So Now You’re A Freelancer. Here Are Some Very Important Things To Consider.
By BUD WARD
O.K. You’re a freelancer now.
You may be fresh out of school or a wizened veteran, perhaps unceremoniously “down-sized.”
Or, there again, you may yet become one, as so many of your former newsroom colleagues already have.
Look around you. So many of your SEJ colleagues nowadays are in that same camp. As such, many might well be your mentors and, let’s acknowledge, many may also be among your competitors. Either way, you can learn from them.
But to return to the question: You’re a freelancer…now what?
Being More than ‘Just’ a Journalist
It all starts with your attitude, and with the skill set you bring to the freelance challenge and develop along the way.
First, you will need to think like an entrepreneur. Yes, an entrepreneur, something not traditionally taught in J-schools. Think like a business person. Ditto the above point. Be entrepreneurial... and learn how to artfully self-promote — social media, etc. This is not necessarily easy, given that so many of us went into this field specifically to avoid such demands.
The Health Insurance Question
In U.S. society, this is, unfortunately, a big one. Covered or not covered? How, how much, and by whom? Writers newly unemployed, after the relative security of a salaried position over the past few years, certainly will find their options greatly expanded if an employer-paid or subsidized health care program isn’t one of their greatest and most immediate needs.
Forget about “COBRA” and other helpful but short-term assists, we’re talking health coverage here. Have it, perhaps through a spouse or significant other, and that’s one consideration that need not drive — need not even be among the key drivers of — your next steps. Whew! Without it, all else may become more difficult, and almost certainly will become more costly. But it’s by no means impossible depending, more than any other one thing, on your own health, both physical and mental, and temperament.
The Cash Flow Issue
You may be used to the seeming assuredness of a paycheck hitting that bank account like clockwork, every other week or at least once a month, providing invaluable peace of mind. But you’re a freelancer now, so Fuggedaboutit.
If you can afford, both financially and psychologically, to evaluate your self-worth — and, not unimportantly, also pay your bills — based on what you earn over a longer time frame, that can be like gold in the bank. (Well, not exactly.)
So, let’s say you’ve been comfortable bringing home X-hundred bucks every two weeks. What would happen if instead, and for purposes of discussion only initially, you were to bring home 12X-hundred bucks every three months or so, sliced up as no bucks at all in some weeks but twice-X in some other weeks. Get the picture?
If cash flow isn’t the immediate financial or psychological need (you have some savings socked away and maybe even a severance to get you going) …
If you can make do with making only a percentage of your previous standard take-home for the first several weeks, or even months …so long as you close out the year pretty close to what you “need” …
All that too can shape those early freelance months. Or years.
Incorporate: Should I? Or Shouldn’t I?
The late physician and popular author Richard Carlson made a fortune with his “Don’t Sweat the Small Stuff” advice books and variations on that theme.
Take it to heart: the issue of whether to incorporate or not incorporate need not be a burdensome question for most freelancers. You might decide to, and you might decide not to — either way, your decision is reversible down the road. There are costs, mind you. Costs of incorporating and costs of not incorporating.
There are also benefits of both approaches. Saw that one coming, didn’t you?
Protecting your own and your immediate family’s resources from liability — for instance, some polluter’s crying foul that you reported that their emissions stink up the place — is one important consideration. “Ain’t-a-gonna-happen,” you might well be thinking, and there’s no doubt that many, make that most, freelancers can make it through their entire careers without ever having been sued for libel or slander.
Last I checked — and I caution you here that it’s been some years now — costs of incorporation were pretty reasonable. Once incorporated, of course, there are other important obligations: like completing corporate tax returns and meeting monthly or quarterly corporate income reporting requirements, unemployment compensation expenses, and the like.
Planning to pay yourself a salary out of the corporate earnings? No doubt yes, in all but the fewest cases. Best advice Iever got when I initially incorporated in 1982 — retain an outside firm to handle your payroll and reporting obligations. Yes, even if you are the sole employee. Take this one seriously, for missing even a seemingly “minor” reporting requirement can cost you lots and lots, both in time and in money. Firms like ADP and Paychex are among the reputable nationwide providers of these kinds of services for small businesses, though Intuit/Quicken and others also can meet these needs.
Oh yes. A corporate accountant. Not cheap, but having an accountant may be another worthwhile expense if you incorporate.
And if you don’t? It’s not necessarily a big deal. (And don’t swallow all the Kool-Aid of those telling you customers will be more likely to flock to you as a corporate entity than as an individual. It’s just not clear that that’s the case.) Many, probably most, of those same expenses that would be deductible as legitimate corporate expenses are deductible too to individuals claiming them as allowable.
Moral here: Don’t sweat it, and by no means make it a big drawn-out time-crunching decision, on whether to incorporate or not. Get some advice, follow your instincts … and revisit it down the road in a few months or so.
Your Business Expenses
So you’d gotten comfortable during all those salaried years, or while living off your parents’ largesse, to having been provided niceties such as ...
- Writing pads, pens, and pencils, maybe even a mouse pad or stapler;
- An office desk (a desk period) and chair, a radio to stay abreast of breaking news, maybe even a newspaper subscription (Remember those? Okay, then a digital subscription!);
- A laptop, a computer case, maybe even a suitcase for those business trips to the annual SEJ meeting and elsewhere;
- A desk lamp, a cell phone, magazine subscriptions, a book case.
If these are things you need as a self-employed individual, keep the receipts! Pay from a separate credit card and not the one you use for your personal stuff. Keep records of your personal and corporate mileage, of business-related purchases big and small, and of repairs and service calls. Of anything that would be legitimately deductible. Become the invoice and receipt hoarder you never wanted to be!
The Big Picture
Life after employment for a writer or journalist isn’t just a challenge. It’s a thrill. Expect ups and downs. Be prepared for longer hours, longer days, longer weeks than you would ever have committed for “da man.”
But there’s one big difference, and it’s your difference …because they’re your hours, your choice.
Being a freelancer, particularly in exceptionally challenging times for both journalism and for the general economy, can be extraordinarily challenging …but even more rewarding.
Nobody said it’s supposed to be easy.
Bud Ward, one of the co-founders of SEJ, is editor of The Yale Forum on Climate Change & The Media, published by Yale University’s School of Forestry & Environmental Studies and its Yale Project on Climate Change Communication.
* From the quarterly newsletter SEJournal, Winter 2011-12. Each new issue of SEJournal is available to members and subscribers only; find subscription information here or learn how to join SEJ. Past issues are archived for the public here.