Running Your Freelancing Business

This article is somewhat specific to the needs of freelancers who live in the United States, but I’ve tried to make it useful no matter your country.

I remember when taxes used to be relatively easy.

I’d get my paycheck, my employer would withhold estimated tax payments, and at the end of the year I’d file a relatively simple tax return and get a refund for any withholding overpayments I made a bit later.

Easy, right?

And then I started my own business.

…And the IRS went from being a faceless organization that mailed me checks every year to an archnemesis, who I felt was always getting in the way of me, my clients, and even my ability to create jobs.

I dug myself into a hole more times than I’d care to admit, especially as I grew my agency and brought on employees and significant overhead. Early on, I thought of my taxes in a very laissez-faire way: “yeah, I’ll owe some taxes probably, but hopefully I’ll have the money to pay them. And if not, I’ll get a payment plan worked out. What’s the worst that can happen?”

To be honest, it wasn’t doom and gloom.

I did end up taking up the IRS on a payment plan, and it was easy to do. (If you owe less than $50,000, you can usually do this without even needing to talk to an agency. If you’re like me and don’t like needing to tell someone that you screwed up your taxes, that’s a very welcome featured.)

But don’t be like me and end up mucking around with IRS payment plans.

If you take one thing away from anything I do here at Double Your Freelancing, it’s this: Learn as much as you can from those who’ve already forged the trail.

So today I’d like to introduce you to Luke Frye of Timber, an accounting firm that specializes in working with freelancers. He’s helped me prepare this article (since I’m woefully ill-equipped to talk authoritatively about taxes or legal things), and his firm has also produced a really good email course that goes deeper than what we’re able to cover in this article—I’ll link you to that at the end of this article.

I’m about two weeks out from releasing my latest course.

So far, about 8 hours of training lessons have been recorded and it’s coming along really, really well. In terms of actual content, it’s my biggest project yet, and the early access customers who have already joined are kicking butt.

But I’ve also heard from a few of you, questioning how a course on marketing automation fit alongside courses and content on value-based pricing, getting clients, and offering paid discovery services.

If I were to really dig into that concern, I think the overarching issue was: Marketing automation is for companies who sell products or software online and not services businesses.

Today we have a very special article from Julie Elster, founder of Just Tell Julie, a service that helps you turn your overdue invoices & failed payments into customer services opportunities.

Julie spent over 10 years in Corporate America working with accounts receivable and she certainly knows her way around debt collection tactics. Today she is an accounts receivable virtual assistant and helps make getting invoices paid painless for freelancers. Through her Thermonuclear Niceness, Julie quickly turns mildly overdue invoices into customer service opportunities. In this article, Julie teaches us how to get paid!! Sound good? — take it away Julie!

The End of Overdue Invoices: Are you using these two methods?

Owning your own business has some truly amazing benefits. You can make your own hours. You can take on the projects that you want, and turn down the ones you don’t. You can work on your terms, and do it your way.

The downside? Sending an invoice, and hitting the refresh button on your email over and over again waiting for the notification that your client has paid – like your inbox is an awful freelancing slot machine that mostly dispenses spam. Without the other regular recurring revenue, overdue invoices are especially painful for small teams and solopreneurs.

There is a surprisingly easy and simple solution to keep the late and non-payers at bay. It’s so remarkably simple I’m shocked not everyone does it.  

Ready? Here we go:

To avoid late and non-payers every single time, collect payment upfront. Collect payment before work starts. If the client doesn’t want to pay, the work doesn’t begin. It really is as easy as that.

Ok, maybe I’m oversimplifying it just a little bit, but it really can be done. I have worked in accounts receivable for years, and make a living reaching out to clients who haven’t paid their invoices. The #1 thing I tell my clients is to reconsider their process when it comes to collecting payment from clients to prevent the problem before it starts. The majority of clients I work with charge hourly rates. When a client approaches them to work they collect a small deposit upfront. When the work is complete they send an invoice based on the number of hours the project took to complete. Then they wait, hoping the invoice is paid in a timely manner. Does that sound familiar?

There are a lot of horror stories out there about freelancing.

Freelancers are getting screwed over on websites like Upwork, they’re driving their prices lower when competing against others, and they’re investing hours into writing proposals — and only closing around 25% of those they pitch.

I’ve been traveling lately, which means I’ve had plenty of time to think about my own consulting business and the businesses of the freelancers and agencies we’ve featured on our student success stories directory.

I thought: If I could boil down success to a recipe, what would that recipe look like?

1. They have a strategy for getting clients

I maintain a steady stream of clients by speaking at conferences and by having created a course on marketing automation. This lands me high-quality consulting clients who see me as an expert in automation and personalization.

Back when I ran an agency, we regularly ran seminars and other events that expanded our audience and kept our sales team fielding leads full time (when you have 11 people to support, you need significant deal flow.)

But even those who aren’t perceived as industry experts or don’t have the capacity to host weekly business seminars can still create systems for selling.

I used to think of myself as a developer.

I’d go to conferences and code retreats with other developers. I’d buy books detailing new frameworks and languages that I could use to keep myself relevant. And when talking to and pitching clients, I’d rely on my developer-ness to win the project.

But as I grew my agency, I was forced to start looking at the bigger picture. I could not longer compete as just a development agency.

Why did these clients hire us?

What were they really looking for?

This inevitably led me to the conclusion that what our clients really wanted was much more than just development.