Is Freelancing Illegal? A Guide For Newbies

Freelancing isn’t a new concept, but it is becoming more and more popular by the day, especially with the advent of the internet.

Freelancers are expected to make up to 50% of workers by 2020. Despite this increased popularity, there are still plenty of people who don’t understand how freelancing works or what their rights are as freelance workers.

Here we break down some important things for newbies to know before they even consider becoming a freelancer.

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Takeaways
1. Understand Legalities: As a newbie freelancer, it’s crucial to grasp the legal aspects of freelancing to avoid potential pitfalls.
2. Seek Legal Advice: If unsure about the legal implications of freelancing in your region, consider consulting a legal expert specializing in freelance work.
3. Contract Matters: Always have clear and well-defined contracts with clients to protect your rights and ensure fair compensation for your services.
4. Stay Informed: Keep yourself updated on relevant laws and regulations that might impact your freelancing career. Knowledge is key to staying compliant.
5. Tax Obligations: Familiarize yourself with tax responsibilities as a freelancer to prevent issues with tax authorities and maintain financial stability.

Table of Contents

There Are Mixed Feelings About The Legality Of Freelancing

The fact that you are a freelancer shouldn’t make you feel guilty or worried. You are not doing anything illegal! Freelancing is not a crime, it is not fraud and it isn’t even tax evasion.

It also doesn’t involve money laundering or any other illegal activities.

If your freelance job is legal, then there’s no reason to be nervous about the possibility of getting caught by the police or ending up in jail if something goes wrong with your freelance business.

Learn about the pitfalls that could be keeping you from financial success as a freelancer. Check out our guide on 10 Freelancing Mistakes That Are Keeping You Broke to discover how to boost your freelancing game.

It’s Okay To Negotiate Your Rate

Negotiate your rate, but not your rate of pay. Once you have a few projects under your belt and have built up a portfolio, it’s okay to negotiate the amount of money you charge for each project.

That said, be realistic about what you can earn as a freelancer. If you aren’t well-known or aren’t working in an area with stiff competition (such as high-paying tech jobs), don’t expect to command top dollar for everything that comes your way.

Be open to negotiation. If someone wants to work with you and has seen your portfolio, they should be willing to negotiate rates when necessary especially if they’re looking at multiple candidates who are all competitively priced.

Make sure you know what you’re worth as a freelancer before going into any job interview or negotiating session.

Know what kind of salary range is typical for an entry-level position within the field where your skills would be most useful.

This will help guide both how much money per hour type job offers might make sense once those positions become available later down line too!

You Can Create A Company And Be A Sole Trader, But You Don’t Have To Be

As a freelancer, you can choose whether to be a sole trader or set up a company. A sole trader is an individual who runs their own business and is responsible for all of their liabilities.

They have no employees and no VAT number.

On the other hand, if you want to become a legal entity with employees and possibly other benefits (like being able to claim expenses).

Then setting up a limited company is your best option. You will need to register at Companies House with HM Revenue & Customs (HMRC).

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You Need To Know Your Worth As A Freelancer

You need to know your worth as a freelancer. This means that you need to know the value of your skills and experience, but also the value of what you can offer to clients.

You need to know the current market and what are the best ways for you to make money from it.

You should also take into consideration that there’s always someone out there better than you, so if they offer a similar service at a lower price.

It doesn’t mean that they’re doing something illegal or unethical! It just means that they have more experience in this field than you do and/or are better at negotiating with clients.

You Will Always Have Tax Obligations

The good news is that you will always have tax obligations, which means that you can claim expenses and can also claim tax credits.

The bad news is that this doesn’t mean your taxes are automatically lower than if you were employed.

The amount of money you’ll be paying in taxes depends on your income level, but if it’s any consolation, once you become more experienced as a freelancer and start earning more money.

The amount of taxes due will likely go down because the average person has higher earnings than the average employee.

It’s also important to keep track of your earnings so that when April 15th rolls around (or whatever equivalent holiday applies to where you live), you have all the documentation needed to file an accurate return.

This includes keeping track of any invoices or other forms received from clients and making sure they’re filed away properly along with a copy of each one.

You Need To Know What Your Rights Are As A Freelancer

If you are working as a freelancer, you need to know what your rights are.

In most cases, you will be entitled to the same employment rights as any other employee. This means that if you work in the UK, then:

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You Should Be Paid Holiday Pay And Receive Your Payslip Every Month (Or Fortnight)

You can take up to 5 weeks’ annual leave per year. If this is not granted by your employer, then they can face prosecution under the Working Time Regulations 1998 (SI1998/1833).

You may be entitled to sick pay if illness prevents you from working or attending an interview at work.

Who You Work For Is Largely Up To You

There are a lot of ways to structure your freelance work and working relationships. You can work for a company as an employee, or you can work for a client as an independent contractor.

And there are also many ways that these relationships can be structured some companies will hire consultants, while others prefer to hire full-time employees;

Some clients will hire freelancers directly, while others prefer to involve agencies in their hiring process.

Web developers might find themselves working in teams or alone; graphic designers will likely be part of large corporate design teams; writers may write content for websites or individual blogs; photographers may shoot portraits or create visual art pieces. It’s up to you!

Your Rate Varies With The Type Of Client You Work For

Your rate varies with the type of client you work for. Some clients are more demanding than others, and you have to adjust your rates accordingly to account for this.

If you’re working in the United States and a client is paying $50 per hour, but they’ve given you very little information about their project and are asking for something that’s not clearly defined.

Then it’s probably worth it to charge them less than $50 per hour. If a client wants something specific done by tomorrow at 10 am when most agencies take 2-3 days to complete projects like this and they’re willing to pay $100 per hour.

Then it’s probably worth charging them double what other agencies would charge (or even more).

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It Isn’t Just Money That Governs Your Rate As A Freelance Worker

You should be paid for the value you bring to the project. This can be a combination of things: your experience, your skills, and how much time you are putting into it.

If you have 10 years of experience in graphic design and have a portfolio full of past work that shows off exactly what you can do including examples that show off similar projects.

Then there’s no reason why I shouldn’t pay more for those skills than someone who only has 2 years’ worth of experience and doesn’t have any samples to show me.

The same goes for someone who is new to freelancing but has been working in this field for decades.

They might not know as much about web design as someone with 6 months’ worth of knowledge under their belt, but they will most likely be able to teach some things in return.

If someone needs help learning how something works because they’re new at something (like WordPress), then that would increase the price since now we’re talking about two people working instead of one!

A Contract Is Vital!

Contracts are important for both parties. They help you understand the terms of your work and protect you financially if things go wrong.

Contracts also protect your clients – by ensuring they get what they pay for, and that it’s done on time.

The simplest contracts are emails or letters signed by both parties agreeing to do something specific in exchange for money.

But if you have an ongoing relationship with a client or sell regular products or services, then it’s worth putting together a formal document that sets out all the terms clearly so there can be no confusion later down the line (such as who owns the copyright to any images used).

Don’t Forget To Add Expenses In When Quoting Rates, Otherwise, They Could Eat Into Your Earnings

The next thing you should do is be sure to include any expenses in your quote. This includes travel, equipment, and other costs that need to be incurred to complete a project.

You’re not only protecting yourself but also ensuring that your client doesn’t have any surprises at the end of their contract.

Expenses are not just for larger projects; they can be added into the quote for small jobs too – as long as there is some element of your time and effort involved with completing tasks outside of regular work hours (i.e., being on-call).

It may even be worth mentioning this at the start of negotiations so that both parties know what’s expected from them throughout the process.

Clients Will Use Certain Tactics So They Can Pay Less Than Agreed Without Being Seen As Dishonest, Unethical, Or Untrustworthy

As you progress as a freelancer, you’ll start to notice that clients will try to pay less than agreed by offering a lower rate. This can be frustrating because it means that your hard work is not being valued.

If a client does this, it’s best to first try and negotiate for the amount you feel was agreed upon. If that doesn’t work, then consider turning down their offer (if possible) or ending your relationship with them altogether.

Freelancing Is More Popular Than Ever, But There Are Some Things You Need To Consider Before Embarking On It Full-Time

Freelancing is becoming increasingly popular, and for good reason. Freelancers can earn a substantial amount of money each month while working from home or anywhere they choose to set up their workspace.

If you’re looking for an extra source of income or a career change, freelancing might be the perfect option for you.

However, there are some important things that freelancers must take into consideration before embarking on this path full-time.

Considerations such as whether it’s legal or illegal for yourself or workers in your industry; how much time your work will take away from other aspects of your life;

What kind of skills are needed; and where to find clients who need help from somebody like yourself should all be considered before making any decisions about entering the world of freelance work

Many freelancers face the challenge of managing work while on maternity leave. If you’re in a similar situation, check out our thoughtful article on Some Thoughts on Freelancing While on Maternity Leave for valuable advice and perspectives on this unique journey.

Conclusion

We’re glad you made it to the end of this post! Remember, it’s not just about being a freelancer it’s also important to make sure that you know your rights and obligations when working on projects as one.

If you want more information about how to be an awesome freelance worker, check out our blog post on 10 things every freelancer needs to know.

Frequently Asked Questions

What Is Freelancing?

Freelancing is a way to earn money by doing work on a project-to-project basis. Rather than working for an employer, freelancers work for clients who need a specific job done.

Freelancers can do everything from writing articles to designing websites to creating podcasts, and they can work remotely from anywhere in the world.

Why Should I Start Freelancing?

There are many reasons why you should consider getting into freelancing! First of all, it’s a great way to build your portfolio and gain experience if you’re just starting in your field of expertise.

You can also make more money than if you were working as part of an office team or through another type of traditional employment. Finally, it gives you the freedom to set your schedule and work wherever you want!

Does Freelancing Break The Law?

No. The short answer is, no. The law does not prohibit freelance workers from working for themselves or others.

Are There Any Laws That Affect Freelance Work?

Yes. Several laws may impact a freelancer’s work, including tax laws, labor laws, and trade regulations (such as those governing fraud). Learn more about these laws here.