tech scene. San Francisco, New York, London, Berlin, etc (onsite freelance roles).
- And with that large pool of jobs, my final belief is that you really don’t have to be that talented. I feel there’s a common preconception that self-employed people will generally be working at a higher level than those in similar full-time roles. This really isn’t true, especially with the skill-set stagnation that can occur when you go it alone (more on that later). The most relevant traits of the self-employed are simply organisation and motivation, and not stagnating to the point that they become totally unemployable.
Here’s some more anchored links to things if you don’t fancy reading the whole lot.
- Do I start a company or register as a sole trader?
- Freelancing/contracting — what’s the difference?
- It’s probably not good to start freelancing before you’ve had a few full-time design jobs
- Tax savings and bank accounts
- My earnings over 3 years
I basically merged this 3 year analysis into a totally separate post, with thoughts on my skill-set stagnation, the role of a designer, and how work isn’t drying up. It’s become such a sizeable piece since merging I probably should have left it separate, but it’s incredibly relevant alongside my own career analysis. Essentially, if you’re going to read one section of these ultra long ramblings, make it that one.
And so I can finally conclude this overly long introduction, here’s a tiny bit of background on my history for additional context:
- 3 years working at 2 agencies in the Midlands.
- 2⅔ years freelancing in London.
- ⅓ of a year freelancing in Nottingham (current).
Do I start a company or register as a sole trader? (for UK readers)
OK this one has probably been discussed to shit but I can’t be bothered to check the rest of the internet to see if that’s the case right now. There’s more interesting stuff coming up, I promise.
So there’d be far more sophisticated descriptions to separate these two self-employment setups, but I’ll go for the more practical stuff. Registering as a sole trader still means you’re officially self-employed, but it’s all under you as an individual. It basically means there’s no actual company to manage, which means far less complicated accounting to do. You won’t need an accountant when you’re sole trading, especially if you sign up for something like FreeAgent or Xero.
Unless you’re feeling adventurous, you’ll need to find an accountant if you set up as a limited company. In fact, even if you’re feeling adventurous, I’d still find an accountant. They’re really worth the money, as company accounts will be a real time sap if you try and do them yourself. My “accounting doesn’t need to be that hard” point above only works if you hire an accountant.
So if starting a company causes extra complications and accountant fees, why bother? Basically, if you make enough money, you’ll save on the tax bill. That’s the key reason why so many freelancers incorporate. I was going to provide some sort of guidance on what sort of earnings figure causes the potential tax savings to kick in, but the government have literally just introduced new company tax laws and made it all complicated again. The main tax savings always came from the fact that company owners can pay the majority of their income through dividends, while paying the lowest possible salary (which are taxed with PAYE and National Insurance contributions). Even though dividends are now taxed at a rate starting from 7.5%, making the benefits of a company setup less prosperous than previously, it will still be beneficial once you’re established and earning a good amount. It’s just harder to work out when that is these days, and I’d rather let you ask the rest of the internet instead. Or an accountant.
Some people also give the reason that a real company name is more prestigious and attractive to clients. Largely I think that’s bullshit, I (along with most freelancers I know) have always opted for the more down-to-earth branding methodology of just using our own name, so the only change that incorporating made for me is a “Ltd” after my name on each invoice. Obviously if you’re actually starting a multi person agency you’re going to have to incorporate.
I sole traded for the first 10 months of freelancing, then incorporated when I knew my earnings were going to be enough to save money on tax and make it worthwhile.
Remember to consider accountant costs when working out if incorporation is worth it — general average for a good one that’ll save you money is £100 a month.
I’d say the final consideration with this when starting out, is how you view your self-employed future. If you’re dipping your foot into freelance, not totally sure if it’s gonna work out, getting started as a sole trader is a good way to give it all a test run. Closing down a company can be a horribly tricky task, especially when there’s zero motivation because you’re, er… closing down your company. If you’re realistically filling a gap between full-time jobs, definitely opt for sole trader. If you’re super confident in longer term freelance success, and the amount you’re going to make (your required earnings to actually live life may be above the figure required to save tax for instance), then maybe incorporate straight from the off.
I’m convinced that freelancers spent so long trying to create this image of a hard grafting and low-level earning career that it’s really hard to get much transparency with their rates, because it reveals the realistic truth.
I’ve decided that if you’re jumping into full-time freelance, you shouldn’t need to charge less than £300 a day (currently around $420 USD). Here’s some reasoning:
- Ultimately, most legit businesses who are looking to hire a freelancer *know* this is the minimum amount that they should be expecting to pay, so you may as well follow along with their budget expectations.
- Freelance rates manage to avoid the negative side of location based salary variance. Because remote work is a thing, all businesses need to compete somewhat with the sort of rates that businesses in London, New York, etc can offer. While these major cities will still be better for offering the projects with the super high rates, I’ve found that nearly any town or city in the western world will provide jobs and businesses that are content with paying £300 a day for the services of a freelancer.
- While I’ve already stated I don’t believe you need to be super talented to go self-employed, if you’ve gained the confidence to do so, you’re likely at least adept at your job. That’s all you need to be to get hired at this rate. Experience and increasing talent will naturally allow you to charge more.
So here’s some maths with that rate. 2015 had 261 working days. Take 4 weeks off for further holiday, and you’ve got 241. Charging £300 a day, you can bring in £72,300 annually. At this point there’s some variance with expenses and actual profit, but after tax and NI (if sole trading), you’d probably pocket around £50k. Interestingly, this puts you in the UK’s richest 4%.
Basically there’s a lot of money to be made (or a lot of holidays to have), all while people assume you’re a poor grafter because you don’t have to wear a suit and work at Liverpool Street.
If you’re looking on advice on choosing your rate, my super rough and generalised guidelines is that £300 should be your minimum, don’t hesitate to go to £400 if you’ve got some good experience behind you, or £500 if you really are working at a senior level. Ultimately, choose what you’ll be happy with, and then talk to as many similar freelancers as possible to scope out if you should maybe go higher or lower. Another clue once you’re a little further into self-employment, is that if you’re clearly getting too many enquires at your current rate, it’s probably worth increasing your rate. Just not to the point where all the enquiries disappear.
The easiest way to find clients who will pay you this money
Basically, businesses in major cities because they have more money to spend, and stronger tech scenes. The top of my totally non-researched list would be San Francisco, New York, London, Berlin, LA, and Paris. Because they have a pool of talent to use, you’ll find plenty of businesses in these major cities really favour local freelancers who can work onsite. But there’s still always gonna be a ton of remote work on offer. If you happen to live in a major city, life’s easier for you, as you can say yes to onsite work. More on that later.
Secondly, funded businesses/startups. Get some investors to give a tech startup a few million pounds/dollars to play with and they’ll barely pay attention to rates, and hire on a whim. It’s pretty convenient.
I’ve spent most of my freelance career so far working for funded tech startups in London and I think that’s made a huge contribution towards making the finding of work and earning a living fairly comfortable so far.
Why funded tech companies also make your life easier
Other than that fact they have lots of money to pay you with, they’re also (hopefully) going to have a better understanding of tech/design/dev, and ultimately be a better client to work with than your standard local small business or international mega-corp. Often, you’ll fit within an existing team so the pressures of responsibility are much less, and there’s a lot less work involved in keeping client relations cosy.
I do think the much acclaimed startup “grind” is massively exaggerated, but if it does ever exist, another benefit is that you largely avoid the silly expectations there because you’ve been brought in as a freelancer. Even the most deluded founders will largely understand you’re not going to work out of hours for your 0% equity in their company.
You don’t need to be salesmen
Honestly, I’m still pretty bad at selling myself well. I don’t undersell, and I stick to my rate, but I’m too cynical of tech/startups/design to embrace buzzwords and the big impressive pitch. I’ve also got to contend with confidence issues relating to the fact my skill-set hasn’t improved too much over the last few years. Nonetheless, I know I can do a good job for most companies, but I’m not to equipped to communicate that well a lot of the time. Thankfully, this lack of sales skills really hasn’t been an issue.
There’s definitely been a bit of luck in this. When I was based in Birmingham, working at Substrakt, I knew I wanted to move to London and go self-employed at the same time like an absolute madman. I remember scanning Twitter, Work In Startups, and Authentic Jobs to see if any London startups were looking for freelancers. Eventually (via Twitter I think), I stumbled across Sidekick Studios, and specifically their Nesta funded social startup they’d spawned — The Amazings. Adil (founder of both) was looking for a freelance designer to work on The Amazings, and could offer me a 3 month contract, with the likelihood of extension. That was enough for me to move south and register as a sole trader. After spending the best part of a year working on The Amazings, and then what it changed in to (Mastered), I soon realised how handy working in that environment had been. Sidekick Studios made startups, and while a lot failed, a good handful succeeded and grew as legit businesses. The studio space also brought together an unusually high concentration of entrepreneurial tech teams and freelancers. After leaving, I discovered this collection of friends and colleagues had turned into a brilliant pool of contacts. I’ve since freelanced for a startup created at Sidekick Studios, and another that rented desks for a few months. I’ve also used recommendations from this network to work on totally new projects that have ex-Sidekick people involved. I’m still feeling the benefits of connecting with that group of people even now.
I got lucky with accidentally falling into a pool of useful contacts, but all my freelancing experience so far has been proof that so much of “sales” can just happen naturally.
- People at tech companies talk to people at other tech companies, especially if geographically close. Do good work and you’re going to get recommended.
- Befriending people in tech (not cold calculated “networking”, this shit should happen naturally), means you’re even more likely to get recommended and hired. Often even if you’re not the most perfect person for the job.
More proactive ways to find work
As powerful as word of mouth recommendations are, it’s not realistic to expect all enquiries to arrive with such minimal focus.
Blogging really works. When I stuck to my most consistent blogging habit in the spring of 2014, actually spending time on more in-depth design writing, the amount of enquiries it produced was incredible; far more than a portfolio update ever has. The best writing isn’t overly forced, I was just writing on the design related thoughts that my work was helping me realise. If you’ve got actual context to write about, it makes blogging far quicker and more enjoyable. Not keeping this up has been a huge regret over the last 2 years, and I’d be in a much better position if I had. I’d have a far stronger base for enquiries, and I’d feel more confident in communicating my design thoughts and ideas. That’s the other benefit blogging provides — it’ll help you become a better communicator, which is such a key part of design. It also helps put a whirlwind of design related thoughts from your mind, into a more digestible format that can clarify plenty of things for your own benefit. You’re essentially teaching yourself.
Job boards are still a thing. The downside is that as they’re generally well targeted to a large audience, you’re immediately contending against many other people, lessening your chances of actually ending up with any work. Nonetheless, I’ve still ended up with the odd freelance project via a job board. I’d pick out Angel.co, Authentic Jobs, Crew, Work in Startups, and Remote OK as the most effective ones.
And Twitter. I still tend to share my availability on there, and also keep searches running for terms like “freelance web designer”, “freelance ui designer”. There’s endless shit on there via those sort of searches, but you’ll quickly get used to filtering it out. Keeping tabs on opportunities on Twitter has given me a handful of neat freelance projects to work on.
Has work ever dried up then? (If you’re gonna read anything, I’d read this!)
With me, quite a few times. In fact, as I alluded to right at the start, I’ve basically been unemployed for the past 2 months (super handy for writing overly long blog posts like this). But my evaluation is that it could all be prevented. Here’s why I think I’ve had problems, and how they’re fixable:
I’ve played a risky game with not planning ahead too much
With my first freelance gig at The Amazings and the next two projects that followed, each opportunity appeared quickly out of the blue, was quickly and successfully negotiated, and was kicked off incredibly soon after first hearing about it. The apparent efficiency and speed of finding and starting freelance work skewed my original (and correct) mindset that you should get work planned and scheduled a good month in advance, or a few weeks at the very least. This meant that I’ve had a scattered habit of only focusing on lining up the next job as my current project literally comes to an end, or actually dropping projects earlier than planned (not genuine contract breaking, but not renewing a contract that could easily be extended). I actually believed that scheduling work in advance was almost impossible, as every early work enquiry seemed to want to start straight away. The simple fact is that potential clients will nearly always initially present themselves as needing immediate help and being in a rush, but realistically they can easily wait. In fact, even if you are available immediately, you’ll likely get thrown a delay while the client actually gets their shit together.
If your enquiry rate is regular enough that you’re barely ever without project offer, you can likely be more lax with planning ahead. But realistically for most of us, we should try to plan a month or so ahead.
My skill-set has stagnated
Enter my therapy session, and also further historical background. So I come from a totally self-taught design background. My hobby of dicking around with graphic design and code as a kid eventually presented itself as a viable career option while at college, so I hopped into my first agency job and avoided the university route (absolutely not going to delve into this topic right now, but I’m likely going to do a follow up post on that incredibly tedious discussion around university being beneficial or not, because I have ~ opinions ~. Spoiler: it totally depends on each individual person. Who’d have guessed right).
Clearly, I worked relatively hard in my privileged upbringing, and learnt a lot while starting out to eventually get myself to an employable standard. I continued teaching myself regularly on the side after getting a job as I was conscious of being young and at a junior standard. Ultimately design was still an incredibly focused hobby too, so extra hours didn’t feel a bit like work. My second agency job also gave me some hugely talented colleagues in a nice small team, the ideal combo for learning from others. Being a client facing agency, often clients without much knowledge about design/tech, I also had to work hard on improving my design communication and client management skills. Then the jump into self-employment was the next motivator to keep putting the hours in with improving my design skills, really delving into building and designing products, and getting my head around startups. The initial self-employment nerves are a great help for self improvement, that’s for sure.
Eventually, two things happened around the same time:
- I felt the most comfortable for the first time in my career. Self-employment wasn’t nearly as hard as I always thought, and I was feeling less junior, less inexperienced.
- Design slowly started feeling less like a hobby and more like a job (a laughably first world problem, I’m so sorry).
The first change isn’t necessarily a bad one at all. It’s not a good thing to be constantly tense about your career and skills. The motivation it creates to better yourself isn’t really maintainable. Instead, self improvement should happen mainly because you’re interested and enjoy what you’re do. So when both these motivators decreased so quickly, skill-set progression mainly halted.
Again, that’s no disaster. Your career doesn’t have to be endless, aggressive progression. But that was around a year and a half ago, things haven’t changed too much. and I’m only just actively getting around to fixing the bad habits I’ve gotten into.
I allowed myself to get cynical enough about design to the point where I wasn’t just ignoring the actual buzzword/fluff side of things, or horrendous startup preaching, but I stopped reading and educating myself about genuine design discussion, research and ideas. This has massively slowed down progression with my design knowledge. You’re still going to always learn a lot of the job, but it becomes far less applicable when you struggle to communicate it properly, which reading and research really helps with. So does regular chat with the design and product team you work with. Naturally, this can be rarer when you work as a freelancer, so it can become even more important to make the effort to digest these discussions a different way.
On the other side of design, I’ve also stagnated with what I can offer in front-end dev. Before expanding on this however, I want to quickly segue into the reasoning of why I am going into so much detail about my floundering skill progression.
Web design jobs haven’t dried up, they’ve just changed
There’s been a lot of talk since the start of the year on web design jobs drying up. There’s been a handful of blog posts that have got plenty of agreement, interestingly with a lot of head nodding coming from relatively experienced figures. Considering my recent 2 month unemployment, I’m in a position where it wouldn’t be nonsensical for me to agree. I find this opinion largely frustrating however. The claims are commonly coming from people in the industry who are largely trying to offer exactly the same sort of services as they were 5 years ago.
This is incredibly relevant because it’s clear that the source of design demand has changed a lot. A lot less people will want to hire you for brochure and marketing website designs, because the investment just isn’t worth it anymore when something like Squarespace can do a fantastic job. This is a good thing! For most of us, I’m sure those projects can feel a lot more tiresome than they used to. It’s not arrogance or ego, it’s just that we all know investing in the broader skill-set of a freelancer makes little financial sense, when beautiful static websites can be made with Squarespace, a product that’s been worked on, researched, and improved over many years.
So demand for the basic static website design services has dropped, especially for the non-tech small/medium business crowd. That’s something nearly anyone will agree with. What some people seemingly haven’t clocked, is that overall demand hasn’t disappeared, it’s simply moved and morphed. There is SO much demand for freelance designers from tech startups and companies, with real digital products to work on. There’s also constant work from agencies looking to hire freelancers to meet this demand. These are the areas you should be selling yourself to now. This is also really neat — there’s far more challenging/satisfying design problems to be working on, with design likely to be valued far more by your average modern client.
These design problems, being more challenging, focus on quite different areas. If your average project these days is a V1 web app for a fintech startup, you’re going to be using quite a different skill-set to the one used for that website design and WordPress build for a central London restaurant 5 years ago. Web design has morphed far closer to product design than it ever used to be. You should be learning far more about the building of successful products, the research behind them, iOS design patterns, app tech, startups (bluergh), prototyping, testing, sprints, etc. All that modern design stuff.
I segued from my point on front-end development progression because I think this is hugely related and relevant too. All designers have certain opinions on what a designer’s role is, but that’s never going to be the most important factor here. The main relevance lies with where design demand lies. When our work was mainly brochure websites, then naturally a HTML/CSS skill-set occupied our base design knowledge, so we could actually build what we were designing.
When a specific skill is so clearly clearly infiltrating all areas of our discipline, sometimes you’ve just gotta hold your hands up and admit you should learn it. Or if you don’t fancy it just yet, accept that your version of that discipline is going to be less in demand.
Another contributor is that with so many of these design jobs coming from small tech startups, product team members have to be able to crossover and generalise. If the designer can wear many hats and deal with development tasks, you’re going to be a lot more beneficial to that team.
I feel like this is definitely another thing that the rest of the internet has written plenty about, so I’m not going to delve into further detail. Sure, there’s still roles for specialised designers with little development knowledge, especially in senior positions. You can choose to deepen your design thinking away from code, and maybe polish your buzzwords a little at the same time. But the generalist designer is where a huge percentage of the jobs are moving to, and this will only continue to become more evident. If you’re well rehearsed in this shit, you’re going to have more success as a freelancer, and as a designer.
So yes, I’ve had many dry patches, but every single one feels like it could have been avoided, with just a bit less laxness and laziness.
All the “admin” shit isn’t that bad
Back to the more standard analysis.
I’ve largely covered this so far, but to recap, you’re not going to become a sales person, and the accounts really aren’t much of a headache. The complicated company stuff can be sorted by an accountant, while the rest (or sole trading) is basically just tracking stuff in an app like FreeAgent or Xero. Literally entering numbers, sending invoices and marking them as paid, and logging expenses. Accounts aren’t complicated, and aren’t the time sap everyone seems to assume. Unless you’re disorganised and leave all that number entering and expense logging until the day before your tax return is due. Again, commitment to good organisation really is the best trait you can have with self-employment.
Also, I’ve never ever had to deal with the masses of email or endless meetings that many people seem to think a freelance career is all about.
Freelancing/contracting — what’s the difference?
I’m really not sure if there’s any authoritative approval with these definitions—they’re certainly a bit vague, but this is how the industry perceives these two self-employment types.
Contracting normally means working in the office of the client, for a longer stretch of time than the “average” freelance project. It’s not unusual for contractors to work for the same company for almost a year. Contractors rarely have to quote an overall project cost, but simply supply their day rate, while the employer hires them for as long as they’re needed, or can afford. I was recently at a talk by Joel Hughes, who said you can always spot a contractor in an office as they’ll be the only ones smiling, mainly at getting paid twice as much as the full-timers for doing exactly the same work.
Freelancing is very often more remote based work. While a contract should certainly exist (seriously, always make sure there’s a contract for the project), it’s much more likely that the end of it will be the actual end/deadline of the project. You’re not likely to be working for a client for as long, often freelancing for multiple clients at the same time. You’re less likely to be hidden amongst a team like a contractor, meaning a fair bit more responsibility and focus on client management.
I wanted to talk about these, as I really feel contracting is another reason self-employment shouldn’t be too intimidating. Contracting really is the safety net of going solo. Win a contract, and you can easily have future work confirmed for 6 months, have the earnings from those self-employment rates I’ve mentioned above guaranteed for the long-term, have the comfort of holding responsibilities very similar to a full-time job, all while enjoying the flexibility and comforts of self-employment.
It’s good to start self-employment with a longer “contracting” contract
Bias may exist with this opinion, as it’s exactly what I did, but I really did feel it worked perfectly. It provides the chance to get your head around being your own boss, accounts, and scouting for future work — all while avoiding the stress that full-on, multi-project freelancing can bring.
It’s probably not good to start freelancing before you’ve had a few full-time design jobs
That’s a big generalisation, and totally won’t be true for some people. I know one or two who started their career with freelance and did very well. I have this opinion because if I’m realistic with myself, I learnt and progressed far more during the years I had a full-time job. A lot of this will be down to my earlier problems around laziness, but the simple fact is that full-time employment does naturally empower you to learn more on the job. Real full-time employers are more invested in educating and teaching their team, while you often lose the long-term team/colleagues around you to also learn from and bounce off (sometimes solvable with long-term contracting, another positive with that setup!). When you’re the boss, it’s easier to avoid throwing yourself in the deep end. My first full-time job had me dealing with client’s expletives down the phone, genuine PHP development, and chasing financial targets every month. When self-employed I’ve found it easier to avoid the shit stuff, which is excellent to a point, but can prevent the tough stuff that makes you a better, smarter designer and person.
Basically, I think it’s pretty clever to get a few years and full-time jobs under the belt (especially at an agency), and then treat yourself to self-employment after. You’ll be far more equipped.
Tax savings and bank accounts
Your accountant will let you know how much you should be putting away for the taxman, or if you’re sole trading, the internet (FreeAgent) will be able to calculate and tell you. I just wanted to say some words on how you should commit to this.
If you’re starting a company, you legally need a legit business bank account. All of these will come with a savings account (may need to request), which is ideal for the money you need to save for tax. Alternatively, if sole trading, it’s still important you create a new/separate current and savings account to store and track business money, but it doesn’t need to be an actual business account.
It’s incredible how many freelancers don’t put money they need to pay towards tax into a savings account as the earnings come in. This would probably be the number one item on my self-employment checklist. If you don’t save as you go, it’s incredibly easy to not have enough in the account when the tax is due. It’s easy to be naive to the reality before the tax is demanded, but if you’re not saving enough, you’re essentially entering debt.
So, save as you go, and then really aim to leave those savings untouched. I’m aware as anyone that these savings may need to be dipped into when you have some bad months, and the positive is that because tax payments are so far in the future from the earnings they’re based off, you’re often going to have time to “recover”. But you should only be dipping into tax savings when you absolutely need to, and respect the fact you’re entering debt when doing so. Also, remember to make a note on what figure you should be aiming to recover to when you want to get things back on track.
I’m going to end with sharing my self-employment earnings so far. With all the analysis above, I really don’t have much to add to this. With those handful of dry patches I’ve experienced, alongside some purposeful time off for side projects, I’ve never reached the potential earnings I baited you with. But as I’ve stated, I truly believe they could be easily avoided.
I also hope transparent earnings aren’t perceived as egotistical. While not reaching max potential, I’m not naive to the fact I’m privileged to be working in a lucrative industry as a white male with a very healthy income. But I wish to share, because despite the increase in freelancers sharing their rate, actual long-term earnings rarely get exposure, and they tell the truest story about the financial side of things. Basically, no one ever seems to have any idea what freelancers tend to earn, and I believe this might contribute a little bit towards fixing that.
I’ve also included tax/NI payments thus far. The pay-a-really-long-time-after-the-actual-earnings nature of tax make it pretty hard to correlate tax alongside the income figures, but hopefully this gives a better idea of the profits produced from the earnings. I’d roughly say there’s around £4k of tax still left to paid on these earnings listed below, but it’ll be a while until that tax bill comes around.
June 2013: £3,848.33
July 2013: £2,500
September 2013: £3,863.33
October 2013: £3,030.30
November 2013: £6,766.66
December 2013: £2,698.41
Total before tax: £22,707.03
February 2014: £2,575.76
March 2014: £3,188.40
April 2014: £3,975
May 2014: £3,600
June 2014: £1,935
July 2014: £6,859.10
September 2014: £7100
October 2014: £9,300
December 2014: £15,500
Total before tax: £54,033.26
January 2015: £5,950
February 2015: £4550
April 2015: £5,425
May 2015: £2,450
June 2015: £2,100
August 2015: £8,400
September 2015: £1,050
October 2015: £9,446
November 2015: £1,750
Total before tax: £41,121
January 2016: £7,334
February 2016: £5,743
Total before tax: £13,077
January 2015: £7,373.74
July 2015: £2000
January 2016: £762.15
April 2016: £8066.60
Total tax/NI: £18,202.49
For me, a minor unknown is how much being based in London helped me out. As I’ve written above, I do believe the design jobs and remote market is large enough for it not be a sizeable barrier, I think the initial struggles have simply been with me being too lax in looking for work. Keeping on top on that, while reinvigorating my skill-set should get me back on track, and hopefully rid myself of the consistent dry spells once and for all.
Interestingly, I didn’t lose or gain money with my freelance income while in London, I simply broke-even, mainly due to the outgoings on rent. With hugely reduced outgoings these days, if I do get back on track, I might actually be able to have personal savings for the first time in a while!
I think… I think that’s actually it. Genuinely no idea how this ended up being quite so long, but I hope amongst the waffle, there’s been some useful or interesting snippets. It’s hard to cover everything, and I greatly love getting nice email or tweets, so if you’ve got any further questions or thoughts, get in touch — hello@jacksmith, or @jack_l_smith.