How freelancing works: Types of jobs, benefits and challenges

Did you know that around one million Australians are engaged in some type of freelance work? With technology making remote work possible for more people and the gig economy going strong, it seems that freelance work is only set to rise.  

But exactly what is freelancing? If you’re not familiar with this type of work you might be wondering what freelance work entails and if it would work for you. In this article, we cover different topics related to freelancing, explore freelance work options for graduates, and compare the differences between freelancing vs a regular full-time job.

What is freelancing?

A freelancer is an independent worker who provides their services on a contract-by-contract or project-by-project basis. They are self-employed and offer their services as a business, with an Australian Business Number (ABN) from the Australian Tax Office (ATO).

Freelancers are in charge of everything to do with their work. They negotiate their own contracts, set their own rates, do their own invoicing and are paid directly from their clients. At the end of the financial year, they have to figure out their own taxes, too.

Freelancers are responsible for their own work schedules. They can usually set their own hours, but may take on contracts that require them to work with clients or be contactable at specific times. Freelancers don’t get holiday pay or paid leave. Depending on the type of work, they may be able to work from home, while others may be required to work onsite or in an office. 

This differs from remote work, as remote workers are often permanent employees of an organisation, with all the benefits and requirements that entails. Freelancing also differs from entrepreneurships, as entrepreneurs generally aim to scale their businesses by hiring employees, while freelancers work as a single entity.

What does a freelancer do?

Freelancers do all sorts of things across a wide range of industries. The term is often associated with writers, graphic designers, programmers and photographers, but you can freelance in practically any role: as a translator, project manager, event planner, personal trainer, accountant, business consultant, health care practitioner, landscaper – the possibilities are endless.

Aside from having skills in their chosen field, freelancers must also be skilled in running a small business. They need to be organised, have good time management, be motivated and self-disciplined, be resilient, be a good communicator and have basic accounting skills. Being your own boss comes with a lot of unexpected responsibilities. 

How to become a freelancer

The pathway to becoming a freelancer is not the same for everyone. Some people find opportunities organically after working in their industry for a few years. Others have full-time jobs while dabbling in their freelance work as a ‘side hustle’. If you’re interested in becoming a freelancer, here are some different routes you can take. 

Setting up: from idea to action

The first step is deciding what services you’ll offer. Every freelancer has to have a skill set they can leverage to provide goods or services that people want to buy. Identify your most marketable skills and a potential customer base. 

Think outside the box in terms of your skill set – you don’t necessarily need formal training or experience to be able to freelance. Content creator, virtual assistant, dog walker, transcriber, tutor, cleaner and handyperson are all roles that require no formal experience to break into as a freelancer. 

The next step of starting your freelance career is to create a business plan. Plan out the weeks and months ahead of you, including budget, marketing and networking, with milestones to track your progress. If you’re relying on freelancing as a sole income, have a back-up plan so you don’t have to deplete your savings.   

Legal and financial foundations

Before you start out as a freelancer, make sure you’re aware of your legal and tax obligations. Visit the ATO website for information on applying for an ABN and registering for GST, if your yearly earnings will be above $75,000. 

Consider hiring an accountant to help you put the right amount of tax aside and work out what expenses are tax deductible. As a freelancer, you won’t receive a PAYG slip or group certificate, you’ll have to calculate your own tax. You should create a template for your invoices and track all your payments and expensies. It can be worthwhile investing in accounting software to keep your finances organised. 

Freelancing versus a full-time job

We’ve covered what is a freelancer and what does a freelancer do, but how does freelancing compare to a permanent full-time job?

Weighing the pros and cons

There are many advantages to freelance work – more flexibility and independence, for example. It might be a tempting proposition for those who feel constrained or bored by regular full-time work. The prospect of being your own boss and choosing your own clients and projects (and working hours) may also be enticing.

However, there are also downsides and challenges that come with the freelance lifestyle. For example, there may not be job security or income stability if you’re doing smaller contracts or projects. You might feel more pressure, as all of the responsibilities of the ‘business’ fall on your shoulders. It can be harder to find a happy work-life balance as a freelancer, as your personal and professional lives tend to overlap. 

It’s important to weigh up the pros and the cons of this type of work before deciding whether or not it’s right for you.

Comparing freelancing vs a full-time job

Work hours

• Freelancing: Flexible and dictated by client needs
• Full-time job: Typically 9–5

Income stability

• Freelancing: Dependent on securing contracts and client reliability
• Full-time job: Regular paychecks of consistent amounts

Job security

• Freelancing: Unpredictable
• Full-time job: Stable, with legal protections

Flexibility

• Freelancing: High flexibility
• Full-time job: Stable, with legal protections

Benefits and super

• Freelancing: None – must be self-funded
• Full-time job: Often provided by employer

Career growth

• Freelancing: Self-directed – up to the individual
• Full-time job: Generally structured along a defined path

Work environment

• Freelancing: Depends on the role, some can work from home or remotely
• Full-time job: Typically on-site or hybrid

Making the transition

If you feel like a freelance career could be right for you, it’s important to make sure you have a good foundation before jumping in. As with any big career decision, research your options, get advice from other freelancers or a mentor and make sure you have emergency savings. It may take time to find a steady stream of work, so be prepared to network and market yourself extensively at first.

Many freelancers transition slowly from full-time work into contract work. This makes it possible to gradually accumulate clients until you can financially support yourself with only freelance work. As you do more freelancing projects, create a portfolio or gather testimonials from clients that you can leverage to get more work down the track. 

Finding work and building relationships

One of the biggest challenges of working as a freelancer is finding steady work. It’s always easier to keep a client than it is to find a new one – here are some tips on how to maintain long-term client relationships and find new work when you need to. 

Platforms and networking

Freelancer platforms can be one way to generate new leads as they can connect you with clients specific to your field and the services you provide. Networking, as always, is also a valuable tool. Go to industry and networking events, join groups, be active on forums and reach out to contacts, offering your services and asking for leads. 

Crafting a winning portfolio

No matter what services you provide, it’s a good idea to have a website where you can showcase past projects and list your services. A portfolio, testimonials and examples of past work are an essential part of marketing yourself as a freelancer. New clients will want to see proof of your abilities before they offer you work. A portfolio should showcase examples of your best work, showing a range of things you can do/provide, with a short explanation of the project. 

Pricing and negotiation

As a freelancer, you decide how much to charge your clients. Different ways of charging clients include:

• hourly rate,
• day rates,
• whole project fee, and
• monthly retainer. 

Setting rates and understanding market value

It’s important to set fair and competitive rates that are aligned with market standards. To find out the general rates for your line of work, you can consult other freelancers, research freelancing platforms or ask people in your clients’ demographics. 

In most cases, clients will have a set budget for the services you provide, so while there may be some room for negotiation, don’t expect to dramatically raise your rate. Negotiating a lower rate may open the door to more regular work, providing some income stability. 

No matter what rate you set, remember to review it regularly to keep it in line with inflation and your increasing level of expertise. Make your clients aware of any upcoming increases in your rates, so they can plan accordingly. It’s a good idea to increase rates at the start of a new year or financial year.

Advantages and disadvantages of freelancing

While the advantages of freelancing are widely known, the disadvantages are less obvious. Here are some of the pros and cons of being your own boss. 

Exploring the benefits

Some of the many advantages of being a freelancer are related to having more freedom. They include:

• Potentially better work-life balance
• Flexible hours and location
• More diverse and interesting work
• Control over work days and calendar
• No office politics
• Can choose clients and projects
• Not tied to an employer

Confronting the challenges

Working as a freelancer also has challenges. Being your own boss means all the responsibility falls on you. Here are some of the main cons of freelance work:

• Potentially worse work-life balance
• Irregular income
• Irregular hours with no upper or lower limit
• Isolation
• No paid holiday or sick leave
• Must navigate the complexities of income tax 
• No professional support
• Responsible for health insurance and super
• Requires a high level of self-discipline
• No company bonuses or incentives

In-demand freelance work

The stress of finding freelance work can be reduced by offering services that are always in demand. To have the best chance of succeeding as a freelancer, find a job you’re good at that people will always find a need for. Content producer, disability support worker and accountant are just a few examples of roles that are in high demand. 

Identifying lucrative niches

Every industry has a niche, so it’s worth researching which niches in your chosen field command the highest rates. It might mean you have to undertake special training to gain the relevant knowledge or skills, but consider this an investment in your business. If it’s to help you get work, it should be tax deductable. 

To identify lucrative niches, search on job platforms to see which roles appear most often that have high salaries or hourly rates. Ask your peers and professional network what services they consider hard to find or overpriced. 

Managing a freelance business

As a freelancer it’s up to you to manage all aspects of your business. Here are some aspects of managing a freelance career you might not have considered.  

Effective time management

One of the hardest parts for new – and seasoned – freelancers is managing time effectively. As a freelancer you may feel obligated to take every job offered to you as a way of ensuring income. Even if you’re more selective with projects, you may find yourself juggling several projects at once.

Time management is an essential skill to have as you organise work around other commitments, factor in unexpected delays or revisions, and deal with any increases in scope. To help you plan your time, consider using apps or tracking software. Logging the time you spend on projects will also help you estimate and adjust rates for future jobs. 

Dealing with common issues

Time management is just one aspect of managing a freelance career. Here are some other issues that most freelancers have to deal with:

• Revisions. You may have cases where you have to revise work to keep a client happy. To avoid any issues this might cause, either bill by the hour or outline in your initial contract how many revisions are included in the scope of work.
• Difficult clients. If you have a particularly difficult client, it’s okay to stop working with them. Decline future projects politely and refer them to a different freelancer (if you can), who may be better suited to their needs. It’s best not to burn any bridges as a freelancer, as your network is one of your most valuable assets. 
• Taking on too much work. It might be tempting to say yes to every project, but you run the risk of delivering sub-standard work or burning out, both of which ultimately put you at a disadvantage.
• Not getting paid. Always have a written contract in place or an email ‘paper trail’ clearly stating the scope of work and the amount you’ll be paid. If a client doesn’t pay you, reach out to your state or territory’s Fair Trading agency and lodge a complaint. 
• Not enough work. You may experience dry periods of work. It’s important to have a financial safety net of at least six months’ expenses and a plan B for when you’re out of work. Consider picking up a casual or part-time role to tide you over. Ramp up the marketing your services: through paid ads, leafleting your area, word of mouth or reaching out to people personally on social networks.  

Scaling and growth

One of the best outcomes for a freelancer is having so much work that you need to scale, or expand, your business. If your freelancing career takes off, you might find yourself edging into entrepreneur territory. 

From freelancer to business owner

Some freelancers are successful enough to transition into business ownership, starting their own companies and hiring other freelancers – or full-time staff – to support them. As a business owner, you might take a more strategic or leadership role, overseeing work, while employing people to help with administration, invoicing or entry-level services. Operating as a small business with a good reputation, you can start to charge significantly more for your services, as clients are prepared to pay more for what they perceive is lower risk. 

Diversification and brand building

Many freelancers choose to diversify their services in order to increase their earning capacity. This might mean additional training or upskilling in a related field. For instance, an electrician might diversify into solar, a content creator might diversify into photography or video editing – if you set up a variety of different income streams you can better overcome the irregularity of freelance work.

Brand building is another tactic that can help grow a freelance business. Brand building includes leveraging social media for more visibility, posting content related to your offerings, creating a website or launching a blog, attending industry events and marketing through emails and digital ads. 

The future of freelancing

Freelancing is likely here to stay, as workers prioritise flexibility, and technology makes more types of jobs accessible to contract workers. As more people offer freelance services, we may see companies trending towards employing contractors over permanent staff, as it offers more flexibility and can reduce costs. 

Emerging trends and predictions

There are many trends affecting the freelance landscape, including technology, the gig economy, corporate interest in AI, automation and social media. Here are some trends we might see happening in the coming years:

• More full-time freelancers: it’s cheaper to engage a freelancer than it is to employ permanent staff. If companies reduce hiring, that means more work for freelancers.
• AI-related jobs: there are already roles advertised for AI blog writers and AI SEO writers. 
• Compliance legislation: we could see more protections for freelance workers. 
• Acceptance of ‘side hustles’ by employers: many employers ban their staff from doing any freelance work as it’s seen as a conflict of interest. But they might have to be more accommodating as the popularity of freelancing grows and workers aren’t as dependent on their main job for income. 
• Freelancer marketplaces: there’ll probably be more online platforms popping up to support the freelance market. 

Freelancing is an appealing career path for many. It allows you to be your own boss and dictate your own day-to-day schedule. With self-discipline and a good business plan, you can take your skill set and turn it into a successful and fulfilling career that’s 100% under your control.