Being a freelancer, being our own boss, has appeal. It appeals to our sense of self-worth, it can seriously boost our self-esteem and we get to take real pride in our achievements. This applies if you are a newbie, someone just starting out on the freelance journey, or have been operating as such for many years.
But one thing which frustrates freelancers is hearing about employed people who can get access to certain insurance policies at a reduced cost. It happens when a company arranges a bulk discount. You being just ‘you’ can hardly apply for such a scheme. It sounds unfair and probably is.
There’s a strong argument which states that most freelancers need insurance. We need it for the usual things like life cover if we have a family to support and we definitely need it as income protection.
In case you’re new to the freelancer caper, such normal work benefits as sick leave no longer apply when you are self-employed. Of course you can give yourself a holiday whenever you like but how will that keep your business productive?
What if I get sick?
No sick leave is a perfect example of how a freelancer requires income protection insurance. In a nutshell, the insurer will pay you an agreed amount – it’s set out in the policy – if you are sick or injured and thus unable to work for an agreed period of time. This type of cover is essential if you have no back-up. Remember stopping work means your income stops.
And with a life cover policy or some income protection, it’s just you and the big insurer. You are on your own and can’t negotiate a discount. Employees in a big firm can get a discount through a ‘bulk purchase’ but little old freelancer you doesn’t have that kind of buyer muscle.
It’s not all doom and gloom
But there are benefits for you. Being on your own, your insurance costs – life cover, professional indemnity, office contents and income protection are just four examples – will most likely be tax deductible. Check with your accountant. This can mean a serious saving. It’s a legitimate expense for any freelancer.
And remember your bottom line figure is your net income. Your tax owed will be less once legitimate expenses are taken into account. And you might [and should] have a personal pension fund. In some countries you can get various insurance policies paid from within your pension fund. Investigate. Negotiate. Save.
Knowledge is power
Taxation laws vary from country to country but knowing the basics or making sure your accountant knows the laws, particularly as they apply to someone in your employment situation, will help you save and thus make money.
Boosting your income is the obvious way to be more financially successful but there are other ways. Maximise your tax benefits and reduce your expenditure will guarantee you reap the financial rewards.
Chantille McDonald is a Freelance writer and enjoys giving people a head’s up on money saving websites. Once such site is www.choosi.com.au