I'm a work-from-home freelancer and entrepreneur. I own my own writing and balloon businesses.
While it may be tempting to ditch your benefits right away and strike out on your own—and it's more than doable—I highly recommend doing this in steps. This is in part because it makes things financially easier for you, and partly because going completely freelance is a very big decision. It also allows more room for error.
The decision to go freelance carries a lot of risks, some of which you may not have even considered. And it's not something that's only risky if you're going from receiving state benefits to making it on your own—it's a huge decision for anyone from any walk of life. (Don't worry—I will be going into a little more detail about this in another article!)
I could probably write a book full of advice and steps to take when going freelance, but I've tried to narrow it down to the five things I felt were/are most important.
1. Do Your Research
It's easy to have someone recommend lines of work or clients for you to make some cash with. But just because you're good at something doesn't mean you're a good fit.
When you work freelance, your success is entirely dependent on you. From finding work to meeting deadlines and sometimes even managing payments, it's all on you.
So you need to research the kind of freelance work you're interested in. Keep in mind these few things:
- Are you good at it? This is important. If you're a cashier and you suck, you have a boss that will swoop in and give you extra training or offer to switch you to another position. You rarely have that opportunity to work freelance. Go with your talents. If you don't feel you have talents, find them. There is a freelance job out there for virtually anyone.
- Can you do this every day? While you probably shouldn't work every day (this can burn you out and lead you to either giving up or hitting a rough patch), you should choose something that you find easy, if not enjoyable. Love pets? Great, be a dog walker. Like to travel? Awesome, you're a house sitter now. Maybe you love to teach—go tutor! Find something you can do every day.
- Is there work to be had? This becomes a problem in two ways. The first is that the market is oversaturated. The work used to be there, but now everyone does it and you'll be lucky to pull in a lot of money. The other is that there is no market for it. You can offer the best service or product in your field, but if no one is buying it, it doesn't matter. Make sure that you choose a field that is going to bring in the money you're working for.
- Are you comfortable? When I first tried out freelance writing, I got my start on a forum that offered no guarantees. You had to pretty much shake on it and hope the other person came through. While it worked out overall, I was much more comfortable when I moved to other platforms with better guarantees. Even now, with my balloon business, I still have to take a chance on clients, but it's something I'm comfortable doing now. Find a line of work or a freelancing agency that makes you feel comfortable.
2. Make the Hard Choice
It can be easy to want to just supplement your income with freelance, contractor, or entrepreneurial work. But you probably won't be able to pull in a ton of cash if you don't make it your priority. So you have to decide—are you going to do freelance part-time, full time, or transition from part-time to full time?
This is something you have to figure out for yourself. I transitioned from a part-time job to part-time freelance work. It was relatively easy and ultimately ended up saving money (no gas to get to work, no paying for lunches, so on).
If I could go back and do it again, I would probably do both jobs part-time until I got the hang of it and managed to accumulate some savings ($100–$500 would have been plenty).
Some things I would say to consider when deciding this path:
- Are you invested in your current job?
- What will you "lose" by quitting?
- How often are you paid?
- Is the freelance job you're considering superior (better pay, better pay cycle)?
- Will switching right now help to save money?
- Will leaving your current job break you?
A pros vs. cons list would definitely be beneficial during this step.
3. Come up With Your Plan of Action
Whether or not you choose to go all-in with freelancing upfront, or stick with the job you have right now for a while, you need a plan of action. This can include trial periods for different freelance jobs, quit dates, back up plans, and anything else that will help you on your way to becoming a freelancer.
Here are a few tips that have helped me, my husband, and so many other freelancers, contractors, and entrepreneurs:
- You must make and adhere to a schedule or you will flounder. This schedule should be something that both brings in the money you want and need, as well as one that will fit your lifestyle.
- You will need clear goals and time frames in order to keep everything flowing. If you have a goal of $50 a day, then you don't have to feel like you're in a frenzy all the time. On slow days, $50 will seem hard. On great days, it'll feel too easy. While it may suck to try to meet your goals and the tough days, don't purge on the great days unless you genuinely have an urgent need.
- You'll also want to become very familiar with tax codes as freelancers get charged heftier taxes. You'll also have to set aside money for your taxes, as they will not automatically be deducted from your earnings. Read up on the tax laws associated with self-employment and contractors and decide how much you need to put back each pay period, or if you want to pay it all at the end of the year.
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4. Understand Your Costs and Profits
You've probably heard of reinvesting your earnings into your business. That's something you absolutely have to do. For example, the cost of my businesses is relatively low. For writing, I require a working laptop with an active internet connection. The laptop I work from is a refurbished $50 number that has served me well for over a year now.
Even my balloon business isn't very costly, with roughly $200 worth of non-specialty supplies lasting me roughly a year.
When doing my balloon gigs, I have to factor in how much each party has cost me in supplies—which I need to replenish, and how much it has cost me in time. Some colors are harder to come by, some sizes cost way more than others. It's not a simple as picking up a pack of 9'' rounds as Walmart and calling it a day.
I also factor in the cost of custom shirts, business cards, a phone for my business, oils to prolong the balloons, and balloon organizing kits. If I didn't put back money to reinvest in new supplies and into learning new designs and techniques, I would be broke and my business would be dead in the water.
This is why it's so important to keep these things in mind:
- How much is your freelance work costing you per month or per job?
- How much is your time worth per hour?
- What are your material costs?
- How much will it cost you to start your business?
- What is your work valued at?
- What is the market willing to pay for your work?
This last one is quite important. My sister is a superb makeup artist. When she lived nearby, she used her exceptional talents for both face painting and henna parties. She was raking in some pretty sweet cash. However, she moved to another state where the market was much less favorable. She went from earning $100 per party to a mere $20.
Once you've paid for any expenses, the rest is all profit. You can choose to invest more in your business (for me, I upgraded from mixed bags of 260s at Hobby Lobby to Qualatex balloons), or use it to pay for extra fun or bills. Just make sure that you're putting enough into your work to keep it and yourself afloat.
5. You Do Have to Report This Income
Thankfully, we had been toying with freelance work on-and-off over the years and became familiar with reporting freelance income. This is probably one of the most annoying parts of doing freelance work while receiving state benefits.
Not only does it guarantee that your benefits will be lowered—and possibly taken away—it's a lot more inconvenient to report.
Though things may change state-to-state, in Texas, we had some difficulty reporting it using the standard change of income avenues. We had to provide proof of income through a combination of bank statements and PayPal screenshots. We had to either print it out and go up to the office to show it or mail it in with a note. We renewed once online with freelance income, but it was such a pain in the rear that I don't recommend this. We had several follow-up phone calls about this.
Something to consider is that your freelance income might be inconsistent. You're going to be finding your way, figuring out the right balance, discovering nuances. One week you might make $50, the next you might make $200. So when you report your change of income, keep in mind that you typically have 30 days to do so.
In that 30 day period, show your weekly or bi-weekly pay. Typically, the benefits office will average it out. If you're uncomfortable doing this, average it out yourself.
Using a paper form rather than filling the form out online might be a better option because you can write a note to explain that your income fluctuates.
This is also something you should discuss in person or on the phone with your caseworker.
Before You Get Started . . .
Before you get started, it may be a good idea to call your local benefits office to discuss how to report these kinds of changes, and if they take into consideration fluctuations that may happen. This can really help to ease any worries you may have along the way. Having said that, you honestly shouldn't face too many problems when reporting changes. The biggest challenges you face will be finding a freelancing gig you love and making the scary commitment to ditch your 9–5 for something so much better.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.