Out of all the money making ideas online, freelancing carries with it the most professional risks. Why? Working freelance means that you don’t have the protections that working under an employer offers. Working freelance also means that people will prey on you and your lack of protection, and you’re left taking responsibility for things that a regular employer would cover, like for example – paying business taxes.
Here are a few problems you may run into while working freelance, but you’ll be relieved that there are ways to deal with these problems.
#1 Paying Taxes
There are only three things guaranteed in the life of an American; birth, death, and paying taxes…even if you work freelance. Uncle Sam is always visiting his large ‘family’ with his hands out, so even if you don’t work with a business, you have to pay income taxes. The government can’t run without making money from somewhere!
Paying taxes can be a little tricky when you’ve never had to file self employment taxes. Paying taxes is mandatory, as in NOT an option! And since you are freelance, you have to take care of all the paperwork yourself.
How to Deal:
The first thing you need to do before taking on your first client is to set up reliable bookkeeping software. Some of the most popular and easy to use are:
Keeping detailed records of how much you make will help you calculate how much you’ll owe at the end of the year. Also, keeping back a percentage of the money you make each month will make your lump tax payment in April a lot less painful.
When tax time rolls around, you need to pick up an IRS Form 1040 (Schedule C and Schedule SE) from the local post office or library and fill it out. If you’d rather have a professional do the work for you, hire a freelance accountant and help out a fellow freelancer.
If you’re a freelancer with some sort of duplicable work (eg. a freelance writer, a photographer, artist, designer, blogger etc.), this is a problem that you will face at some point or the other. Creating original content can sometimes be very difficult, but you persevere and get something out there. When someone just sinks low enough to directly copy your work without putting any effort of their own, it can be a very difficult pill to swallow.
Not only is the problem with plagiarism the fact that some lazy idiot comes and takes the credit for someone else’s (your!) hard work, but in some cases, the price that the victim pays is often very high. Consider the freelance writing market. Some freelance writers desperate for money will copy and paste content directly from someone else’s work. Google frowns on this so much so that any site caught with plagiarized content on it can be blacklisted. If the site that copied the content happens to get indexed first, then your clients who are paying you to create original high quality content might potentially get blacklisted.
How to Deal:
Honestly, there is no easy way to deal with this problem :(. Whenever possible, take measures to protect your work. For instance, if you are a freelance photographer, watermark your pictures. If you are a blogger use protection from plagiarism detection software and report any improper use of your content. The most common software used for detecting plagiarized text is:
And take a stand of never to succumb to the temptation of the copy-paste solution. If you ever need to use someone else’s work, make sure to provide accurate references.
#3 Non-Communicative Client
Working freelance has many downsides, but none as annoying as the client that won’t return your phone calls/emails, and doesn’t provide enough detail for you to actually work. Sure, you can work all day on a project without hearing back from your client, but if they never gave you information on what they wanted from you, you could have just wasted a whole day you’ll never get back.
Many clients believe that because you work freelance, you have a lot of free time to just sit around and patiently wait to hear from them. You are busy and you don’t have time to wait, but you can’t move forward on a project without direct contact with your client.
How to Deal:
This problem is a difficult one to deal with because you can only do so much with one sided communication. Patience and persistence is the key to getting your client to comply, and it wouldn’t hurt to let them know that you are having difficulties getting the requested work done without some support from them. Freelancing doesn’t mean treading alone. If your client cannot communicate important information to you in a timely manner, you need to discuss how their lack of involvement is making your work more difficult, which makes getting their finished product take longer.
Skype is one of the most popular online communication platforms that you and your client can use for easy and open communication.
#4 Breach of Contract
Breach of contract is another very difficult problem to deal with. When you and your client sign the contract (you did get the client to sign a contract, right?), you are both entering into agreement with the terms of the contract and the penalties that come when one side or the other doesn’t comply. But what if the client breaches on this contract?
Once again freelancers get a raw deal with clients because so many, especially those abroad think that because you’re a freelancer you aren’t protected by big corporations and their big corporate lawyers. When a client deliberately breaches your contract, that is fails to uphold their end of the contract, it can be difficult to seek legal action against them, especially if they are in a foreign country. The problem with money making ideas that work strictly online is that there are fewer lawyers that take on intellectual property and ecommerce cases.
How to Deal:
No matter what, always have a written contract signed and dated by your clients. This is an ironclad form that you can use if, for unfortunate reasons, you must file suit against your client for breach of contract. Also, do some research and find a lawyer locally that have experience working with online breach of contract cases, or even a lawyer willing to take on such a case. It always helps to know in advance that you have legal help to fall back, if things got really bad.
You could send a cease-and-desist letter to your client. Even though anyone can send this letter, most people have a lawyer draft one for them for a nominal fee. In most cases this action alone may be sufficient to scare a client into action.
#5 Payment Issues
Sometimes freelancers totally get shafted. They provide quality work for clients, and the clients don’t pay for the product, or they pay and take the money back after a certain amount of time has passed. These are both problems that have been reported repeatedly, especially against online payment systems like PayPal, which don’t offer protections for people offering services instead of products (there are several lawsuits against PayPal in the works).
If you provide a client with a finished product and they don’t pay, the only thing you can really do is pester them until they do pay. Unfortunately, there are so many scammers out there looking for free stuff, you just might run into a ‘client’ who is willing to pay top dollar for work, but when it actually comes time to pay, they disappear off the face of the earth. This is when having a contract comes in handy, but it isn’t worth the paper it’s printed on if the information in the contract is falsified. Always check!
There are also many cases in which a client will pay for work in advance, or pay for work over a period of a few months using online checks via PayPal, and once a certain amount of time has passed, they request a chargeback for the e-checks and effectively pull the coin out of the soda machine after getting their Coke. This has left many a freelancer owing PayPal money on top of being out the money for their bills. Unfortunately, PayPal has no way to protect freelancers who offer services, unless you’ve sent product through the mail.
How to Deal:
You can request that clients pay you using the normal immediate payment methods on PayPal which do not allow for charge backs. Also, you can request money orders sent registered mail rather than checks, which can easily be forged or have stop payments issued on them. Finally, always insist on half the payment upfront until you establish a good working relationship with the client. Some freelancers hesitate to do this as they are worried it may give the client a bad impression. But it is as much your right to expect the client to take on risk for the first half of the project, as you will for the second half of it.
Online money making ideas like freelancing come with some difficulties. Expect to face some of these along the way. But if persevere, you will figure out a way to deal with these issues and how to prevent them even before they occur. Remember, where money is involved there will always be issues – irrespective of which money making idea you pick. Being prepared with the prior knowledge will go a long way in dealing with it when you are faced with the beast.