When it comes to freelancing, most of us envisage working from our beds, feet up, with a coffee in hand. No peak hour traffic, extra sleep, and a job you can complete from anywhere? Living the dream! For many people, freelancing seems like the perfect career move. But there's a lot to consider if you want to become a freelancer, and some of this stuff is pretty dry. So we've created a short and sharp list of six of the most important things you should consider before becoming a freelancer (and living your dream!)
Tax
Before you can sell your services to clients, you must first apply for an Australian Business Number (ABN). If you do not register for tax, but choose to freelance, the Australian Taxation Office will take 48.5 per cent of your earnings, so it’s important you register. You can also claim back tax on various items and services. For example, a freelance graphic designer could claim back tax for a new laptop, for partial internet access or a specific type of software.
GST
If you're freelancing in Australia and earning over $75,000 a year, you must register for GST. This requires you to determine whether your services are taxable (whether they require GST or if they are GST-free or input-taxed). In order to process GST payments, you must create tax invoices for your taxable services. If you are paying GST, it is imperative you keep track of it and put it aside until it can be paid. You must also lodge an annual return.
Public Liability Insurance (WorkCover)
Public liability insurance covers injuries and property damages caused by your services or products. If someone falls and injures themselves, or if there is an accident in your workplace, public liability insurance will protect you and cover the damages. Essentially, it covers all third party injury and property damage, and you can expect to pay around $50-$100 per month.
Personal Accident and Sickness Allowance
When your freelancing, work health insurance is essential. If you become unwell, and are unable to work for an extended period of time, personal accident and sickness insurance can sustain you while you recover and cover a significant amount of your income.
Superannuation
If you are self-employed or freelancing, you are not required to make personal super contributions, but it is highly recommended if you want to start saving for retirement. From July 1, 2017 most individuals can claim a full tax deduction on their super contributions. If you’re a low income earner, the government may match your personal super contribution, unless claimed as a tax deduction.
Equipment Insurance
Whether you’re a graphic designer, writer or web designer, you’re likely to have thousands of dollars worth of equipment. Equipment insurance covers loss and damages to your gear. There are companies in Australia that specifically insure creative professionals and freelancers like the Design Institute of Australia and Professional Photographers Insurance.
Of course there are plenty of other things to consider when becoming a freelancer - whether you will have consistent work and enough contacts, the work environment and whether you can handle working alone - but these are some of the essentials before you start. Freelancing requires discipline and skill, and as a freelancer, you’ll have ups and downs. Be prepared - ensure you are covered for accidents or unexpected sickness, and can legally protect yourself should you find yourself in hot water. Soon enough, you’ll be living your dream!