The concept of freelance work sounds great. Decide your own hours, submit proposal templates to jobs that appeal to you, manage your own contract templates, take long vacations, and set your own rates. It’s no surprise so many people have joined the remote work revolution in the past few years. However, many of them are being misled.
Sure, there is money to be made, but most freelancers aren’t making nearly enough as they should be. A lot of freelance workers make the mistake of underselling themselves, effectively missing out on a lot of billable expense income that they could have been paid for.
This reality has led some to advise freelancers to aim for as much as $100 per hour to compensate for everything they need to do. It’s time you learned just what you’re missing out on.
So, before diving into the nitty-gritty, let’s answer the most obvious question - what is billable expense income?
Billable expenses are the costs that you incur while carrying out work for your clients. You can add these items to your freelance invoice as additional expenses, which are different from the products or services you provide.
Imagine you have your own creative agency, and you begin a new project with a client. Every month, the agreed deliverables are:
You may have agreed on a fee for each blog, or a per-word rate, as many freelance writers do. But what about all the time you spend researching? What about the lengthy Skype calls discussing project specs? What about the time required to do keyword research? How about the emails?
Even in some of the highest paid freelance jobs, many new freelancers are losing out because they don’t think to charge for these items.
Including billable expense income on your invoices is a smart move for more reasons than one. It isn’t just about getting paid for the time you spend on Google. Here are three big reasons that freelancers should consider charging for these added costs.
That great client that pays you $40 per hour may be your favorite to write for, but when you factor in the 7-8 hours of unpaid scoping time each week, suddenly the hourly rate doesn’t look so good.
Before you broach the subject with your client, it’s always a smart move to have the facts. Gut feelings can easily be debated, but cold, hard data that proves the time you are investing will carry much more weight with your clients. By using Bonsai to improve your time tracking and management, the conversation will go a lot smoother.
Research from the Freelancers Union found that almost one-third of American citizens are classed as freelancers. With that in mind, there is a pressing for more people to get proactive with their tax management and familiar with the best tax software for independent contractors.
If you don’t have a clear understanding of your earnings, and what you are charging for, then it’s very easy to underestimate the figures on your self-employment tax forms. The move to a more vigilant, itemized billing system with all your clients can benefit you on payday, and during the end-of-year tax rush.
It would be great if all clients were fair and decent, but sadly, many freelancers learn a few tough lessons along the way. There are no hard rules for what you can or can’t charge a client for so it’s up to you to communicate everything. With professional proposals and a written freelance contract, you can set reasonable freelance rates that reflect the demands of the project.
Do you want a system that ensures you get paid what you’re owed? Sign-up for a free Bonsai trial to take control of your freelance career today.
The founder of Freelance to Win, Danny Margulies, has enjoyed great success in helping new freelancers earn their worth. He believes that many fall into a trap of using their previous job as a guide for their freelance rate.
“When people move to freelancing from a corporate job, they often use their salary as a benchmark: ‘I was making $X an hour, so that’s what I should charge,’”
Here’s the truth:
Every single second that you invest in contributing towards a client’s project or a process that will benefit them or their business is a second that you should be charging for. It doesn’t matter how insignificant it may seem – that’s time out of your life going towards the betterment of your client.
As a professional freelancer, you should strive to get paid for your work and bill your clients appropriately. Here are four items that your clients may pay for.
Freelancers don’t have the time to wait around for international bank transfers to arrive. As a result, it’s very common to get paid through Stripe or PayPal nowadays, as it’s much safer and faster than it once was. The one caveat is the small fee that must be paid to the platform.
This can become an awkward situation if it’s not discussed prior to payday. It’s smart to add the fee as an item before you send the invoice to your client by email, ensuring you don’t lose out on any money from the agreed rate for your product or service.
Chasing clients for payment is never fun, and yet many freelancers are left hanging around for weeks without getting paid. This can cause chaos with your cash flow, and considerable stress if money is tight.
If clients do get slack, try adding a late payment fee to the invoice, and then increase it for every day that passes. That can suddenly prompt them into action!
The early days with a new client involve a lot of discussion through emails and Skype chats, plus time spent crafting proposals, quotes, and contracts. This can add up quickly, taking away from the time that could be spent earning.
By using Bonsai's freelance time tracking tool, you can keep track of this time and deliver accurate invoices that ensure you get paid for all the time you work for a client.
Regardless of the industry or topic, you’re almost certainly going to sink some time into research. It’s essential to deliver premium-quality work, otherwise, you will struggle to create a product aligned with your client’s goals and vision.
A time-tracking tool will help you calculate how much time you spend researching topics and compiling your notes.
Ideally, you should clarify everything from the outset with a proposal or itemized cost sheet, which you can send via email to prospective new clients before engaging in any lengthy communications. If they read this and are still happy to proceed to a consultation call, you can be confident they are a serious client.
When it comes time to invoice your clients, you need to be able to list everything with precision, otherwise, it only invites the potential for debate. You should track time for:
And also, take note of any expenses you incur while doing the project, such as:
By keeping a close watch throughout the project, you will be able to create accurate invoices that include all billable expense income that you outlined in the beginning.
Expense tracking with Bonsai allows you to centralize your freelance career, making it easier to effectively track projects and create professional invoices for all your clients.
After you do some time-tracking for a few weeks, you can perform an in-depth assessment of your client base to see what each relationship is worth to you. Some time-consuming customers may prove more hassle than they're worth.
While offering a free 30-minute consultation is a nice touch for new clients, you should set boundaries on how much free time you give away. Beyond that, you are well within your rights to charge for extra time, effort, and work that you spend helping your client towards their goals.
Make everything crystal clear in your initial proposal, get a solid written contract, and then follow through by including billed expense income where you deem fit. This professional approach to your career will ultimately help you get paid what you deserve.
Join Bonsai today to discover what your freelance clients are worth to you.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?