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If you’re new to the world of freelancing, you must know how to protect yourself both legally and financially. When you’re a freelancer, you’re basically your own boss. This means that you are responsible for all the risks that come with your job. If you don’t prepare for these risks, you could lose money and get into unnecessary legal trouble. Here are three key things you need to prepare for as a freelancer:
Always Prepare A Written Contract
Before you start a new project for a client, it’s crucial that you have all the details of your agreement set in writing. A written contract will ensure that you are financially and legally protected if a client dispute arises.
Every written contract should cover what the job is, how much the job pays, how and when the payment will be paid, and terms for late payments. With these details in writing, you will have proof that you made an agreement on these terms. This means that if a client refuses to pay you for your work, you will be able to file a legal dispute against them.
A verbal agreement alone won’t protect you from unexpected situations with clients. Having a written contract protect not only you, as the freelancer, but also your client. It avoids you being taken advantage of, and the client being underserviced. The process of writing up contracts may become tedious after a while, but it’s worth the extra effort. It’s the safest way to ensure you that you get paid for your hard work, and on time as well.
Pay Your Tax Obligations
One of the most important things you must do as a freelancer is to understand your tax obligations. As a self-employed freelancer, you are responsible for paying your own tax. Failing to pay tax correctly could get you into a lot of trouble legally and financially.
The process of paying tax can be quite time-consuming, especially if you don’t really know what you’re doing. If you need help with the process, it’s best to contact a tax professional. A professional will help you understand exactly what your tax obligations are. They can use their expertise to save you a tonne of time, money and stress. This will allow you to focus fully on your freelancing activities.
Protect Your Assets & Reputation
Every freelancer should have an insurance plan to protect them from financial risks and liabilities. The type of insurance you get will depend on the type of freelancing activities you do.
For example, if you’re a freelancer who provides advice or design to clients, there’s always the risk that the client won’t be satisfied with your work. If a customer believes that you made a professional mistake, they have the right to take legal action against you. This could take a hit to your finances and your reputation. The best way to avoid these risks is to get a professional indemnity policy. This form of insurance will protect you and your assets if a customer files a complaint.
If you don’t know which type of insurance solutions are right for you, get in touch with an insurance broker. An insurance broker will help you understand which policies are right for your freelancing activities.
As you can see, there are many financial and legal risks you need to prepare for as a freelancer. The most important things to consider are your tax obligations, your insurance policy, and the details of your contract. If you get these things right, you will have a more positive experience as a freelancer.
Johanna’s passion for writing meant that freelance writing was the best possible career choice for her. Though it has its own share of struggles and challenges, for Johanna, it’s one of the best decisions she’s ever made. Follow her personal blog to get to know her more.