How to Be Sure You’re Covered as a Freelancer
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Being a freelancer is awesome. You get to set your own hours, work with a variety of interesting clients, and most people who outsource their business needs pay their bills on time so the income is consistent if you develop good relationships with companies. The problem is that you’re kinda-sorta on your own when it comes to taxes and health insurance. You also have to plan for the worst-case scenario: being sued. Here’s how to cover your bases as a freelancer.
Buying Individual Health Insurance
Health insurance is expensive, especially as a freelancer. That’s because you don’t qualify for small group rates. You’re left to fend for yourself on the individual market. Even with healthcare reform, you may end up paying a lot through the exchanges if you’ve never had insurance before or if you’re reasonably successful. That’s because premiums under the Affordable Care Act (aka Obamacare) favor those who traditionally find it difficult to get insurance due to health reasons or who have low incomes.
Unless you have health problems, or you’re just starting out, expect to pay more through an exchange. Of course, you do have one option to save yourself a bundle on insurance and that’s the Freelancer’s Union. This group offers a group health insurance plan that works just like any other group insurance plan.
In some states and areas, though, the Freelancer’s Union doesn’t exist or it’s not competitive. For example, if you look up individual health insurance in California, and you discover that the union no longer exists there, your only option will be the exchange rates. Or let’s say you’re just starting out or have existing health issues. You may find that the state or federal health insurance exchange rates are cheaper than the union rates. Since every state is different, it pays to spend some time comparing rates. Yes, it’s a little tedious, but you only have to do this once.
Create A Legal Barrier
Creating an LLC or some type of legal barrier is also crucial. You’ll want to protect yourself from the unfortunate client that decides nothing is good enough. They’re out there. Maybe you’ve already experienced this. You do the work. It’s submitted on-time. The client isn’t happy and decides he wants to sue. You try your best to make it right, calm down your client, and give him what he wants. It’s a lost cause. He wants to take you to court.
Here’s where the problems begin. If you’re a sole proprietor, all of your personal belongings are on the line. You could lose everything you’ve worked so hard to accumulate.
Hire a CPA For Taxes
Taxes aren’t something you want to goof up. The IRS doesn’t have a sense of humor that anyone is aware of. A CPA is like your personal messenger, delivering critical information to the government on your behalf. All you have to do is turn your books over to the accountant, and he takes care of the rest. He guarantees his work. You stay out of trouble so you can focus on doing what you do best instead of wasting days upon days (even weeks) pouring over government forms.
Anthony Jensen is an insurance agent. He often writes for small businesses and self-employment blogs.
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Category: Business
