This is a guest article contributed by Alvina Lopez* looking at some crucial topics to consider if you are planning to live a long-term freelancing life.
If you’ve just begun your journey into the exciting world of freelance work, welcome! Freelancing is an incredibly rewarding way to make a living—it enables you to pursue your passions freely while being able to spend more time on the things that matter, like friends and family.
As the very structure of our economy changes, becoming more globalized, more and more people will resort to freelance work. Still, even though it may be enjoyable as you first begin freelancing, it becomes more complicated if you want to be self-employed permanently. There are various things to consider, like obtaining health insurance independently, learning how to file your taxes, and planning for your retirement.
We are living in tough economic times, and skyrocketing health insurance premiums have made it difficult for freelance workers to be properly insured. Still, if you do your research, you’ll be able to find the right health insurance plan for you. Some of the best and most affordable health insurance plans are provided by your local chamber of commerce, which operates for the express purpose of improving the economic viability of your local community.
Most chambers of commerce offer individual health insurance plans for freelance or self-employed workers. Another good option for health insurance is offered through the Freelancers Union (US). The most important thing to remember is to look into each plan and ask questions. For more options, check out this Freelance Folder thread.
Filing taxes can be pretty tough on freelancers, so again, it’s best to do as much research as you can so that you won’t be overpaying. As a freelancer, there are many expenses that you can write off (e.g. your computer, your printer, and any other equipment that is necessary for you to complete your work).
According to this insightful article featured on Kiplinger.com, you can also deduct your health insurance premium and half of your self-employment taxes. If in the US, keep in mind that you will be required to fill out two additional forms (either the Schedule C or Schedule C-EZ, as well as the Schedule SE), along with the 1040.
If you are a first-timer to filing freelance taxes, then the best option is to work with a tax professional who specializes in self-employed taxes to maximize your return. If you oversee the process carefully, asking questions along the way, you’ll eventually be able to do it yourself.
Planning for Retirement
Traditional workers often don’t have to worry so much about retirement. Full-time American employees have the benefit of having a company-supported 401k plan, which essentially enables them to save for retirement without even thinking about it.
For us freelancers, however, saving for retirement is a responsibility that falls squarely on our own shoulders. Paying into social security may seem like it will be sufficient for once you retire, but the truth is that this is most definitely not enough to live on once you no longer can, or no longer desire, to work.
If you are young and just beginning your freelancing career, then your best bet is to simply set aside a specific percentage of your monthly income into a savings account allocated for retirement. This will get you comfortable with the idea of saving for the future, which is a mindset that many young workers take some time to develop.
Once you are financially secure and have built up a fairly solid nest egg, seek out a financial planner who can educate you about the various retirement accounts out there. Financial planners who have worked with freelancers before are best to approach, so try to get a referral from a fellow freelancer, or run an Internet search for planners in your area.
This U.S. News and World Report article gives an overview of different retirement accounts for freelancers that you can ask your financial planner about.
Keep an Eye on the Future!
These are just a few of the important things to keep in mind if you intend on having a long and sustainable freelance career. Although we freelancers are something of a live-in-the-moment bunch, keeping an eye toward the future is essential if you want to continue enjoying your free lifestyle for years to come.
What health care plan do you use? Do you use a professional accountant to file your freelance taxes? Are you planning for retirement?
Alvina Lopez is a freelance writer and blog junkie, who blogs about accredited online colleges. She welcomes your comments below.
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