How to Protect Yourself Financially and Legally as a Freelancer

May 8, 2018 Raul Harman

Choosing a career as a freelancer is always a good choice. You favor more flexibility in your work schedule as a freelancer and you’re your own boss. Many people nowadays work as freelancers either to build up enough experience until they find a more stable job or to build a career according to their own preferences. Either way, freelancing is a great way to find work and capitalize on your skills. What’s more, thanks to the modern technology and fast Internet speed, many people find freelance work especially appealing, due to the opportunity to work from home.

However, freelancing isn’t without risks. The main issues almost every freelancer faces is troublesome clients, as well as difficulties getting paid. Many of those who employ freelancers oftentimes want to exploit them, mainly because freelancers don’t have the resources to adequately protect themselves. Still, you don’t have to be a large company or work for one for that matter, in order to secure yourself from inconveniences. Here are a few ways to protect yourself both financially and legally as a freelancer.

Conduct thorough client research

Freelancers are in need of work, that goes without saying. But, if you haven’t had work in a while, it doesn’t mean you should accept the first offer that comes your way. As a freelancer, you have the liberty of turning down a client, especially if that client doesn’t look too promising. Sure, you might miss out on a paid project, but if a client is dishonest, you may not get paid or you’ll have more trouble than the project is worth. That’s why it’s important to research your potential clients before you accept to do any work for them.

Through research, you can find out a lot about your client, which will help you decide whether you want to accept their offer or not. For instance, you can ask other freelancers if anyone had worked with that client before and what their experiences were. Also, you can give them a call and ask them follow-up questions. The main reason you must do research is to determine if the client is trustworthy and whether they want to pay you for your work.

Never work without a contract

Contracts are essential for protecting yourself both legally and financially. The main reason is that a contract is a legally binding document that enforces both parties to do what they agreed on. For example, you must do the work and client has to pay you on time. Unless you have a contract, a client can refuse to pay you and they’ll suffer no legal consequences, since there’s no proof that you made any agreements on the matter. That’s why it’s important to always work under a contract.

That way, you can name every detail of the arrangement with your client, such as deadlines, work obligations, costs and payment dues and so on. If a client fails to pay you on time, you can easily follow up with them to determine the reason behind the late payment. If it turns out to be a transfer delay or missed email reminder, then you have nothing to worry about. If the client is being evasive or they won’t give you a straight answer, you can always take them to court as a last resort.

Always have a proof of work

As a freelancer, you must work hard to build your reputation and ensure there’s enough interest for you on the market that will maintain the optimum workflow. Every once in a while, you’ll come across clients with unrealistic expectations or clients that are too demanding. It’s important to be well prepared when dealing with such clients and never give them a reason to give you a bad review. If you don’t deliver exactly what they’ve envisioned, they’ll refuse to pay or might even threaten to cancel the project.

That’s why you must always have a proof of work. Clients may like your work but they might also claim you haven’t met the deadline or that the work isn’t yours. If that’s the case, you can always use a reliable employee monitoring software, that will track your work progress and make screenshots of your work. That way, you will always have proof of work, which you can use to either convince clients that everything went accordingly or to use it at court to support your claims.

Have a billing system set up

If you want to protect yourself financially and ensure that clients actually pay you, you have to have a billing system set up. This is especially true if you’re working on multiple projects and simply don’t have enough time to remind every client individually. Moreover, if you’re working on a particularly long project, you can set up payments on specific intervals or milestones so that you don’t go without payment for too long.

That way, you can ensure that you constantly have a positive cash flow and that you don’t run out of funds to cover your expenses. There are various kinds of software you can use to schedule automatic payments and client invoicing. This can save you a lot of time and effort in ensuring that you get paid in a timely and orderly fashion. It’s important, however, to let your clients know about your billing methods and that they agree to the terms as well. This will help you develop a payment system that works well for you.

Upfront billing

Securing your payments can also be achieved through upfront billing. Depending on the size and the scope of the project, you can always ask clients to pay you a portion or the full amount of your fee in advance. The main reason you should do this is to protect yourself from difficult clients and ensure that you get paid. For instance, some freelancers charge 100% upfront for smaller or short-term projects.

The fact of the matter is that short projects don’t take too much time and they don’t cost as much as some other more demanding work. Moreover, you ensure that clients don’t change their mind midway and cancel the project or claim they’re not satisfied with the results once you deliver the work, in order to avoid paying you. You can also charge at least 30% for longer projects and 50% upfront for medium-sized projects. That way, you’ll still get paid to a degree even if the project gets turned down.

 

Freelancers may not have adequate resources to protect themselves financially and legally, but that doesn’t mean they’re completely defenseless. With a bit of planning and caution, you’ll be able to either avoid problems or have good means to deal with them, should you ever come across such problems in the first place.

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Raul Harman

Raul Harman

Raul is a B.Sc. in Innovative entrepreneurship and has a lot to say about innovations in all aspects of digital technology and online marketing. While he's not enjoying travel, football and great food, you can find him on Technivorz.com