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The Complicated Financial Lives of Freelancers

207 points by evo_9 8y ago

meesterdude 8y ago
Well, if this isn't my life to a T. A THIRD of the workforce though? I wouldn't wish what I'm going through on anyone. I had no idea it was so widespread.
- ggm 8y ago
  "soft" mechanisms to remove unemployed people from the labour pool have been used for a long time, to reduce the visible statistics on the rate of unemployment. It leads people to talk about other measures like the rate of under-employment, the number of people seeking work, the number of people in part time work who seek full time work. But, since many people choose this life to get work:life balance outcomes it shouldn't be assumed all freelance and self-employed are there for nefarious reasons. Just, that quite a few of them are, because there aren't good alternatives. "I won't give you a job as a bricklayer but I will subcontract to you if you form your own company" for instance...
- ryanwaggoner 8y ago
  I’ve been a self-employed solo dev for 11 years and not to brag, but I’ve done very well for the last six or seven in particular. I’ve also helped lots of other freelancers figure this stuff out, ping me if you need some advice (goes for anyone): hi@ryanwaggoner.com
HillaryBriss 8y ago
> Freelancers are competing not just within their town, not just with in their state, but are completing globally, and there's just huge global pressures on the amount that they can earn... bingo. for a piece of work that can be well specified, separated out from the main workflow and then farmed out, it's natural, in today's world, for the customer to open the field globally. a little too natural. so, the US freelancer is left asking the question: how can I compete with wages set at the global standard of living, including currency exchange differences? there doesn't seem to be a good answer.
- kingkawn 8y ago
  The answer is that they will all soon be much poorer
- seppin 8y ago
  Find clients that care about quality, be better, and charge more.
  - meiraleal 8y ago
    It's still competing globally. Although it can be said that american coders are above average globally, to earn an American wage every one of them will have to be top 1% in quality.
    - GrumpiNerd 8y ago
      So then the people who aren't skilled enough will have to either improve their skills or go find something else that better fits their skills. Competition is good.
- gk1 8y ago
  The answer is to stop offering a commodity and start offering something that's unique and valuable. See Patrick McKenzie's epic post: https://www.kalzumeus.com/2011/10/28/dont-call-yourself-a-programmer/ https://www.kalzumeus.com/2011/10/28/dont-call-yourself-a-pr...
  - HillaryBriss 8y ago
    excellent. thank you.
- mistersquid 8y ago
  I'm currently working as a subcontractor for a friend's consultancy. For the better part of the last decade, that consultancy relied on remote workers (outside the US) to generate margin. In that last decade, my friend has discovered there are costs with a remote-only development team and so has decided to insource technical, marketing, and management roles. Her clients are SMBs in the US, and business is growing. So, one direct answer to your question about how a US freelancer can "compete with wages set at the global standard of living, including currency exchange differences" is to serve a US clientele whose products and services are closely tied to the US and (in my particular case) where being in the same time zone has a significant impact on getting work done. I'll also add that the insourced group is implementing more reliable processes and producing higher quality deliverables to the consultancy, as measured by client satisfaction and owner feedback. EDIT: Add paragraph regarding work quality of insourced group.
NTDF9 8y ago
One of the things that I have really come to understand is America is not even close to "land of the free". There is a very very narrow set of rules that you absolutely have to follow to even be able to live peacefully here. Be born at least middle class, go to good schools, pursue the right degrees, go to corporations, make no mistakes in life and then finally retire in a retirement home paying thousands a month. Steer from the above path and you'll start seeing things like mistakes in IRS filings or a medical issue or a pre-existing condition or a divorce or a bankruptcy or an unmangeable debt or a gap in career.....you know, normal human problems, you are screwed. And then there are man-made problems like jail without bail, lawsuits flying around, guns, crime. Notice there is no place in society for teachers, small-time healthcare professionals, career in arts etc.
- captain_perl 8y ago
  And don't forget about being downvoted for listing facts!
  - NTDF9 8y ago
    > And don't forget about being downvoted for listing facts! Yeah,its a very funny phenomenon. For some reason, Americans like to downvote anything true about their society. This is what you would expect out of communist societies.
    - jstewartmobile 8y ago
      Not true. You'd be about halfway up in any other forum, but this is hacker news--where we're not supposed to talk politics... unless it's the kind of politics they want us to talk about--like net neutrality or antitrust or some other intersection of nerds and money.
      - NTDF9 8y ago
        > but this is hacker news--where we're not supposed to talk politics... unless it's the kind of politics they want us to talk about But this isn't politics. This is the societal reality of the home of tech industry. There are many people around the world who are blown away by the stories of Silicon Valley. When we share stories of SV parties, VCs, lifestyle, homelessness, then why not about life and reality here? At the very least, it is informative to people who are uprooting their families and lives in other countries.
prawn 8y ago
That this is likely a submarine piece for one of the linked products or quoted entrepreneurs shouldn't discount the value of discussion. There are only going to be more and more people working like this and it's a huge price to pay for the "freedom". I've effectively freelanced for 20 years and it's brutal, crushingly so. Until you're big enough to have someone handling admin/etc, you are doing everything and things inevitably get missed or ignored. For me, it's been invoicing and chasing up invoices - to the tune of hundreds of thousands of dollars over the years missed completely. End result is all of the hassle and pressure but with less reward. Building specific frameworks/systems to work within is absolutely the solution IMO. So, like Xero but with a focus on an exact industry/locale. One-button follow up of unpaid invoices, automatic setting aside of money for paying taxes, automatic advice on rates. Too often, people try to fit the tools to their way of working when I think they'd be better off fitting their work to the tools.
- gk1 8y ago
  FreshBooks is $50/month and you can automatically send invoices and schedule reminders. This is a solved problem.
  - gjs278 8y ago
    ok and then they ignore the freshbooks invoice
    - anoncoward111 8y ago
      This is right. This is what many businesses do. It's better to demand cash upfront, period. If they don't take those terms, then they don't get your services. If that means you have to wait tables until you find a few legit clients, then so be it.
      - sho 8y ago
        > It's better to demand cash upfront, period In my experience the vast majority of businesses will not entertain the idea of cash up front, period. I bet that you wouldn't either. If you were building a house, and the builder demanded cash up front, you'd laugh in his face. Finding good clients is important, but if you demand to be paid in advance, get used to waiting those tables because you're going to be doing it a long time. Note: you will not be paid in advance for waiting those tables, either.
davidscolgan 8y ago
Something I wish I'd known when I started freelancing about 8 years ago: Being good at your craft (like programming) is assumed. In order to do well at freelancing, you also have to have some business sense. There are all sorts of great resources about how to business online, but it didn't even cross my mind at the beginning that that would be important. Once I started learning how to business freelancing became waaay easier. Things like how to invoice, how to negotiate, how to talk to a client, how to schedule your time, how to budget, how to market yourself, how to network, etc etc etc are not at all related to programming, but can make the difference between a happy freelancing existence and a miserable career. I've been fortunate to have a pretty lovely freelance web development career. My key has been finding clients that are smaller companies and not full time, with a long ongoing project. Smaller companies allow you to build a relationship with the owner of the business, and to position yourself as not just a pair of hands to write code, but a trusted advisor who takes the business's actual needs into account when writing code (which is how you compete with global talent). Not full time means you can have multiple clients at once to give you a nice advantage over a full time job: if one source of income dries up, your income doesn't go to zero. Most of my clients have been multi-year projects. I'll slowly build their webapp for around 10 hours a week at most. I've worked about 20 hours a week for the last 8 years, lived in lower cost of living areas, and spent the rest of my time on doing whatever I feel like. Some resources I'd recommend: * The Personal MBA by Josh Kaufman - a nice overall summary of how to run a business * The corpus of Kai Davis's material (https://kaidavis.com/ https://kaidavis.com/), including his super valuable/highly entertaining podcast Make Money Online (https://makemoneyonline.exposed/ https://makemoneyonline.exposed/) * How to Win Friends and Influence People by Dale Carnegie - how to interface with fellow humans (freelancing/business is mostly a human activity) Happy to help anyone who's interested in freelancing if I can, send me an email.
- TomK32 8y ago
  Oh, "How to Win Friends..." is eighty years old. That's the part I have the biggest problem (being on the near end of the autism spectrum). But even I managed to find a small client with a long-running project that I kept busy with for almost eight years until I needed a change. The point I regret a lot is not having sought and become part of a small team to handle to long-running projects better in every aspect. The folks around me I admire the most did just that, most of them working in a two-people team and they are very productive and inspiring.. Regarding the 20hrs/week, everybody should know: That's the productive time, for every human being. Charge accordingly.
acconrad 8y ago
> "No one really explains to you taxes and contracts and how to chase a client for that bill that they owe you — like, the nitty-gritty," Wait...what? Before I even broke out into freelance consulting I hired an accountant. When starting your own business, I would think it's base-level knowledge that anything with legal ramifications (and that includes the IRS) should be handled by a professional. Get an accountant. Get a lawyer (at least for one day to draft up your documents and make sure your business is set up or even use LegalZoom). And within the first month of breaking out on my own, I must have read like 3 or 4 books on freelancing/consulting, 10+ blog posts, and podcasts. True - no one is going to act like Clippy and say "Hey looks like you're starting a freelance career. Have you considered an LLC and liability insurance?" But - do people not try and learn about what they're getting involved with anymore? Starting a business, even if it's a 1-person sole proprietor consulting firm, is a big task. And yes, davidscolgan is right that you should consider all business aspects beyond your primary skill. But it seems almost irresponsible to say that starting a business is going to be a huge shock. No one is going to tell you, but even a cursory search online will give you a torrent of information on freelancing, consulting, and starting your own business. If I hadn't put in the initial legwork into studying the consulting landscape there is absolutely no way I'd: (A) still be consulting or (B) make nearly as much money. But the answers are out there. And yeah - get an accountant, it will drastically simplify your finances.
- rietta 8y ago
  Some people down on their last $100 or less don't always have the luxury of choosing. Building a Wordpress site NOW for a little money or doing something in PHP/MySQL today if you have some basic skills and next thing you know, you're a freelancer without the luxury of having planned all that up front.
- rietta 8y ago
  That said, I never really found taxes all that confusing even long before hiring an accountant. Turbo Tax was always easy. I did have the advantage of learning from my grandmother (who was a bookkeeper) and my dad who was an executive as I was doing my first business as a teenager.
- 8y ago
mgkimsal 8y ago
"No one really explains to you taxes and contracts and how to chase a client for that bill that they owe you — like, the nitty-gritty," Years ago I ran a conference for independent web/tech folks. I put it together because I'd been tired of going to other tech conferences and... just realizing that none of the content would have any impact on my ability to have good contracts, deal with insurance, get paid, deal with taxes, market myself, onboard new projects, etc. Figuring out how to shave off 4ms of a query, or replicate mysql, or float my divs with sass... none of that was relevant, but I still enjoyed the social aspect of conferences - the gathering of folks with similar needs, skill and problems looking to help each other. Yeah, no one 'tells' you how to do any of these things. Tax stuff, especially starting out, doesn't need to be that complicated (but you don't necessarily know that up front). "There's no such thing as maternity leave for freelancers"... Hint - it's really just extra overhead an employer budgets in to the price they charge for their services minus the expense of you. Budget for this stuff yourself. It's hard, especially at first, if you haven't done it before, to begin to think about this stuff, and deal with 'irregular income'. But it's possible. "Two-thirds of them are dipping into their savings every month to make ends meet. We see that freelancers as a result are really lagging behind employees when it comes to saving for retirement," It's because they're undercharging, and the buyers are profiting off that arbitrage. I'm not sure there's any simple or easy way to get around this. Years ago I was part of a forum for tech folks where 'rates' were discussed, and a couple people shut down the thread (and the next one, IIRC), because they had this notion that this was "price fixing" and somehow they were playing a part ('safe harbor' sprang to mind, but... they weren't having it). Yet... everyone keeping their prices "secret" doesn't really help most people. I can see prices for auto labor on websites, but most tech folks don't put pricing (hourly or otherwise) out there. And... I get it. I understand why (I don't, but did for a while, and may again). > Another big barrier to savings is the complexity of taxes for independent workers. > Traditional employers contribute toward their workers' payroll taxes, but that's not the case for the self-employed, who must pay all their own Social Security and Medicare taxes. And because taxes aren't automatically deducted from their paychecks, freelancers must figure out what they owe on their own. > "Without that, Chang says, it's hard for freelancers to know how much they can save. Well... even when taxes are 'automatically deducted' from a paycheck, that doesn't mean it's the correct amount (which is often a moving target). As others in the thread here mentioned, this is sort of a solved problem, especially for smaller/solo folks, by using a payroll service. It's not free, but generally for under $600 for the year, and factor in another few hundred for a CPA to prep taxes... you can sort most of this out. It's not fun, and ... yeah - hey - you're going to need to charge enough to cover these costs of doing business. Dealing with all this gives you a whole new appreciation for anyone you may go work for in the future. I was at a client's meeting of around 15 employees, and they were discussing health insurance. Premiums were going up, and the company was covering X% of the premiums, but everyone would have to pay a bit more. The owner said "does anyone know what our actual monthly cost per insurance policy is?" There were a dozen guesses... and I was shocked as to how far off people were guessing - almost all way on the low side. At the time, the employer's cost for each health plan each month was... $580, IIRC - people were guessing $80, $120, $95, $160. > "I almost can't have fun anymore because there's always something that I should be doing". Welcome to business. Go take a 'regular' job and have 'fun' with your 5 paid days off every 365 days. I don't mean to be negative here on that point, I just feel like many (most?) people have a very naive view of business, work and money/finances.
sverhagen 8y ago
Freedom, right? Oh, really? I am one of the hardest working people I have ever met, people can (hyperbolically) say I work more than a hundred hours per week. But that's easy to say when you're full-time, and you leave early for that errand or come in late to drop the kid off at daycare, and then make a few hours at night. When you are tracking your hours, suddenly making 60 real hours is hard, or even 40 real hours for that matter. (I'm still in a privileged position, so no real complaints.)
- gk1 8y ago
  So start billing for the value you provide, not by the hour.
ryanwaggoner 8y ago
Making a ton of money as a freelancer is easy: just hustle harder for clients. Let me explain :) I quit my job and started freelancing full-time when I was 24 because I found a $50 / hour PHP gig on Craigslist and did the stupid math of "40 hours per week x 50 weeks per year x $50 / hr = $100k / year!!" Ugh, so naive. Those first few years were rough and I almost quit many times. Everything was so much harder than I knew, from finding clients, to getting the work done, to getting paid, etc. BUT I stuck with it and gradually figured it out. I started spending time on "business development". I stopped charging hourly. I started investing in my own skills to move into higher margin areas. I focused on a particular client niche instead of doing everything under the sun. I built better sales and marketing channels. I got more disciplined with my time. Etc, etc. To date I've billed over $2 million to clients for mobile dev, web dev, product management, technical writing, and online marketing (by decreasing order of where I've made the most), and I know this sounds like I'm bragging, but I have zero concern these days about being able to make at least $250k per year from freelance and consulting. I haven't figured out a lot of things in life, but I've figured out this. I've also spent the last few years writing, speaking, coaching, and otherwise helping other freelancers get started and grow their businesses, first friends and family, now a pretty sizable online audience, so I have a pretty good view of how freelancers succeed and how they fail. More than anything else, the quality I see that helps freelancers succeed is being willing to spend regular time hustling for clients. You don't have to be a sales and marketing wizard, or be an extrovert, or spend half your time on it. But you need to spend time every day / week / month on it, and never stop, always be thinking about who your customer is, where you find them, and how to close them. The freelancers I see fail almost invariably have no reliable marketing channel other than referrals (or Upwork, which is the fast-track to commodity rates). And referrals are awesome, some of the best work I get, but they're passive AND they work a lot better if you can seed your ecosystem with other sources of leads. If you can build a pipeline of qualified client leads, everything else is easy. You can make a lot of mistakes with a client or a potential client if you have another lead coming right behind that one. And that wipes away most of the concerns in this article. Through solo 401ks, my wife and I have saved more than half a million for retirement. We have a healthy emergency fund. We have insurance. We take plenty of vacation, etc, etc. No one in this article would have any of the problems they're talking about if they made twice as much. And I can guarantee you that almost none of them spend hardly any time trying to find and close clients. They either wait for clients to come to them, or they use Upwork, which is almost as bad. The problem here isn't irregular income, it's just not enough income. OK, enough rambling...I'm happy to help anyone in the HN community with some free 1:1 advice if you want to email me: hi@ryanwaggoner.com
stevenicr 8y ago
Anyone aware of any bank accounts (USA based banks) - that allow for some programmatic moving percentages of money between accounts? I want to have it when I deposit client checks in one account it takes the money and moves one third to another account and one third to another. (then I'd like to have a personal account do the same, whenever money is transferred from my business A account to this personal account, take one third and move to savings, one third move to wherever.. My google FU did not find this.. I found a couple of banks saying that you could do transfers, and I think one bank had it so you could choose an amount, like $500 every week or something more static and have that auto transfer... but for freelancing gigs it's not usually a static amount every week. I thought about doing (and may still have to ) an ask HN on this, but this story / thread is likely perfect for this. I'd like to find an actual bank product that would do this, I don't really trust the security of a phone app to mess with accounts, and don't want to put a bunch of eggs into some cloud basket either, so I'd prefer to stay away from third party cloud sites that use my authentication to touch any accounts. This kind of thing would help so many in the gig economy plan for the quarterly stuff better, hope someone can point to a bank that does this.
- SmellyGeekBoy 8y ago
  +1. I'm absolutely amazed that this isn't a thing. "Put 10% of everything that comes in into this savings account" (for example) wouldn't just be useful for freelancers!
  - TheOtherHobbes 8y ago
    It's not a thing because the market is limited, it could be a security nightmare to administer, and because useful rules would be more complicated than "Put 10%..." - because you would have to allow for overdrawn accounts, closed accounts, moved or renumbered accounts, and so on. Product features like these invariably turn out to be far more complicated than they look.
    - mixmastamyk 8y ago
      Nah, you login at the website and add rules for moving money around. Already available. Moving percentages instead of fixed numbers is a small step up from that.
josephjrobison 8y ago
For a book recommendation, Simple Numbers... by Greg Crabtree is definitely the best accounting and finance book for freelancers and small businesses that I've ever read. It's just about perfect, I read it two years too late but it's transforming how I look at finance and accounting for my consultancy. https://www.amazon.com/dp/B00FUINEYG/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1 https://www.amazon.com/dp/B00FUINEYG/ref=dp-kindle-redirect?...
mancerayder 8y ago
I've been freelancing for a few years as a DevOps Engineer. I've gotten very lucky because I've landed gigs that let me become virtually in expert in a few different technologies, while making the most money I've ever made, all with no on-call at all (traditionally the bane of my existence) and with very friendly people and clients. However, I'm nervous now as my gig runs out for at least two reasons. First, I'm self-employed in name only. While managers view me as a very senior resource that is essentially a team lead due to experience and charisma, I still feel like I have no more control than an employee. In other words, I feel like an employee. Which is not how I suspect many of you feel. Second, finding a new gigs is going through recruiters (here in NYC) and interviews are --again-- exactly like, if even worse than, employee interviews. In other words, not only am I expected to spend hours going through round after round of interviews, but I'm expected to already know all the technology they need, and moreover I'm competing with A) full time employees since many roles will take FTE or contractors; B) other contractors with lower rates. I live in NYC and would pay someone for advice on the second part above. We need some sort of not-for-profit place to meet and congregate online as freelancers.
- mixmastamyk 8y ago
  > interviews are --again-- exactly like, if even worse... hours going through round after round I would decline extensive interviews for contracts less than a year. Be up front with them that the process does not make sense. It will be obvious in a few hours whether you can do the job, and therefore little risk to them. (I realize some places will stick to their process, be damned. It is a quality signal, however.)
yourstruly33 8y ago
> "It's just excruciatingly difficult to manage our finances" And it's US. Compare it to Italy and you'll have a difficulty setting switching from Medium to NIGHTMARE.

207 points by evo_9 8y ago

Well, if this isn't my life to a T. A THIRD of the workforce though? I wouldn't wish what I'm going through on anyone. I had no idea it was so widespread.

ggm 8y ago
"soft" mechanisms to remove unemployed people from the labour pool have been used for a long time, to reduce the visible statistics on the rate of unemployment. It leads people to talk about other measures like the rate of under-employment, the number of people seeking work, the number of people in part time work who seek full time work. But, since many people choose this life to get work:life balance outcomes it shouldn't be assumed all freelance and self-employed are there for nefarious reasons. Just, that quite a few of them are, because there aren't good alternatives. "I won't give you a job as a bricklayer but I will subcontract to you if you form your own company" for instance...
ryanwaggoner 8y ago
I’ve been a self-employed solo dev for 11 years and not to brag, but I’ve done very well for the last six or seven in particular. I’ve also helped lots of other freelancers figure this stuff out, ping me if you need some advice (goes for anyone): hi@ryanwaggoner.com

HillaryBriss 8y ago

> Freelancers are competing not just within their town, not just with in their state, but are completing globally, and there's just huge global pressures on the amount that they can earn... bingo. for a piece of work that can be well specified, separated out from the main workflow and then farmed out, it's natural, in today's world, for the customer to open the field globally. a little too natural. so, the US freelancer is left asking the question: how can I compete with wages set at the global standard of living, including currency exchange differences? there doesn't seem to be a good answer.

kingkawn 8y ago
The answer is that they will all soon be much poorer
seppin 8y ago
Find clients that care about quality, be better, and charge more.
- meiraleal 8y ago
  It's still competing globally. Although it can be said that american coders are above average globally, to earn an American wage every one of them will have to be top 1% in quality.
  - GrumpiNerd 8y ago
    So then the people who aren't skilled enough will have to either improve their skills or go find something else that better fits their skills. Competition is good.
gk1 8y ago
The answer is to stop offering a commodity and start offering something that's unique and valuable. See Patrick McKenzie's epic post: https://www.kalzumeus.com/2011/10/28/dont-call-yourself-a-programmer/ https://www.kalzumeus.com/2011/10/28/dont-call-yourself-a-pr...
- HillaryBriss 8y ago
  excellent. thank you.
mistersquid 8y ago
I'm currently working as a subcontractor for a friend's consultancy. For the better part of the last decade, that consultancy relied on remote workers (outside the US) to generate margin. In that last decade, my friend has discovered there are costs with a remote-only development team and so has decided to insource technical, marketing, and management roles. Her clients are SMBs in the US, and business is growing. So, one direct answer to your question about how a US freelancer can "compete with wages set at the global standard of living, including currency exchange differences" is to serve a US clientele whose products and services are closely tied to the US and (in my particular case) where being in the same time zone has a significant impact on getting work done. I'll also add that the insourced group is implementing more reliable processes and producing higher quality deliverables to the consultancy, as measured by client satisfaction and owner feedback. EDIT: Add paragraph regarding work quality of insourced group.

NTDF9 8y ago

One of the things that I have really come to understand is America is not even close to "land of the free". There is a very very narrow set of rules that you absolutely have to follow to even be able to live peacefully here. Be born at least middle class, go to good schools, pursue the right degrees, go to corporations, make no mistakes in life and then finally retire in a retirement home paying thousands a month. Steer from the above path and you'll start seeing things like mistakes in IRS filings or a medical issue or a pre-existing condition or a divorce or a bankruptcy or an unmangeable debt or a gap in career.....you know, normal human problems, you are screwed. And then there are man-made problems like jail without bail, lawsuits flying around, guns, crime. Notice there is no place in society for teachers, small-time healthcare professionals, career in arts etc.

captain_perl 8y ago
And don't forget about being downvoted for listing facts!
- NTDF9 8y ago
  > And don't forget about being downvoted for listing facts! Yeah,its a very funny phenomenon. For some reason, Americans like to downvote anything true about their society. This is what you would expect out of communist societies.
  - jstewartmobile 8y ago
    Not true. You'd be about halfway up in any other forum, but this is hacker news--where we're not supposed to talk politics... unless it's the kind of politics they want us to talk about--like net neutrality or antitrust or some other intersection of nerds and money.
    - NTDF9 8y ago
      > but this is hacker news--where we're not supposed to talk politics... unless it's the kind of politics they want us to talk about But this isn't politics. This is the societal reality of the home of tech industry. There are many people around the world who are blown away by the stories of Silicon Valley. When we share stories of SV parties, VCs, lifestyle, homelessness, then why not about life and reality here? At the very least, it is informative to people who are uprooting their families and lives in other countries.

prawn 8y ago

That this is likely a submarine piece for one of the linked products or quoted entrepreneurs shouldn't discount the value of discussion. There are only going to be more and more people working like this and it's a huge price to pay for the "freedom". I've effectively freelanced for 20 years and it's brutal, crushingly so. Until you're big enough to have someone handling admin/etc, you are doing everything and things inevitably get missed or ignored. For me, it's been invoicing and chasing up invoices - to the tune of hundreds of thousands of dollars over the years missed completely. End result is all of the hassle and pressure but with less reward. Building specific frameworks/systems to work within is absolutely the solution IMO. So, like Xero but with a focus on an exact industry/locale. One-button follow up of unpaid invoices, automatic setting aside of money for paying taxes, automatic advice on rates. Too often, people try to fit the tools to their way of working when I think they'd be better off fitting their work to the tools.

gk1 8y ago
FreshBooks is $50/month and you can automatically send invoices and schedule reminders. This is a solved problem.
- gjs278 8y ago
  ok and then they ignore the freshbooks invoice
  - anoncoward111 8y ago
    This is right. This is what many businesses do. It's better to demand cash upfront, period. If they don't take those terms, then they don't get your services. If that means you have to wait tables until you find a few legit clients, then so be it.
    - sho 8y ago
      > It's better to demand cash upfront, period In my experience the vast majority of businesses will not entertain the idea of cash up front, period. I bet that you wouldn't either. If you were building a house, and the builder demanded cash up front, you'd laugh in his face. Finding good clients is important, but if you demand to be paid in advance, get used to waiting those tables because you're going to be doing it a long time. Note: you will not be paid in advance for waiting those tables, either.

davidscolgan 8y ago

Something I wish I'd known when I started freelancing about 8 years ago: Being good at your craft (like programming) is assumed. In order to do well at freelancing, you also have to have some business sense. There are all sorts of great resources about how to business online, but it didn't even cross my mind at the beginning that that would be important. Once I started learning how to business freelancing became waaay easier. Things like how to invoice, how to negotiate, how to talk to a client, how to schedule your time, how to budget, how to market yourself, how to network, etc etc etc are not at all related to programming, but can make the difference between a happy freelancing existence and a miserable career. I've been fortunate to have a pretty lovely freelance web development career. My key has been finding clients that are smaller companies and not full time, with a long ongoing project. Smaller companies allow you to build a relationship with the owner of the business, and to position yourself as not just a pair of hands to write code, but a trusted advisor who takes the business's actual needs into account when writing code (which is how you compete with global talent). Not full time means you can have multiple clients at once to give you a nice advantage over a full time job: if one source of income dries up, your income doesn't go to zero. Most of my clients have been multi-year projects. I'll slowly build their webapp for around 10 hours a week at most. I've worked about 20 hours a week for the last 8 years, lived in lower cost of living areas, and spent the rest of my time on doing whatever I feel like. Some resources I'd recommend: * The Personal MBA by Josh Kaufman - a nice overall summary of how to run a business * The corpus of Kai Davis's material (https://kaidavis.com/ https://kaidavis.com/), including his super valuable/highly entertaining podcast Make Money Online (https://makemoneyonline.exposed/ https://makemoneyonline.exposed/) * How to Win Friends and Influence People by Dale Carnegie - how to interface with fellow humans (freelancing/business is mostly a human activity) Happy to help anyone who's interested in freelancing if I can, send me an email.

TomK32 8y ago
Oh, "How to Win Friends..." is eighty years old. That's the part I have the biggest problem (being on the near end of the autism spectrum). But even I managed to find a small client with a long-running project that I kept busy with for almost eight years until I needed a change. The point I regret a lot is not having sought and become part of a small team to handle to long-running projects better in every aspect. The folks around me I admire the most did just that, most of them working in a two-people team and they are very productive and inspiring.. Regarding the 20hrs/week, everybody should know: That's the productive time, for every human being. Charge accordingly.

acconrad 8y ago

> "No one really explains to you taxes and contracts and how to chase a client for that bill that they owe you — like, the nitty-gritty," Wait...what? Before I even broke out into freelance consulting I hired an accountant. When starting your own business, I would think it's base-level knowledge that anything with legal ramifications (and that includes the IRS) should be handled by a professional. Get an accountant. Get a lawyer (at least for one day to draft up your documents and make sure your business is set up or even use LegalZoom). And within the first month of breaking out on my own, I must have read like 3 or 4 books on freelancing/consulting, 10+ blog posts, and podcasts. True - no one is going to act like Clippy and say "Hey looks like you're starting a freelance career. Have you considered an LLC and liability insurance?" But - do people not try and learn about what they're getting involved with anymore? Starting a business, even if it's a 1-person sole proprietor consulting firm, is a big task. And yes, davidscolgan is right that you should consider all business aspects beyond your primary skill. But it seems almost irresponsible to say that starting a business is going to be a huge shock. No one is going to tell you, but even a cursory search online will give you a torrent of information on freelancing, consulting, and starting your own business. If I hadn't put in the initial legwork into studying the consulting landscape there is absolutely no way I'd: (A) still be consulting or (B) make nearly as much money. But the answers are out there. And yeah - get an accountant, it will drastically simplify your finances.

rietta 8y ago
Some people down on their last $100 or less don't always have the luxury of choosing. Building a Wordpress site NOW for a little money or doing something in PHP/MySQL today if you have some basic skills and next thing you know, you're a freelancer without the luxury of having planned all that up front.
rietta 8y ago
That said, I never really found taxes all that confusing even long before hiring an accountant. Turbo Tax was always easy. I did have the advantage of learning from my grandmother (who was a bookkeeper) and my dad who was an executive as I was doing my first business as a teenager.
8y ago

mgkimsal 8y ago

"No one really explains to you taxes and contracts and how to chase a client for that bill that they owe you — like, the nitty-gritty," Years ago I ran a conference for independent web/tech folks. I put it together because I'd been tired of going to other tech conferences and... just realizing that none of the content would have any impact on my ability to have good contracts, deal with insurance, get paid, deal with taxes, market myself, onboard new projects, etc. Figuring out how to shave off 4ms of a query, or replicate mysql, or float my divs with sass... none of that was relevant, but I still enjoyed the social aspect of conferences - the gathering of folks with similar needs, skill and problems looking to help each other. Yeah, no one 'tells' you how to do any of these things. Tax stuff, especially starting out, doesn't need to be that complicated (but you don't necessarily know that up front). "There's no such thing as maternity leave for freelancers"... Hint - it's really just extra overhead an employer budgets in to the price they charge for their services minus the expense of you. Budget for this stuff yourself. It's hard, especially at first, if you haven't done it before, to begin to think about this stuff, and deal with 'irregular income'. But it's possible. "Two-thirds of them are dipping into their savings every month to make ends meet. We see that freelancers as a result are really lagging behind employees when it comes to saving for retirement," It's because they're undercharging, and the buyers are profiting off that arbitrage. I'm not sure there's any simple or easy way to get around this. Years ago I was part of a forum for tech folks where 'rates' were discussed, and a couple people shut down the thread (and the next one, IIRC), because they had this notion that this was "price fixing" and somehow they were playing a part ('safe harbor' sprang to mind, but... they weren't having it). Yet... everyone keeping their prices "secret" doesn't really help most people. I can see prices for auto labor on websites, but most tech folks don't put pricing (hourly or otherwise) out there. And... I get it. I understand why (I don't, but did for a while, and may again). > Another big barrier to savings is the complexity of taxes for independent workers. > Traditional employers contribute toward their workers' payroll taxes, but that's not the case for the self-employed, who must pay all their own Social Security and Medicare taxes. And because taxes aren't automatically deducted from their paychecks, freelancers must figure out what they owe on their own. > "Without that, Chang says, it's hard for freelancers to know how much they can save. Well... even when taxes are 'automatically deducted' from a paycheck, that doesn't mean it's the correct amount (which is often a moving target). As others in the thread here mentioned, this is sort of a solved problem, especially for smaller/solo folks, by using a payroll service. It's not free, but generally for under $600 for the year, and factor in another few hundred for a CPA to prep taxes... you can sort most of this out. It's not fun, and ... yeah - hey - you're going to need to charge enough to cover these costs of doing business. Dealing with all this gives you a whole new appreciation for anyone you may go work for in the future. I was at a client's meeting of around 15 employees, and they were discussing health insurance. Premiums were going up, and the company was covering X% of the premiums, but everyone would have to pay a bit more. The owner said "does anyone know what our actual monthly cost per insurance policy is?" There were a dozen guesses... and I was shocked as to how far off people were guessing - almost all way on the low side. At the time, the employer's cost for each health plan each month was... $580, IIRC - people were guessing $80, $120, $95, $160. > "I almost can't have fun anymore because there's always something that I should be doing". Welcome to business. Go take a 'regular' job and have 'fun' with your 5 paid days off every 365 days. I don't mean to be negative here on that point, I just feel like many (most?) people have a very naive view of business, work and money/finances.

sverhagen 8y ago

Freedom, right? Oh, really? I am one of the hardest working people I have ever met, people can (hyperbolically) say I work more than a hundred hours per week. But that's easy to say when you're full-time, and you leave early for that errand or come in late to drop the kid off at daycare, and then make a few hours at night. When you are tracking your hours, suddenly making 60 real hours is hard, or even 40 real hours for that matter. (I'm still in a privileged position, so no real complaints.)

gk1 8y ago
So start billing for the value you provide, not by the hour.

ryanwaggoner 8y ago

Making a ton of money as a freelancer is easy: just hustle harder for clients. Let me explain :) I quit my job and started freelancing full-time when I was 24 because I found a $50 / hour PHP gig on Craigslist and did the stupid math of "40 hours per week x 50 weeks per year x $50 / hr = $100k / year!!" Ugh, so naive. Those first few years were rough and I almost quit many times. Everything was so much harder than I knew, from finding clients, to getting the work done, to getting paid, etc. BUT I stuck with it and gradually figured it out. I started spending time on "business development". I stopped charging hourly. I started investing in my own skills to move into higher margin areas. I focused on a particular client niche instead of doing everything under the sun. I built better sales and marketing channels. I got more disciplined with my time. Etc, etc. To date I've billed over $2 million to clients for mobile dev, web dev, product management, technical writing, and online marketing (by decreasing order of where I've made the most), and I know this sounds like I'm bragging, but I have zero concern these days about being able to make at least $250k per year from freelance and consulting. I haven't figured out a lot of things in life, but I've figured out this. I've also spent the last few years writing, speaking, coaching, and otherwise helping other freelancers get started and grow their businesses, first friends and family, now a pretty sizable online audience, so I have a pretty good view of how freelancers succeed and how they fail. More than anything else, the quality I see that helps freelancers succeed is being willing to spend regular time hustling for clients. You don't have to be a sales and marketing wizard, or be an extrovert, or spend half your time on it. But you need to spend time every day / week / month on it, and never stop, always be thinking about who your customer is, where you find them, and how to close them. The freelancers I see fail almost invariably have no reliable marketing channel other than referrals (or Upwork, which is the fast-track to commodity rates). And referrals are awesome, some of the best work I get, but they're passive AND they work a lot better if you can seed your ecosystem with other sources of leads. If you can build a pipeline of qualified client leads, everything else is easy. You can make a lot of mistakes with a client or a potential client if you have another lead coming right behind that one. And that wipes away most of the concerns in this article. Through solo 401ks, my wife and I have saved more than half a million for retirement. We have a healthy emergency fund. We have insurance. We take plenty of vacation, etc, etc. No one in this article would have any of the problems they're talking about if they made twice as much. And I can guarantee you that almost none of them spend hardly any time trying to find and close clients. They either wait for clients to come to them, or they use Upwork, which is almost as bad. The problem here isn't irregular income, it's just not enough income. OK, enough rambling...I'm happy to help anyone in the HN community with some free 1:1 advice if you want to email me: hi@ryanwaggoner.com

stevenicr 8y ago

Anyone aware of any bank accounts (USA based banks) - that allow for some programmatic moving percentages of money between accounts? I want to have it when I deposit client checks in one account it takes the money and moves one third to another account and one third to another. (then I'd like to have a personal account do the same, whenever money is transferred from my business A account to this personal account, take one third and move to savings, one third move to wherever.. My google FU did not find this.. I found a couple of banks saying that you could do transfers, and I think one bank had it so you could choose an amount, like $500 every week or something more static and have that auto transfer... but for freelancing gigs it's not usually a static amount every week. I thought about doing (and may still have to ) an ask HN on this, but this story / thread is likely perfect for this. I'd like to find an actual bank product that would do this, I don't really trust the security of a phone app to mess with accounts, and don't want to put a bunch of eggs into some cloud basket either, so I'd prefer to stay away from third party cloud sites that use my authentication to touch any accounts. This kind of thing would help so many in the gig economy plan for the quarterly stuff better, hope someone can point to a bank that does this.

SmellyGeekBoy 8y ago
+1. I'm absolutely amazed that this isn't a thing. "Put 10% of everything that comes in into this savings account" (for example) wouldn't just be useful for freelancers!
- TheOtherHobbes 8y ago
  It's not a thing because the market is limited, it could be a security nightmare to administer, and because useful rules would be more complicated than "Put 10%..." - because you would have to allow for overdrawn accounts, closed accounts, moved or renumbered accounts, and so on. Product features like these invariably turn out to be far more complicated than they look.
  - mixmastamyk 8y ago
    Nah, you login at the website and add rules for moving money around. Already available. Moving percentages instead of fixed numbers is a small step up from that.

josephjrobison 8y ago

For a book recommendation, Simple Numbers... by Greg Crabtree is definitely the best accounting and finance book for freelancers and small businesses that I've ever read. It's just about perfect, I read it two years too late but it's transforming how I look at finance and accounting for my consultancy. https://www.amazon.com/dp/B00FUINEYG/ref=dp-kindle-redirect?_encoding=UTF8&btkr=1 https://www.amazon.com/dp/B00FUINEYG/ref=dp-kindle-redirect?...

mancerayder 8y ago

I've been freelancing for a few years as a DevOps Engineer. I've gotten very lucky because I've landed gigs that let me become virtually in expert in a few different technologies, while making the most money I've ever made, all with no on-call at all (traditionally the bane of my existence) and with very friendly people and clients. However, I'm nervous now as my gig runs out for at least two reasons. First, I'm self-employed in name only. While managers view me as a very senior resource that is essentially a team lead due to experience and charisma, I still feel like I have no more control than an employee. In other words, I feel like an employee. Which is not how I suspect many of you feel. Second, finding a new gigs is going through recruiters (here in NYC) and interviews are --again-- exactly like, if even worse than, employee interviews. In other words, not only am I expected to spend hours going through round after round of interviews, but I'm expected to already know all the technology they need, and moreover I'm competing with A) full time employees since many roles will take FTE or contractors; B) other contractors with lower rates. I live in NYC and would pay someone for advice on the second part above. We need some sort of not-for-profit place to meet and congregate online as freelancers.

mixmastamyk 8y ago
> interviews are --again-- exactly like, if even worse... hours going through round after round I would decline extensive interviews for contracts less than a year. Be up front with them that the process does not make sense. It will be obvious in a few hours whether you can do the job, and therefore little risk to them. (I realize some places will stick to their process, be damned. It is a quality signal, however.)

yourstruly33 8y ago

> "It's just excruciatingly difficult to manage our finances" And it's US. Compare it to Italy and you'll have a difficulty setting switching from Medium to NIGHTMARE.