Try it out part-time first
Quitting to pursue your passion full time may feel like the right thing to do, but it may be better to do a trial run first. If possible, start freelancing on the side while maintaining your regular job. This will allow you to see if the lifestyle of a freelancer is something you want to pursue further.
As a part-time freelancer, you’ll be able to grow your client list while having a steady income from your regular job. Once you have ongoing work, quitting your full-time job becomes a lot easier.
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Talk to other freelancers
It’s always a good idea to get perspectives from other freelancers. They’ve been in your situation and can offer practical advice to help you succeed. The last thing experienced people want is for people to make the same mistakes they made. If you don’t know any freelancers directly, try reaching out on community forums such as Reddit.
You could ask questions such as what their typical day looks like, where they find jobs, and how much they charge. Speaking with people that perform similar jobs may seem counterintuitive since they’re your competition, but having a strong network can actually increase your value. The last thing you want is to undercharge significantly when other freelancers have established a fair rate. Knowing what your services are worth can make freelancing much easier.
See if you qualify for any assistance
The government of Canada provides assistance to freelancers and entrepreneurs that you may qualify for. Not only can you apply for financing, grants and tax credits, but you can also get expert advice to help you develop and grow your business.
In addition, if you’re a business owner between the ages of 18 to 39, you’ll want to check out Futurpreneur, as they have spent 25 years providing financing, mentoring and support tools.
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Figure out how you want to structure your business
There’s nothing really holding you back from starting your business. You can immediately begin working as a self-employed individual or sole proprietor even if you’re still employed full time. Any money you make would be added to your regular income and taxed accordingly.
Some people choose to incorporate their business first before they begin seeking out work. This gives you a separate legal entity, which provides you with limited liability, tax benefits and more. That said, operating as a corporation does require more paperwork, so you’ll want to hire an accountant.
As for GST/HST collection, you only need to register for a GST/HST number once you exceed $30,000 in income in a calendar year. Once you pass that threshold, you have 30 days to register for a GST/HST account. You’d then have to start charging taxes on your work. The exception is taxi operators or commercial ride-sharing drivers, such as Uber. You must register for GST/HST before you offer rides.
Make sure your finances are in order
Managing your finances is often the most challenging part of being a freelancer. Not only will your income fluctuate, but you’ll now be responsible for paying your own taxes. Generally, you’ll want to set aside at least 25% of your income for your eventual tax bill.
Be sure to track your income. Once you enter a higher tax bracket, you’ll need to save even more money for taxes. If you have a GST/HST number, you’ll need to set that money aside too.
While no one enjoys paying taxes, entrepreneurs can reduce their tax burden by claiming eligible expenses. For example, any purchases or expenses related to your business, such as meals, advertising, utilities, travel, etc., can often be claimed as a business expense. This would lower your overall tax bill. Just hang onto all of your receipts in case you get audited.
For more details on your tax brackets and expenses you can claim, please consult my previous piece.
Focus on your central tasks
No matter your business, your work will require tasks that you may not have a strong background in. Maybe you will need to build on your skills with social media marketing or graphic design.
Sure, you could probably figure out many of those jobs on your own. While that makes sense since it’ll keep your costs down, it may not help you grow your business. It might take you 10 times longer to learn the new skills, and you won’t nearly be as good as someone who has made a career out of it. You’ll need to spend more on the help, but the time saved will allow you to focus on the skills that make you money.
If there are areas where you don’t excel, you’ll want to outsource the tasks.
Understand that the grass is not always greener
Lots of people dream about being their own boss and setting their hours, but the reality is that being a full-time freelancer may not be so glamorous. There’s a good chance that you’ll end up working even longer hours, plus weekends, to get your business off the ground. You also won’t get paid for things such as meetings or sending emails. In addition, the income you earn isn’t guaranteed, and it’s an entirely different lifestyle compared to being a full-time employee.
That said, being a full-time freelancer does have its perks. Once you’ve established yourself, you can often dictate your hours and the work you do. You also have the freedom to work from home [anywhere in the world(https://moneywise.ca/managing-money/digital-nomad-lifestyle)]. This can be an ideal situation for people who are looking for a better work/life balance.
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