A Practical Guide To Becoming A Freelancer
You’ve done it: you’ve quit your job (or perhaps committed to a side hustle) and changed your title on LinkedIn to ‘Freelancer’. It’s a huge first step, and one that we’re sure you haven’t taken lightly. But aside from making sure that sweet cash is coming in – whether that be from writing, designing or any other freelance-friendly gig – there are a number of other practical things that you may have forgotten about.
Signing up for an ABN, paying GST; it can be hard to know how to actually do this stuff if you’re new to the freelance game, so we’ve tackled a few of the major practical things you might need to get onto sooner rather than later.
Set up an Australian Business Number (ABN)
If you plan on working for yourself within Australia, you’re going to need an ABN. This is an 11-digit number provided by the Australian Business Register that you will use to identify yourself to everyone from other businesses to the government. If you’re getting paid via invoices, you will need an ABN on your invoice. Applying for an ABN is a fairly simple process. Plus, it’s free.
First step: head over to abr.gov.au. There, you’ll need to answer some questions about why you want an ABN. If you’re freelancing and don’t have any employees, you will need to state that you are a sole trader when asked what kind of entity you are. There is a bunch of criteria you will have to meet to be eligible, but chances are, unless you’re not planning on making any money, you’re entitled to an ABN.
The rest is standard if you’ve ever filled out a form: your name, address, tax file number, and reason for application. Once you’ve finished the process you will receive your ABN online immediately, unless you have omitted information, in which case it can take up to 28 days for the Australian Business Register to review your application.
Learn how to create an invoice
A lot of freelancers do work that requires them to invoice clients, usually either for billable hours or a lump fee agreed upon before the work is started. There are loads of invoice templates online (here and here for example) that are easy to tweak to your needs. Most experienced freelancers have a personalised template at the ready – often with a logo or a customised message – that they fill in on a job-to-job basis (believe us, after you’ve sent your first invoice, you’ll want to simplify the process as much as possible). Unless otherwise stated by your client, all invoices should include:
–The name of the company that has commissioned your work, and often their contact details
–A description of the work completed
–The fee or hourly rate and number of hours worked (plus GST if required; if not, state that you aren’t registered for GST)
–Your bank details
–An invoice number and date
–Payment terms – generally 30 days, but a company might have a set payment schedule that is more or less than this
It’s a good idea to send your invoice in a PDF format, as you can almost guarantee that it will be compatible with all computers. Your invoice hasn’t been paid within the set time frame? Don’t be afraid to send through a friendly email; they can often get lost in the system or be stalled at approval stage… a little nudge never goes astray.
Do you need to register for GST?
Are you making more than $75,000 a year from your freelance gig? If so, good work – and also, you’d better register for GST. You can register to pay GST over at the Australian Tax Office’s Business Portal, over the phone, or through your tax agent. You will then receive a letter from the Tax Office to inform you of your registration details.
But how does GST work? Basically, you need to pay GST on any taxable sales you have made – whether that is for writing work, selling your handmade aprons, or other services or goods provided for profit. You personally are not out of pocket when it comes to paying GST – you will include it in the price of your product, or on your invoice as part of your service.
What you are responsible for, however, is collecting that extra money, and paying it to the Tax Office. The Tax Office will automatically send you a business activity statement when it’s time for you to fill one out. Complete this statement, including how much GST you have collected, and lodge it with the Tax Office. Then, pay any GST owing.
Pay yourself superannuation
If you are a freelancer or sole trader it’s not compulsory for you to pay yourself super. However, while you might be covering your bills today, future you might appreciate a hand as well. When you’re employed by a registered business, they are required to contribute 9.5% of your wage to your nominated superannuation fund. It’s a good idea to keep up this habit once you’ve gone freelance so you’re not left in the lurch when you’re retired.
On the flipside, if you’re doing work on-site, or contract work, you may be entitled to super payments from your temporary employer.
Putting money towards your super as a freelancer is known as a voluntary contribution, and you can pay it straight into your existing super fund. If you plan on freelancing for the foreseeable future, we heartily recommend making the most of voluntary contributions.
Know how much you’re worth
When you’re starting out, it can be hard to know how much you should be charging people for your time. You might be tempted to lower your prices – particularly if you don’t have a great deal of experience in the area that you’re freelancing in.
This isn’t a good idea: you may set a precedent for future transactions, while also undermining yourself in potential clients’ eyes. At the same time, you don’t want to charge an outlandish amount, as future clients might not take you seriously or just go with someone cheaper. It can be quite the conundrum.
There is no real definitive way to determine how much to charge; the company you are doing work for may have a set fee they usually pay, or they might ask you to quote a fee.
The best way to figure out how much to charge is firstly to find out if there is a ‘market rate’ – check forums for your city/country, ask friends in the same industry (or if they have any friends you could speak to).
You should also consider the following:
–Is this covering my costs?
–How many hours will this work take?
–How much would I need to make per hour to make enough money to live on and fairly pay for my skills?
–How much money will I be making from other freelance jobs?
It’s perfectly normal to accept a lower fee from one freelance gig if you’re getting paid a higher fee somewhere else, in order to cover the difference and also build your portfolio and experience. For example, you might be getting paid $250 to write a 1,000 word article at one magazine, but another might be paying you $700 for the same number of words. Unless they’re offering insulting money, it’s a good idea to find a balance between high and low paying jobs, which can also mean getting regular gigs.
There are no hard and fast rules when it comes to setting a fee – but like we mentioned earlier, if it comes down to it, ask someone else in your field, or do a quick Google search to get a bit of an idea of how much others are getting paid.
Figure out your optimal working conditions
If working from home means you constantly wake up late, procrastinate like a champ, and make far too many snack runs to the pantry, then consider joining a coworking hub, basing yourself out of a library or even setting up shop in a cafe. Trial and error should help you find your groove, but the most important thing is to create a routine and find a space for yourself that enables you to be your most productive.
Good luck, you’ll love being a freelancer.
Che-Marie Trigg is a freelance writer and full-time subeditor. Her work has appeared in Virgin Australia Voyeur, Collective Hub and GoPlaces with Toyota magazines among others, as well as on websites like Broadsheet and Junkee. Follow her on Instagram @chemariet.