Freelancing comes with many perks but also with unique risks. To help you avoid them, just follow our Seven Better Safe Than Sorry Rules.

Start with a financial safety net—and maintain it

Freelancers are always advised to start their freelance career with a financial safety net; money put in reserve to cover their living costs while they establish a client base. Maintain that reserve right through your career, even if you have income protection insurance.

It can take a while for your claim to be processed and/or some insurances don’t pay out until an initial period has passed. 1 month’s living expenses is good, but 3 or 6 months’ worth is even better.

Get income protection insurance

A financial safety net is all very well, but few of us can afford to keep a huge sum in reserve and your income may be compromised long-term. Income protection insurance can give you peace of mind and ensure your bills are covered if there’s a period when you’re not working.

Insist on a written contract

Written contracts protect both you and your clients, and as a minimum should include payment terms and stages; what happens when either party defaults; who owns the finished work; and the rights of either party to change, reuse or sell on the work. If your clients don’t offer one, offer one of your own.

Read the small print on freelancing platforms

Freelancing platforms can be a useful source of clients and work, and they can take some of the uncertainty out of the process. Often a deposit is held for you in escrow and released to you if there’s a problem with a client or if they fail to pay the final sum. There are often complaints and mediation services that can be hugely helpful if you’re having an issue with a client.

However, do ensure you read the fee structure in great detail (including any currency conversion fees, transfer fees and the pesky VAT indicated by that asterisk!). Check the terms and conditions relating to the dispute process and ownership or use of work sent via the platform or held on its online portfolios.

The internet is full of freelancers querying how they’ve been left with £25 after quoting £75, or why a freelance platform or ex-client is using their blog post or design. Don’t be one of them! Be sure about what you’re signing up for, clear on what you’ll be paid and confident that you understand how, why, when and who can use the work you submit.

N.B.: take particular care with this when you’re submitting work for contests or competitions.

Do a background check on your clients

Some freelance platforms will give info about the client and their ratings, reviews and stats give an indication of how reliable the client is. Outside of freelancing platforms, it’s up to you to do a little research on potential clients and ensure they’re not in dire financial straits or well-known for unreasonable behaviour and poor payment practices.

Put money aside for your income tax and national insurance bills

Keep an eye on your earnings and remember that you’ll pay income tax on anything over your personal tax allowance and allowable expenses.

There’s also National Insurance Contributions to consider. It’s safest to overestimate your tax and NI bills and put aside money to pay them when they’re due. Your accountant can advise you on this.

Get professional indemnity insurance (and public liability insurance if applicable)

Professional indemnity insurance covers you against claims from clients who have been adversely affected or financially disadvantaged by taking your advice or using your services.

Freelancers are less likely to need public liability insurance, but this depends on what your work entails. Public liability insurance protects you against compensation claims and the legal fees involved in defending against them. These claims could be from clients or anyone else who feels that your business has been responsible for injury or damage, and usually covers your actions in someone else’s premises.

Take the fear out of freelancing by making sure you follow these seven rules to protect your career and financial security.


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