Year-End Questions for Freelancers
As the year winds down, it’s a good time to re-evaluate your big picture strategy and make sure it’s what’s needed to make your business thrive. Take some time out to reflect on your business goals for next year. Then you’ll have a fresh start in Q1 to begin implementing.
1. Are you on top of your bookkeeping?
Before you can plan for the big picture, you need to keep track of what your business spends (expenses) and what it receives (income). If you are not working with an accountant, then software/apps like Mint or QuickBooks can automate most of the work for you.
2. Do you need a raise?
Make sure your pricing adequately compensates you for your time, experience, expertise and costs (which include health insurance, self-employment taxes, etc.). The start of a new year is a perfect time to enact new rates, and you will want to give your current clients advance notice about your new pricing. When communicating the increase, use terms like “market rate” and “scheduled increase” to frame the price change in business terms.
3. Do you need to dump any clients?
When you are just starting out as a freelancer, it’s natural to take any and every gig that comes your way. However, not every client or project is worth your time. Maybe you have an overly demanding client who doesn’t respect your boundaries, an indecisive client with never-ending review cycles (that you don’t always get compensated for) or someone who is notoriously slow to pay. Weeding out that 20% can free up your time and emotional energy for bigger and better things. Plan ahead to drop any clients for 2015 and as a consummate professional, give them plenty of notice to find someone new.
4. Should you get an official business structure?
After a certain point, some professionals prefer to create an LLC or corporation for their business to minimize liability. If your business is sued or can’t pay its bills, you most likely won’t have to use your own personal assets to pay. An LLC or corporation can also help lower your taxes by reducing what you pay in self-employment taxes. You should discuss your situation with a CPA or tax adviser to see if it is right for you.
5. Are you a freelancer or small business owner?
Where do you want your business to be in two years? Five years? Ten years? Are you on the right trajectory to reach those goals? For example, you might want to expand your product/service offerings, productize your services instead of charging an hourly rate or hire employees or contractors to let you scale the business.
Take some time to mull over these questions. Thoughtful answers can help you stay independent and create the life and business you want.