3 Steps Freelance Writers Should Take To Protect Themselves and Their Assets

 The gig economy has been steadily growing in the U.S. for the past five years. Over 73 million Americans now work for themselves as freelancers and millions more are expected to start their own businesses in the coming years.

Working as a freelance writer can be particularly rewarding. You can use your wordsmithing abilities to make a great living and don’t have to worry about clocking in for required hours.

However, going freelance can be financially risky. You don’t earn a pre-defined salary and won’t receive benefits like healthcare insurance. This means you have to take proactive steps to protect yourself and stay financially secure between projects.

Mitigate Financial Risk

Earning a living as a freelance writer is deeply rewarding. You’re being paid to show off your command of language and can choose to take on projects that align with your personal interests or professional goals.

However, going freelance is a little like taking a leap of faith. Your earnings are entirely dependent on the clients you secure and you can’t be certain that you’ll earn enough to cover your cost of living in the first few months.

Future-proof planning can help you make calculated decisions can reduce the amount of financial risk you incur.

Start by building a strong emergency fund. As a freelancer, your emergency fund should cover at least three to six months’ worth of essential outgoings. This will give you time to switch directions if you find that freelancing isn’t right for you.

Remember to put aside a portion of your earnings for tax, too. Don’t get caught out by the 15.3% self-employment tax as you’ll still need to pay for Social Security and Medicare even when you’re self-employed. Work with an accountant or CPA to mitigate your risk and ensure that you pay your taxes on time.

You’ll also need to source your own insurance when you’re self-employed. However, finding the right healthcare coverage can be tricky. Consider using healthcare.gov’s Health Insurance Marketplace to find the right insurance options for you. You’ll be able to browse flexible plans and find high-quality health coverage that aligns with your budget and healthcare needs.

As your freelance writing business grows, try to diversify your income streams. You may have one or two stellar clients when you first decide to go freelance, but you need to spread your risk if you want to make it in the long term. Taking on a few clients can help you diversify your portfolio, too, as different clients will ask for content based on the genre expectations of their industry.

Register as an LLC

Sole-proprietorship is the default business structure for freelancers. Setting up as a sole proprietor is straightforward and relatively affordable, meaning you can start earning without having to bring in professional help. However, as your freelance business grows you may want to switch to a limited liability corporation (LLC).

Starting an LLC is easy. Find a registered agent in your state and have them file the proper paperwork before important deadlines pass. You’ll need to share information like the business name, the contact information of all founding members, the address of the LLC, and the mission statement for your business.

Once you registered as an LLC, your business accounts and personal accounts will be considered separate. This can help you protect your personal assets if you are sued or face legal issues. Likewise, if you go bankrupt, creditors cannot go after your personal assets and only have access to your business assets.

Use Reputation Management Techniques

Your reputation is vital to the success of your business as a freelance writer. A great reputation can help you land high-profile clients and will improve your retention rate between projects.

However, maintaining a great reputation is about more than completing work on time and sending professional emails. If you have a social site or a blog, you need to utilize reputation management techniques to keep your brand strong and your clients happy.

Start by regularly posting to social media and actively engaging with the questions, comments, and concerns you receive. A quick response to a question asked on Twitter or Instagram can nip a potential PR problem in the bud and will show clients that you care about them.

If you maintain a blog or website, lean on your SEO skills to boost your profile and rank higher in search engines. Post high-quality, SEO-optimized content to your blog every month and monitor the site’s performance using Google Analytics. This shows your audience that you have an insider understanding of digital content and will draw more clients to your business.

As your brand grows, utilize free brand-mentioning tools like those offered by SproutSocial and HootSuite Streams. Social listening tools can help you see the conversation happening about your brand and will alert you to any negative PR coming your way.

Conclusion

Going freelance is exciting, rewarding, and a little bit scary. You can minimize the risk you take on by building an emergency fund and registering as an LLC. This can help you remain financially secure between projects and will give you the confidence you need to upgrade your clients and build a brand that supports your growing business.

Amanda Winstead is a writer from the Portland area with a background in communications and a passion for telling stories. Along with writing she enjoys traveling, reading, working out, and going to concerts. If you want to follow her writing journey, or even just say hi you can find her on Twitter.