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Whether you’re looking to earn extra income or replace a paycheck from a lost job, freelancing can be just the thing to help you pay your bills. And it’s not just a young person’s game.

Also referred to as independent work, contracting, self-employment, consulting, or gig work, freelancing has been a growing trend for years and has only picked up speed during the coronavirus pandemic.

If you’re new to freelancing, you’ve come to the right place. Below, we’ll walk you through what you need to know to get started, plus share resources for finding and securing work.

Being a Freelancer vs. an Employee

While freelancing can feel similar to working as an employee, there are some big differences.

  • Independence: You’ll typically work for clients instead of having a boss, giving you greater control over how, when, and where you work.
  • Income: You’ll be paid an hourly rate or a fixed price for a project instead of a salary.
  • Benefits: You won’t receive employer-provided benefits, such as health insurance, so you’ll need to find your own health coverage.
  • IRS Classification: You’ll file a Form 1099 instead of a W2 and you’ll be responsible for withholding and submitting quarterly taxes.
  • While your income may be unpredictable, freelancers often report the flexibility and freedom that comes with being their own boss makes the trade-off well worth it.

Self-Employment Tax Basics

If you earn more than $400 from independent work, you must pay taxes. Unlike employees, freelancers don’t have taxes automatically withheld from paychecks, so you’ll need to cover those yourself.

Plan to owe 25-30% of what you earn
You’ll need to set aside enough to pay income tax well as medicare and social security taxes under what’s called self-employment tax.

Pay estimated quarterly taxes
Save funds in a separate savings account to avoid spending what you’ll owe, and pay by these dates.

Track your work-related expenses
Some of what you spend money on as a freelancer may help reduce the taxes you owe. Keep track of possible tax deductions on some sort of list and save any receipts.

Finally, it’s important to understand IRS penalties for underpaying estimated quarterly taxes. For free tax guidance, visit the IRS Tax Help Center.

Where to Find Freelance Work

There’s a saying about freelancing: it’s feast or famine. So it’s a good idea to always be on the lookout for new opportunities.

Here are the best sources for finding work:

  • Networking and Referrals: Personal and professional contacts can be potential clients, so let everyone know you’re available.
  • Online Work Platforms: Uber, Upwork, Taskrabbit, and Fiverr are just a few fee-based apps and websites that connect clients and workers.
  • Job Boards: LinkedIn, Indeed, and Glassdoor may have free listings for contract or project work.
  • Staffing Agencies: Businesses use them to find temp, temp-to-hire, and contract-based employees.
  • Offline Marketing: Posting flyers or business cards on bulletin boards or business windows can help you find clients in your local community.

Find Freelancing Support

Get a step-by-step guide to getting started at the Work For Yourself@50+Freelancing Resource Center.

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