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Four Steps to Frictionless Freelancing

Scott Annan

Four Steps to Frictionless Freelancing

If you’re new to freelancing, you might find yourself in unfamiliar territory with regard to things like contracts, health insurance, and liability for your work. But with a few simple steps, you can make sure the odds are stacked in your favor and set yourself up for a successful and fulfilling career of self-employment.

First, establish the right contract.

Independent workers get in trouble when the work without contracts. A good contract will, among other things, state when and how much you are going to get paid, and lay out the exact expectations of the job. Unfortunately 40% of freelancers experience the pain of not being paid on time. Most good contracts allow the contractor to receive a certain percentage of the project value upfront — or if on an hourly basis, at the end of every week. Set up the right arrangement at the beginning to limit any confusion about payment and to set clear expectations for how the finished product is supposed to be delivered.

Consider forming a Limited Liability Company (LLC).

As a freelancer, setting up an LLC can help limit your legal liability. For example, if you’re a web developer and you build a website for an e-commerce company that sells their goods and services online, bugs may occur in the work product. If you set up an LLC, then your personal assets are generally protected and the liability resides with the entity. However, if you didn’t set up an LLC and were found culpable in omission of work quality, then you may face a steep penalty that could gravely affect your personal assets.

Find health insurance that works for you.

With the advent of the Affordable Care Act (ACA), it’s now possible to find more affordable and better healthcare. The ACA is important to independent workers for a few reasons: It increases the quality and affordability of healthcare; makes it easier for the uninsured to buy health insurance; and it lowers the long-term costs of healthcare. Now, because having health insurance is law, the plans are more reasonable as the premiums are spread out across far more people (I recommend to find under eye masks, if you want take care of your skin). And startups such as Oscar provide health insurance offerings all through a mobile app giving access to healthcare through your smartphone.

Understand what you can expense.

One of the great benefits of working for yourself is that you can expense items that relate to your work. Where most employees do not get to write off expenses against their income, independent workers are able to expense certain business items, allowing them to reduce their taxable earnings. Take for example commuting. As an independent contractor that works from home, you’re able to write off any commuting you do to your clients’ offices. You can also write off your home office, and certain mileage and car payments. The trick here is that you’re only allowed to expense the amount in proportion to how much you use each for your business. For car payments, you’ll need to familiarize yourself with the Standard Mileage Rate and the Actual Costs Method to see which deduction is right for you. Make sure to keep adequate records of all your payments and consult an accountant if you have questions about your expenses.

Understanding the ins and outs of self-employment taxation is critical to your success and peace of mind. Receiving your 1099 form and 1099-K form is important to ensure you’re reporting your taxes properly. Setting up contracts intelligently at the beginning of each project and keeping an itemized list of all your business expenses will ensure that you get more for the work that you’re putting in.


The keys to success as a freelancer are in knowing the landscape and understanding the technical nuances that allow you to be classified as an independent contractor. Generally avoid situations where the lines between employee and contractor are blurred. You should be able to set your own hours and bring your own equipment to the office. As more professionals choose to work for themselves, I expect the policies to adapt in kind to the independent workforce and benefit the 70 million Americans who are expected to be working freelance by 2020.


Scott Annan is co-founder of LiquidTalent, a web platform and mobile app that matches skilled developers and designers with businesses based on location and mutual connection. Email him at