Too many freelancer designers rely on “handshake promises” and “emailed assignments” and that should change. Especially because neither of those things would hold up in court, should you ever find yourself in that situation. The solution? Contracts. For each and every project you work on, you should have contracts that address the payment, ownership, responsibilities, and restrictions of said project.
The first contract you should have agreed upon is a project contract. This type of contract contains:
- The scope of the project
- Any important deadlines
- A payment sections – including how and when payments will be made, late payment fees, as well as additional costs for project changes
- Who will retain ownership of the finished project – note here that clients will expect to own the completed product, but make sure the wording is correct and NEVER sign a contract that allows the client to own the “method used” to create the project
- What is considered completion
* Contracts can be drawn out as more of a template to be used over and over again, so make sure to put the effort in right away, or even hire an attorney to draft it for you!
The next contract you most definitely NEED as a freelancer is an invoice. This is a contract between you and your client specifically for payment, and will include what you are charging for and the amount. To increase the odds that you will get paid, and paid on time, you should include a genuine “thank you” message as well as the fees for a late payment.
The last contract I will talk about is an independent contractor agreement. This is a contract that you will probably see this come through when doing outside work for an agency, but you will also give out on occasion. If you ever find yourself needing to hire someone else to help complete a project, make sure you have this formal agreement in place. This contract is very similar to a project contract, it will include:
- A description of the work being done
- Expectations such as deadlines
- Final ownership
Like I have stated in previous Freelancing 101 blog posts, if you have more questions a Small Business Attorney is the best person to seek advice from.
With graduation quickly approaching, my peers and I have started the job search, and with that has come one of the greatest debates: to freelance or not to freelance. I blogged about the Pros and Cons of Freelancing earlier, but there are a few more components to consider. For example, how do I do it legally?
First things first, you will need a Business License. It should be noted that the type of licenses you will need depends on your location, as differences in states’ and cities’ laws mean certain places require certain licenses. For example, some places will require a Home Occupancy permit if you work out of your home. But, most places only require a general business license. Check out your state’s website to find more info on this.
Next, you will need to Register your Business. There are four different categories of business entities that you can register as. The first is Sole Proprietorship, which means you are running a business as an individual; you will usually register a “DBA” or “doing business as” name with this entity. Under a sole proprietorship, you are personally responsible for any business liability – meaning your house or your car is at risk, should you face any legal consequences. The second entity is a Partnership, which as the name suggests, means you are doing business with a partner. Under this category, you have a little more legal protection and a lot more requirements for tex reporting. The next entity is a Limited Liability Corporation, aka LLC. An LLC can be formed by a single person or multiple parties. At this level, the owner(s) will now have full legal protection of their personal property in the event of legal action. The final business entity is a Corporation, which requires extensive filing and taxation documentation, and is often doubly-taxed.
You should know that a corporation is the least often used by freelancers, sole proprietorships and LLCs are more commonly used. Most often, freelancers will be advised to register their business as an LLC because any personal liability is eliminated. With that being said, a Small Business Attorney is the best personal to advise you on the type of business entity you should register as.
When listening to my peers dreaming up which sector of the design field they would love a career in, a majority think freelancing is the way to go. I personally think freelancing makes a perfect career for some, but not for all. Like with all jobs, it’s important to think about the aspects of freelancing that contrast with the positives. Take a look at my list below, and let me know what you would add to your pro v. con list!
- Higher earning potential; freelance rates are almost always higher than in-house equivalents.
- Agencies/clients will pay more for specialist skills on-demand
- You can set your own hours.
- You can pick your own clients AKA do the projects you want to do.
- Work where you want; at home, in a coffee shop, while traveling.
- You only earn when you work.
- You have to do all the admin work, like accounting or bookkeeping.
- Some clients you will have to chase down for your payment.
- You don’t have coworkers to bounce ideas off of or to collaborate with.