In February 2008, I decided to take the leap and quit my job to become a freelancer. Now that it's been a year and a half, I think it would be a good time to write about the good, the bad, and things you need to know before becoming a freelancer.

First, I just want to start by reminding myself, why did I ever want to go freelance in the first place? I think I can sum it up in a single sentence. Have you ever seen the movie Office Space? Some people have an amazing tolerance for settings like this, some do not. I will try not to rant too much about what I dislike about office jobs, I do have a lot of respect for the companies and co-workers of my past jobs, but it's good to be free now.

When I was thinking about becoming a freelancer, here were the reasons that enticed me:

• Be my own boss.
• Be able to choose which projects I take.
• Make more money.
• Work when and where I want.
• Have time for my own projects.

Be my own boss. That's a good thing, right? In your job, have you ever had to stay at work late, working unpaid overtime because your project was delayed and delayed, the ball never getting to your court until it's all the sudden an URGENT CRITICAL PRIORITY? Perhaps it's even one of those nights that you're reading this blog. Well, as a freelancer, these happen far less often, but they still do sometimes. Although now when they happen it's more than likely your own fault so you can't complain anymore.

Be able to choose which projects I take. Yeah, kinda.. I would say the projects I have as a freelancer aren't technically any better than the ones I took as an employee. I personally have a lot to learn about how to pick my work. I've still been stuck with some crummy jobs, but this time I was the one that played the hand I was dealt. Being able to be choosy about your projects will vary greatly depending on your vocation, your connections, and your skill level.

Make more money. Well, I definitely don't make more money than I used to. It would certainly be possible for me to do so, but I'd recommend not switching to freelance if this is your biggest reason. I'll get into freelancer expenses, taxes, and the like later in the article.

Work when and where I want. If you are a freelancer, or thinking about becoming one. Find usergroups or other events to meet other like-minded people. I think it's important to have co-workers and the ability to collaborate on ideas related to your trade. I often have people over to work in my home-office and go out to theirs.

Have time for my own projects. I love it. Now that I'm a freelancer, this is the most important thing to me. To be able to experiment and spend time on exactly what I want. I think I go a little overboard in this area, which is cutting into the "Make more money" reason, but I wouldn't give it up.

Taxes
When making the switch, I knew that I would have to take care of taxes myself, I knew I would have to pay for benefits, office supplies and equipment, software, and anything else related to my business.
As a freelancer, you have to pay an additional 12.5% on your income tax that ordinarily your employer would pay. This is offset somewhat by being able to itemize your deductions and deduct a lot of things you otherwise wouldn't have if you were an employee. One of the biggest questions I had going into freelance was how much money do I need to be paying for my estimated taxes. Unfortunately I can't answer that for you, there are income tax calculators that will help a little bit, but there are too many variables to get this very accurate. I would suggest, for your first year, being extra cautious and paying around 28% of your income towards estimated taxes, and then in subsequent years, adjusting that to figure it out better.
There are plenty of good sites out there to tell you what you can and can't deduct, and other guides as to how to prepare yourself for being a freelancer, I highly suggest you read them, I'm only going to give a few pointers that I wish I knew before going into freelancing.

• You can deduct your home office. It's based on the square footage % of your entire house.
• Keep a mileage log of where and when you drive or travel that is business related.
• Keep a mileage log of your personal driving. (Yes, if you deduct your mileage on your vehicle for business purposes, you also need to track your personal driving. Please correct me if I'm wrong on this.)
• When you deduct items like computers, office equipment, and even software, you deduct it over a period of several years. I won't try to explain this here, but just know that you can't deduct a $2000 computer all in one year.
• Business meals and entertainment can be deducted at 50% of their cost.
• You must keep proof of purchase for everything for a bajillion years.

Oh, and I should mention. You do not need to incorporate to make all these business deductions as a freelancer. I don't know exactly what the advantages are tax-wise for becoming a company, but I do know that if you are self-employed, the IRS treats you like a company. Your business name is your real name, and you use your SSN instead of an employer ID.
So once you've somehow figured out what % your estimated taxes should be. You need to pay them quarterly. I use https://www.eftps.gov/ to pay my federal and you will have to find out if your state has a site you can pay your state taxes online. I made the stupid mistake of thinking that eftps.gov took care of both federal and state. It's only federal.

Insurance
I live in the USA. I can't even say insurance without cringing. When I was an employee, I heard all sorts of things about how if I went freelance, I'd have to pay 15-20% of my income for insurance. I heard all sorts of numbers. Health insurance in the USA can be a deal breaker for people wanting to break from the shackles of the machine. If you have any pre-condition or history with mental health, have ever been in therapy, or think the health insurance company might give you grief for any reason. Secure your health insurance before making the switch. As far as how much it costs, it depends on your plan, and how many people you are supporting. For just my wife and I, for health and dental, at just the bare-minimum catastrophic level of insurance, it costs us about 400$ / month. Then if you have kids...
So when I heard people say, "15-20% of your income", they really mean 2,500-3,000 per person, depending on the level of insurance. Yikes... So referring back to my hopes of making more money as a freelancer, between the extra taxes, and covering my own insurance, that is rather difficult.

How much should you charge?
I have often been asked by people how much they should charge. I suggest you find out how much your company charges for your work and then going somewhere right in the middle of what they paid you and what they charged for your time. So if you made 20 / hr, and they charged 100 / hr for your work, as a freelancer it would be reasonable to ask for 60 / hr. You won't be able to go much higher, or your potential clients would just go to a reputable company. Any lower and you won't be able to afford your now heavy business overhead.

If you've never worked in an office, get a real job before becoming a freelancer. There is too much one needs to learn at a real job before going solo.

Collection of tools and sites for freelancers

• http://eftps.gov - Pay your estimated taxes online. (Don't forget that State is separate)
• http://www.dreamhost.com - Dirt cheap web hosting. If you're a freelancer, two of the most important things for you to do is to have a website, and back up your files. Dreamhost has subversion for backups and version control, and cheap web hosting.
• http://www.assembla.com - I don't use this anymore, but it is a good site for project management and subversion backup. I really just want to impress upon potential freelancers how important it is to have a regular automated backup system.
• http://www.gtimetracking.com - Track your time to Google spreadsheets. Yes, a shameless plug seeing that I wrote it, but it really is good software!
• http://www.vistaprint.com/ - Cheap business cards. Just ignore their pleading for buying all the extra crap, you don't need it. I also think it's foolish for anybody to spend a lot of money on business cards, they're meant to be given away. People will not respect you more if you have a voice activated holographic business card.