How Does Freelancing Work? (With Pros and Cons to Consider)

Updated 20 June 2023

Image description

A man sits typing on a laptop computer next to a list with the title "How can I begin freelancing?" and these steps:

• Choose your line of work
• Determine your target market
• Build brand identity
• Decide your rate of pay
• Market your services

Freelancing is becoming a popular career choice, as people are choosing to prioritise a work-life balance and minimise the time spent in a workplace. You can work as a freelancer in a variety of fields and can specialise based on your interests and skills. Learning more about freelancing can help you decide if this is the right career choice for you.

In this article, we discuss how freelancing works and what a freelancer is, and review how freelancers get paid and whether they pay taxes. We explore the fields freelancers can work in and whether you can work as a freelancer without experience, and provide important advice about this career choice to help you decide if it's right for you.

How does freelancing work?

Learning the answer to the question, ‘how does freelancing work?’ can help you determine if becoming a freelancer is suitable for your interests and career goals. Also known as contractors, freelancers can work full time, or they may choose to freelance to earn money along with another job.

Freelancers can work directly with their clients or register themselves on an online platform that connects businesses to freelancers or independent talent. There are many opportunities for freelancers, as they can provide services that businesses need regardless of their location. As a freelancer, you get paid for the project you undertake. You can also simultaneously work on several projects for different clients.

What is a freelancer?

Freelancers usually offer services to an individual or client without a contractual agreement. They are considered self-employed and can work in many fields. Freelancing is a simple form of entrepreneurship, as you offer a service and get paid for it in return. The agreement between the freelancer and the client is generally on a short-term, part-time basis, although these agreements can involve full-time and long-term work.

How do freelancers get paid?

Freelancers usually get paid on a per-project basis. They determine the work and payment details before a contract starts with the client, then invoice the client for hours worked and get paid. You may get paid using an online method immediately after completing the assigned task, or payment processing may take additional time for the client to approve the work and issue the payment.

Some freelancers set their own rates of payment, while others accept the payment rates the client is offering. If you're registered on an online platform to find work, they may keep a percentage of your profits for their services.

Do freelancers pay taxes?

The Australian government considers you a freelancer if you decide when and where you work, if you don't get employer benefits like sick leave or paid holidays and if you earn money per project. To pay your taxes, you can register for an Australian Business Number (ABN). This allows you to pay your taxes if you exceed earnings of $18,200 per year. You can also create a tax account with the Australian Taxation Office (ATO) so you can claim and pay your taxes on time. If you earn more than $75,000 per year, you must register for Goods and Services Tax (GST), which requires you to have an ABN.

Types of freelancer careers

Freelancers have several job opportunities. Hiring a freelancer is usually less costly for a company than hiring a new employee. Non-profit organisations, government agencies, businesses and individuals may all employ freelancers to provide services for them. Freelancers can work in a variety of fields, including:

copywriting
graphic design
web layout and design
IT support
accounting
social media management
writing
editing
proofreading
ghostwriting
tutoring
data entry
career coaching
software development
architecture
tax preparation
data analysis
translation.

Personality traits needed as a freelancer

Here's a list of personality traits that are required for success if you are interested in pursuing a career in freelancing:

Discipline

As a freelancer, discipline is essential for success. You require discipline to stay focused, complete tasks and prioritise your responsibilities. By demonstrating discipline, you can be more effective in your role and can impress the client with your capabilities.

Persistence

Persistence is important for freelancers to help ensure they complete their tasks, regardless of being tired or frustrated. This is especially important as freelancers manage themselves and have nobody to supervise their work. If you work on several projects at once, you might feel overwhelmed, but perseverance is the essential characteristic that can help you meet your deadlines and complete your work to a high quality.

Organisation

Organisational skills are essential for freelancers, especially when working for several clients at once. These skills can help with scheduling, multi-tasking and time management, which are key when trying to manage your workload. Organisation can also help freelancers effectively manage the additional responsibilities associated with working for themselves, such as filing information for tax and earnings and maintaining effective communication with many clients.

Social skills

Having social skills is important for freelancers as they often approach potential clients to offer their services. Along with your expertise, your social and networking skills can help you get hired for work. Your willingness to talk and engage with others can impress a potential client and provide an opportunity for to you convey your knowledge and skills.

Frequently asked questions about becoming a freelancer

Here are the answers to some commonly asked questions about this career:

Can I work as a freelancer without experience?

Experience is important for any job, and clients usually ask to see some examples of your work before they hire you. Sharing your portfolio with potential clients can help you convey your skills and abilities, and instil confidence in the client. If you have little experience, you can consider building your portfolio and resume by offering your services for free.

For example, if you're interested in getting started as a web design freelancer and building your resume, you can start by creating your own website to demonstrate your skills. If you're interested in becoming a freelance writer, you can create a personal blog, write a pamphlet for a family member's small business or create content for a friend's social media at no cost.

Is working as a freelancer a good idea?

If you want to work for yourself and have the freedom to work from where you choose, then freelancing might be suitable for you. As with any job, there are several pros and cons to consider:

Pros of freelancing

Here's a list of advantages that come with freelancing for you to consider:

You work for yourself.
You often change tasks, reducing boredom in your job.
You often determine your pay rate.
There's a variety of work opportunities for you to pursue.
You can set your own schedule.
You have a flexible lifestyle.
Freelancing is accessible for everyone.
You get to choose your clients.
You have the freedom to work remotely.

Cons of freelancing

Here's a list of cons of freelancing for you to consider:

You don't have a steady paycheck, so there's a financial risk.
Work isn't consistent, and clients may choose not to work with you after a short time.
You don't receive any financial and healthcare benefits from employers.
You don't receive any superannuation from your employer.
You're considered a contractor rather than an employee.
There's a need for constantly sourcing new clients
Sometimes you may make a lot of money, other times you may find it difficult to find work.
You handle your own taxes.

Does freelancing count as professional experience on a resume?

You can add every freelance project you undertake in the experience section of your resume. When listing your freelancing experience, include a job title for yourself that reflects the kind of work you do and provide a summary of the services you offer. You can highlight any notable projects or clients you worked for and explain your major accomplishments.

How can I begin freelancing?

If you think freelancing is suitable for you, you can create your own freelance brand and start positioning yourself to attract clients.

Here's a list of what you can do to get started.

Choose your line of work.
Determine your target market.
Choose a brand name to market yourself and build brand identity.
Decide your rate of pay.
Market your services.