By Laura Gayle
Technology has revolutionized freelance and work-from-home opportunities across the globe – particularly in communication-based fields like public relations. On the hiring site Upwork, job posts requesting skills in social media, brand strategy, content writing, and influencer marketing increased by 60-80% in the last quarter of 2017. Independent PR professionals are increasingly going toe-to-toe with traditional agencies for large accounts. There has never been a better time to go into business for yourself. Remote work and freelance opportunities continue to boast benefits not only for clients, but also for PR professionals.
What does it really mean, though, to start and run your own freelance PR business? Most assume this means no getting up and getting dressed for work, and no having to check in with a boss. While the solopreneur lifestyle might seem glamorous to many, it definitely has its drawbacks, increased fear being one of them. Keep reading to learn five of the scary things about being a PR solopreneur and how to handle them.
1. You Never Know What Your Paycheck Will Look Like
Solopreneurs don’t receive a regular paycheck. They do the work, create their own invoices and send them to their clients for the work performed. And then, they wait … hoping clients will pay their invoices on time.
Many small business owners work on a “net-30” basis. This means that once they send an invoice, typically monthly, the client has up to 30 days to pay. So, for work performed in June, the client technically doesn’t have to pay until August 1. And unsurprisingly, it’s not uncommon for clients to miss an invoice deadline.
When this happens, it’s up to the business owner to track down their client (and their payment) via email and/or phone calls. This invoicing and chasing clients can consume several hours a week. When you’re a solopreneur who might work for multiple clients a month, invoicing and contacting clients can take up even more of the work week.
The easiest way to stay on top of invoicing is to create a ledger that lets you tally and designate the hours you work for each client. You can use online accounting software or create your own Google spreadsheets that are shareable with clients — but whatever method you choose, never put off adding the hours you worked to an invoice: You could end up forgetting about it, and then you’re basically working for free.
2. You Never Know What the Work Week Will Look Like
Solopreneurs have to do their own marketing to increase brand awareness; otherwise, they won’t secure new clients. Fortunately, you already know how to do that well. The problem is, marketing your own business is another job entirely, one that stacks heavily on top of the daily tasks required to actually run your business promoting others’ brands. For busy PR solopreneurs, it can be tempting to push your own marketing to the side, but this would be a HUGE mistake. You must market regularly to ensure that you’re always picking up new clients.
After all, you never know when one of your existing clients will come to you and say they no longer need your services. You could ask clients to sign a three- to 12-month contract for your services, but this often pushes them away. One of the top reasons clients work with independent contractors (without a contract) is because it gives them the freedom to work with someone else at any time.
Because clients can dip out at any time, you never know what your work week is going to look like. The key to making sure you stay busy is to market regularly each week. Put aside at least five hours a week for reaching out to new prospects. Also, make sure your marketing assets as well as your products are properly protected. If you have a company logo, you’ll need to get it trademarked. Protecting your work with proper trademarks and copyrights is essential to keeping your business afloat.
3. It’s Hard to Stay Organized
Many solopreneurs couldn’t live without email. It’s their main way of communicating with clients and prospects. You may wake up one morning and have 10 emails from different clients outlining the work that they need from you. Keeping up with everything can be difficult.
One way to stay organized is to combine project management software with a traditional whiteboard. While the software can help you create, track, and juggle requirements for different clients and projects, a large whiteboard hanging by your desk can help you keep notes, make lists, and organize your goals in real time.
If you run a business that sells products, you’ll also need space for your inventory. You can save space by renting a storage unit and storing your inventory in it. This can help keep your work area clear of clutter and easier to work in.
4. Taxes Get More Complicated
As a solopreneur, you won’t receive a W-2 form from an employer at the end of the year. Instead, you should receive a 1099 from every client who paid you more than $600 for your services. If your clients aren’t on top of their finances, they may not send you a 1099 — however, you still have to report all of your income to the IRS. This is why it’s so important to keep updated invoicing records for all clients.
Ideally, if you’ve been in business as a solopreneur for more than two years, you’ll have an accurate estimate of how much money you’re going to make. Accordingly, you should have a good idea of how much to withhold from your earnings to pay toward taxes. You can use a tax calculator to help you estimate how much your taxes are going to be.
To keep taxes as simple as possible, send the money you set aside for taxes to the IRS on a quarterly basis. If you overpay, you’ll receive it back at tax time in the form of a tax refund. If you underpay, your tax liability won’t be nearly as burdensome as if you hadn’t paid in already.
Say, for example, that your project to make $55,000 this year, and after the standard deduction and your expenses, you expect to pay in about $10,625 in taxes. This means that you’ll need to send in quarterly tax payments in the amount of $2,656.25. Keep in mind that if you’re paying both federal and state taxes (if your state has an income tax), you’ll need to adjust your payment amounts accordingly to ensure you’re sending the right amount to each entity.
5. Benefits Become Your Responsibility
You lose employer benefits when you become a solopreneur. Gone are the days of your health insurance premiums being taken directly out of your check. As a solopreneur, you’ll have to find your own health insurance plan as well as establish your own 401(k) or other retirement savings. This can get expensive.
If you have a spouse who can put you on his or her employer’s health insurance plan, it’s usually best to do so. As far as saving for retirement, you’ll need to create a plan and stick to it. Just remember: It’s better to set aside even a small amount for retirement each month than nothing at all. Speak with a financial advisor to help you save for retirement. An advisor or professional tax accountant can show you the various tax advantages you can gain with different retirement options.
Having the freedom to work when you want, as much as you want, and from anywhere at anytime make the life of a solopreneur a dream job that many people long for. If you’re given the chance to become a solopreneur, it’s worth finding out if it’s a lifestyle that works for you. Knowing what to expect and plan for can help the rewards outweigh the risks and possibly set you up for unprecedented success.
Laura Gayle is a full-time blogger and founder of www.BusinessWomanGuide.org, which she created as a resource for women trying to start or grow businesses on their own terms.
2 thoughts on “5 Scary Things About Being a Solopreneur and How to Handle Them”
Laura hits all the main, scary points of being a solopreneur. There are trade-offs in the life of a solo practitioner, yes. But the upside of this life is flexibility, which is priceless in and of itself.
Like Sylvie, another solopreneur who appears to agree is Ximena Larkin, who is featured in this great Forbes article: https://tinyurl.com/yxtz2vxy