6 Ways To Protect Yourself and Your Business When Working as a Freelancer

by | Last Updated: Feb 20, 2023 | Web Design |

It’s fast becoming a cliché, but the pandemic is transforming the way we work.

The widespread move to work-from-home has freed many people from the daily commute and the constraints of the office. And, with more companies looking to hire remote freelancers, more people than ever have started lucrative freelance roles.

It hasn’t all been good news, though. For instance, working from home has been associated with an increase in stress and loneliness. Most freelancers work in a much less formal way than “traditional” employees – without contracts, well-agreed rights or insurance– and this can make them very vulnerable. In this article, we’ll look at some ways freelancers can protect themselves and their businesses from exploitation, money dry spells, and wrongdoings.

1. Always have a contract

The first and most important rule of working as a freelancer is also the simplest – make sure you have a contract for every job you do, no matter how small.

There are two reasons why the importance of contracts is often overlooked by freelancers. The first is that there remains a damaging myth that contracts exist to protect employers rather than staff. In reality, well-drafted contracts will protect freelancers from being exploited by unscrupulous employers. The second reason is simply that many freelance roles are contracted on a fairly casual basis, despite the fact that freelancers contributed over $1.2 trillion to the U.S. economy in 2020.

As a freelancer, you should insist on a contract for every job you undertake, and you can even take the time to explain to employers why this is important – that the contract will allow you to settle disputes if any arise, and that ultimately it will protect both you and your employer from legal ramifications. And if your potential employer doesn’t have a contract ready to go, feel free to download a draft contract, adapt it as necessary, and then propose that you use it to cover your freelance work.

If handled correctly, in fact, proposing a contract in this way can improve your standing in the eyes of your employer, because they will see that you are an experienced professional who knows your rights and values your professional relationships.

2. Get insurance

Another often overlooked aspect of freelancing – especially among those new to this way of working – is the importance of professional insurance.

You should be aware that as a freelancer you are somewhat at the mercy of the companies you work for. Companies (or managers at them) can easily say or do things that damage your professional reputation, whether by design or by accident. Such incidents can easily leave your reputation in tatters, and make it extremely difficult to get further work. There are ways of reducing this risk, however, and professional indemnity insurance is one of them.

While there are many different types of professional insurance available, they all aim at much the same thing – protecting your income against the potential actions of your clients. This protection can include a wide variety of protections, including covering the legal costs of disputes that arise as part of your work, or even providing tools to recover money owed to you.

In fact, in some industries you might have no option but to take out some form of professional insurance. Some industry regulators or associations require this, and some clients will ask you to prove you are covered before working for them.

3. Use a trusted platform

If your freelance work is mainly online, one of the biggest risks you face is untrustworthy clients. Talk to anyone who has worked as a freelancer for a few years, and you’ll hear some real horror stories about clients who refused to pay, or who made their life a nightmare by requesting continual off-contract changes and additions.

Arguably the best way to avoid situations like this is to use a freelancing platform. There are many freelancing platforms now available, and when you look for freelancing jobs on these platforms you can easily see how a potential employer has treated the previous freelancers they have worked with.

In fact, these platforms are so useful – both in terms of protecting you, but also in landing your first remote freelance job – that they are all but ubiquitous in many industries that rely on freelancers. Not only do these platforms allow you to search for the perfect freelance role, but many will also mediate any disputes that arise with your employers, and make sure you get paid for the work that you do.

4. Consider forming a business

A more serious step you can take to make sure you are legally protected as a freelancer is to form a business entity. By forming a company, and then working for this company rather than solely freelancing, you can create a wall between yourself and your liability. The law will see you and your business as separate legal entities, and this means that your personal assets cannot be sought if you are sued.

Forming a business in the USA or the UK is not that difficult, but you should take legal advice to make sure that everything is above board, and that you’ve filed your paperwork correctly.

Forming a business to work through can also have a number of other benefits. Most notably, working through a business can greatly simplify your taxes, and can even reduce them. You may also be able to claim tax relief when you buy equipment and services that you need for your freelance role.

5. Use privacy and security tools

While you should make sure you have contracts and insurance in place before you start working in a freelance role, there are also ways to protect yourself while you are working. One of these is to use privacy and security tools that are designed to protect you against cyberattacks.

Cybersecurity might sound like a complicated field, but there are many tools available that are easy to use and will afford you a good level of protection. One of these is to make sure that your personal website you use to advertise your freelancing services comes with SSL encryption, which makes your personal information much more difficult to steal.

Indeed, according to Toronto-based software developer Gary Stevens of Hosting Canada, any service you use for hosting your website should offer SSL for free as parts of its package.

“If you’re trying to have a website that is actually trusted by Google and be able to one day sell something on, you will absolutely 100% need SSL,” Stevens says. “Without this, no credible payment processor will touch you. If you’re trying to sell anything, this is a problem.”

6. Keep meticulous records

Last but definitely not least, make sure you keep an accurate, careful record of every role you complete as a freelancer. You should make sure that, for every job you undertake, you record the client, key details about the task, and how much you will (or have been) paid for it. That way, if a dispute arises further down the line, you can easily refer back to your records.

Record keeping is something of an art, of course, and everybody will eventually come up with a system that works for them. But what unites all successful freelancers is that their records and systems are organized. This is true of their contact lists and work records, but also their financial records. If you are looking to build a lucrative freelance career, one of the first steps you should take is to carefully record every cent you make.

The bottom line

Ultimately, though freelance work (and especially remote online freelance work) is much more mainstream than it used to be, you should recognize that there are still unscrupulous employers out there.

That said, with the rise of freelancing platforms, taking the plunge into freelance work is easier than ever, and one of the positive impacts of social media on freelance work is that you can vet potential employers before signing a contract with them. This has made staying safe when freelancing much easier, and when combined with the tips above should help to keep you safe, whatever your field.

Featured Image Credit: pexels.com

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