Three important legal ways freelancers can secure their financial freedom
Are you a freelancer, or considering going down the freelance route? Here are three important legal ways you can secure your financial freedom.
Since 2016, choosing to work as a freelancer has become increasingly popular. Since the pandemic and the recognition that work can be done anywhere, working for yourself as part of the gig economy has become even more popular.
If you are considering choosing the self-employed route, it is essential to understand how to maintain your income and mental wellbeing.
Managing contracts and clients requires a new set of skills, and if you are choosing the freelance life because you think it is easier, you may want to think again. Freelancing allows you to follow your passions and work flexibility. However, it comes with concerns over financial security and effectively managing a variable workload.
As a freelancer, there is the central aspect of your work, whether it is copywriting, designing, accounting, project management, or more. Then, the pitching, writing invoices, client meetings, and other business administrational tasks can take your time. It is also a distinct way of working, as neither party must follow the exact legal requirements unless a contract is in place.
While freelancing is an excellent way to work toward financial independence, there are three essential issues to address to make it more straightforward for you.
1) Make sure you get a legally binding contract
It is tempting to keep your early freelancing informal. Doing work on an ad-hoc basis can make freelancing feel more straightforward. However, without a contract, you can find yourself with much stress, as payments come late or not at all.
There is no UK legislation to protect the freelancer’s rights without a contract. Consequently, finding a legal document that you can trust and ensuring this is in place for each client you work with is essential. There are templates online, and freelancing sites offer standard agreements that keep you secure.
Your contract not only needs to include payment terms and schedules, but it should also outline the tools you will be using to complete the work.
You may need to use Adobe Photoshop, Word or other business analytical tools; you should name these in each project. You need to reserve the right to use these tools during the period of the project in service of your client’s needs and require a retainer for the use of these software packages.
2) Ensure you are IR35 compliant
IR35 is a term used in tax law to describe two pieces of legislation. These pieces of law are designed to help prevent tax avoidance by freelancers and by the businesses who have hired them. If the freelancer provides enough service via an intermediary that would usually be paid for as an official employee if the intermediary were not paid, then this law applies.
The difference between a compliant and non-compliant IR35 contract is about £7 per hour. Without a compliant contract, you will be paying more tax than if it was compliant. If you take a non-compliant contract, you need to be sure you are not being miscategorised by the organisation you work for.
You may wish to speak to a solicitor and get legal or independent tax advice to ensure you meet the requirements of the law. You are responsible for knowing your status with your contracts.
3) Consider the rights to reuse your work
Many clients you work with expect to own the work you complete entirely. Most of the time, this is a reasonable clause to have within your contract. However, there are scenarios where you wouldn’t want a client to have unrestricted rights over the ideas you have offered.
For example, if you have provided work within templates, the templates may be your intellectual property and should not be recreated. Also, ideas you presented that were not taken up for this project but may be of use in the future must be protected in your contract.
If your client wants to use these other ideas, you may want them to employ you for another period to implement them.
Make sure you protect your freelance income
The UK economy is forever changing and never more so than in the last few years. The Great Resignation means that more and more people are choosing to work for themselves.
The chance for financial freedom is alluring, though it shouldn’t be seen through rose-tinted glasses. Being a freelancer is hard work, and you need the right legal advice to protect your income.
Laura McLoughlin is a Digital PR based in Armagh, Northern Ireland. She has previous experience as a website editor and journalist, and currently works with Mackenzie and Dorman.
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