For many creative and enterprising individuals a successful freelancing career is a coveted goal. At a glance, it seems like an idyllic situation where you can set your own hours, take on work that interests you and avoid gossipy water-cooler talk. In reality, almost the opposite is true.
To be a successful freelancer you need to schedule around other people, take on a combination of interesting work and less interesting but well-paid work, and shamelessly schmooze with clients. You also need to be reliable, motivated, and prepared to face up to tax and financial realities, the later of which can be a challenge for those with no bookkeeping experience.
Nonetheless, if approached correctly a satisfying and sustainable freelancing lifestyle is achievable for even the most creative type-B personalities.
Start Up
The first and most obvious step towards setting up a successful business is to decide what kind of service you are offering. This isn’t as simple as converting your seashell figurine-making hobby to a full-time sculpture service and waiting for the dollars to roll in. Forming a marketable business idea requires proper consideration of interests, talent, the current market, and start up costs.
Perhaps you should ask yourself these questions: Do you really want to make seashell figurines full-time? Are you actually good at it? Is there a market for them? Are there many other businesses offering the same product? Can you really afford to fly in two kilos of Peruvian abalone shells each week? If your answers reveal motivation, skill, a ready market, and achievable costs, you may have a marketable business idea.
The next step is to get an Australian Business Number (ABN) and register a business name. For sole-traders and small businesses, getting an ABN is essential. Without those eleven magic digits most companies won’t want your business. You will be obliged to reserve almost 50% of Pay as You Go (PAYG) tax to send to the Australian Tax Office. You also won’t be able to register a business name or purchase the Australian domain for your business.
Registering for Goods and Services Tax (GST) is more case-to-case. If you expect your business to turn over $75,000 or more annually you are required to register for GST. If you earn less, registering is voluntary.
Many high product services choose to register. This allows them to claim back GST of products bought for sale and gives added credibility for other businesses that buy from them.
A high service business, on the other hand, may benefit from not registering. Transferring GST to the ATO on a quarterly basis and getting a tax return annually establishes a negative cash flow that could incur financial hardship. However, as each business is unique the best option is to ask an accountant before committing to anything.
If the ins and outs of basic business are overwhelming it may be useful to enrol in a bookkeeping course or sign up to the Department of Education Employment and Workplace Relations (DEEWR) New Enterprise Incentive Scheme (NEIS). This approach was valuable for freelance artist and animator Isobel Knowles.
‘After I graduated RMIT I did a bit of freelance work and artwork while I had a part-time job. Then I did the NEIS course and set up a music video making business,’ she said. After living internationally for a while, Knowles returned to Australia and became a full-time freelancer with a sound understanding of business practice.
Location
Once you’ve got the what it’s time for the where. A home office is unarguably cheap and convenient. If a dedicated work area is made and a strict schedule is abided by it can be possible to manage time effectively.
Yet while working from home is a cheap and easy solution the average house is filled with distractions. Why work when you can wash the dishes and watch The Love Boat?
For those that can afford it, operating from an office space can be a more constructive option. The separate environment makes it easier to stick with a working plan, and the monthly rent is a great way to ensure you actually use the space. It can also offer extra convenience for clients and give you a professional edge. If paying rent is an issue, consider cutting costs by sharing the space with others.
There is also the possibility of a hot desk. This is where you rent a desk in a creative studio on a temporary basis. If your business is primarily online it may be able to survive a shifting physical base. For a range of professional space opportunities, the creative spaces website is worthwhile a visit.
When deliberating between workspaces there are many factors to consider. Knowles outlines some pros and cons of her own situation. ‘I have a studio in the city on Swanston St. It’s great for being central and easy for people I work with to get to,’ she said. For the negatives? ‘It’s no good for vehicle access though which can be very annoying when I need to build something or transport equipment or artwork.’
At the end of the day, no workspace will be perfect. The key is to pick the one that’s most manageable for you and make it work.
Marketing
You may be offering a great product or service, but if no one knows about it doesn’t have much of a future.
In this digital age having an online presence is absolutely essential. Maintaining and regularly updating a website gives you a space to showcase your portfolio to prospective customers and clients. It also makes you highly accessible.
Setting up a website doesn’t mean you need to fork over a couple of thousand for something slick and interactive. A page on a customisable blogging platform such a wordpress can be perfectly acceptable. For a small fee the ‘wordpress.com’ tag can even be removed from your URL, allowing you to appear more professional.
When considering marketing, it is also important to determine what audience you want to reach. Think about who buys your products or uses your services and work out a way to connect with them.
Freelance illustrator Andrea Innocent uses a combination of targeted marketing with postcards and emails to relevant agencies. She also regularly enters industry competitions and focuses on maintaining ongoing working relationships. ‘Keeping in contact with regular clients and agencies that give you work is sometimes even more important than finding new ones,’ she said.
Pay rates
Once you’ve reached your audience the sticky area of negotiating a pay rate rears its awkward head. Quote too high and you won’t get any business. Quote too low and you won’t make a profit.
For someone starting out it is wise to ask around, work out the industry standard and stick as close to that as possible. Depending on the task you can quote based on an hourly rate or a project rate.
For newbies it can be tempting to take a pay cut. Innocent recommends against this practice. ‘Don’t forget that when you take a job for less money you are making all other freelancers drop their prices too. Without sick pay, superannuation or any other perks it just doesn’t make any sense to do this. Resist the urge and hopefully this will pay off in the long run.’
It is also wise to look into usage rights. If you are selling a creative work you need to specify who can exhibit it, where it can be exhibited, for how long and for what purpose. Losing all rights to your work, or seeing it represent something you feel is questionable, is something that needs to be heavily compensated for and in some cases avoided all together.
More tax and finance
One of the biggest mistakes a freelancer can make is winding up with a huge tax debt at the end of the financial year. This disaster can be avoided by regularly submitting Business Activity Statements (BAS’s).
BAS’s are used to report and pay tax obligations. Selecting the right BAS type depends on the kind of business you have and whether it is registered for GST. BAS’s can be submitted at monthly, quarterly or annual intervals depending on the type and your own preference.
Those with fluctuating income rates not registered for GST, often choose to pay a quarterly PAYG income tax instalment with a self-determined rate based on actual income. This removes a lot of the guess work and ensures no end of financial year shock.
Statements need to be submitted before an income tax return is lodged. To keep costings clear it is also best to create a separate business account.
Evan Lowenstein is the Director of Lowensteins Arts Management; a consulting, management and taxation practice that services the arts community. According to Lowenstein, artists are eligible to claim a wide variety of business goods and services.
‘If they’ve got a studio set up at home or an office set up at home then they can claim, if they’re renting, a portion of the rent, a portion of the gas and electricity, insurances, repairs, telephone, internet, anything that equates to what they think is a business use or asset,’ said Lowenstein.
This includes art supplies, postage, stationery, client gifts, business dinners, travel related costs, and entry fees to arts venues, as Knowles and Innocent are aware.
There is also a small business concession for any small business that allows assets under $6,500 to be written off.
The world of tax and finance is complicated for non-professionals. Finding a good accountant familiar with the creative sector is highly recommended. According to Innocent, ‘The information changes so often that it’s really more frugal to pay for a professional to work on your tax.’
To employ an accountant to do a tax return and receive all kinds of advice generally costs between $300-$500, a rate that is tax deductable. And just in case you were wondering, ArtsHub is deductable for people in arts-related industries too.
Daily schedule
As all the cards fall in to place and your empire begins to rise, there is only one person left that threatens to knock it all down. You.
How well you manage yourself determines how productive your business is and how well you meet deadlines. Ask yourself what kind of boss you are. Do you let yourself slop into work two hours late and have a one-hour social media hit before clocking off for a leisurely lunch that ends at dinnertime? Do you allow yourself to take on anything that comes your way, only to drown in the sea of obligations you have created?
Good self-management comes down to self-motivation and organisation. A view of the bigger picture is also necessary.
‘I find it easier to break up my time into allotments of tasks required to run a business rather than specific jobs. For example I spend eight hours a week on marketing. This may be writing postcards, creating a promo, calling agencies, entering competitions. I then spend eight hours a week on innovation so this may be creating new illustration or products or fine tuning my business in some way,’ said Innocent.
Of course, the world of freelance is a world of ebb and flow. One month might offer no commissions while the next has you up to your eyeballs in work. Take the downtime to set up future structures and catch up on ongoing business commitments such as bookkeeping and marketing. When the heavy times hit, be prepared to have a few endless days.
‘At the moment I’m feeling quite overwhelmed by all my deadlines falling within a very short period. It can be good though – no time to overthink things! But also, sometimes no time to sleep!’ said Knowles.
General tips
A number of organisations can be visited online for more freelancer information, as well as developmental and networking opportunities.
The ATO has official information about businesses, super and tax that is comprehensive and up-to-date.
Creative Partnerships Australia offers developmental events and resources and also host networking events for those in the creative sector.
The National Association of Visual Arts (NAVA) offers advice and practical resources for Australian and visual media artists.
There is also a wide range of blogs with creative business checklists.
On top of all this, Knowles offers three pieces of advice for aspiring freelancers.
‘1. Make sure you like doing what you’re doing.
2. Being reliable and communicating well is almost as important as doing good work.
3. Anything you do that goes into the public eye is something that you will likely be asked to do again so consider what you say yes to.’
It’s may be tough starting out but for those who enjoy the work, self-manage themselves effectively, and face up to finances, a successful freelancing business is well within reach. Even for all the hopeless dreamers out there.
