All I would have liked to know before becoming self-employed
When I jumped into my freelancer career, I was at a point where the managers of my part-time job were worried about the time I could give to the company compared to the time I was putting in my own business — I have always been very open to talk to them about my ambitions and my company / side hustle.
I had more and more contracts that took up all my free time outside of my part-time job. I had to make a choice anyway because I felt a constant pressure from some managers of the company and after several moments of reflection and hesitation, I made the jump by becoming 100% self-employed. I then gave about 1 month notice to my employer and after this month, I started my new career.
In the months before this choice, I had the opportunity to work on several amazing campaigns including LG (a campaign for the release of a new phone), Groupe Germain (for a mural of 6000 of my photos at Alt Hotel Ottawa), VIA Rail Canada (for a holiday campaign), Loto-Québec and many others.
With all these opportunities coming my way, I managed to put several thousands of dollars in a savings account to be sure to live for several months even if I had no contracts.
Since everyone’s reality is different, I will talk about my reality as a freelancer / entrepreneur offering photography, social media and writing services. Some aspects may apply to your reality while others might not.
This is all I would have liked to know before embarking on the fascinating world of self-employment and entrepreneurship — which would have definitely made my life easier for the last 3 years. I divided the topics into different spheres that all interact with each other.
This guide is the result of 3 years of trial and error as a self-employed person, it is not a procedure to follow to become a self-employed person, but rather a resource for all those who would like to start the world of entrepreneurship and who do not know where to start and all that implies.
Enjoy your reading and hope it will be useful!
All the governmental things
The first thing I could recommend to you when the idea of becoming your own boss is in your head is to take a look at the Registraire des entreprises website. You will find on this site all the necessary resources for someone who is starting a business or who wants to become self-employed.
You will need to determine what legal form your company will take. There are several options available to you, the best thing is to consult a lawyer specialized in this field.
Once you have determined what legal form your business will take, the next step is obviously to register for a Numéro d’Entreprise du Québec (NEQ) which will then give you the opportunity to collect taxes from your future customers — note that it is not necessary to do all this if you plan to make less than $ 30,000 a year.
If you charge sales taxes, you will have to report them annually or quarterly. To do it all, you can hire a good accountant who can accompany you in the process. Many accountants specialize in businesses and freelancers. When you file your tax return, you must immediately pay the taxes collected on your services, hence the importance of creating an account dedicated to the collection of these taxes, which I will discuss later in this article.
Subsequently, like any resident of Quebec, you will have to file your income tax return with Revenu Québec and the Canada Revenue Agency. As for the taxes to be refunded, you will have to keep money aside to pay the taxes.
Finally, each year, you will have to make your annual update and your current update with the Registraire des entreprises. This step is crucial to being able to continue operating and offering your services. In the event that you are no longer an entrepreneur or self-employed worker, you may decide to dissolve the business.
In Quebec, it is still very taboo to talk about money. This is a subject that does not make people feel comfortable and we are often embarrassed to say how much we earn, how much we want to win, and so on.
Since I was self-employed, I had to learn to have a different relationship with money — I had to learn to talk to a financial advisor, talk to relatives with whom I am comfortable discussing it.
The best thing I could do about my finances is to meet a financial advisor at my bank for advice and best practices for having healthy finances.
The first thing I advise you to do is to take control of your finances as a freelancer is to start by making a budget of your monthly recurring expenses. The exercise will give you a better perspective on everything you have to pay monthly and annually.
Subsequently, on the website of my financial institution, I activated the budget tool to compare the reality to the budget I had made in a spreadsheet. I had a huge shock — during the last 2 years I was spending 2 to 3 times what I had budgeted for. I had to readjust quickly, because I realized that a big part of a company’s success comes from healthy finances. Otherwise, it’s really easy to fall into credit, debts, etc.
Making a budget also helps to determine later what should be charged to your clients in order to at least get to cover our basic expenses each month.
Running costs of your company
I separate my personal expenses from my freelancer expenses and there are a lot of things you do not think about that cost a lot of money in the end. Personally, I attach to my monthly budget all these expenses that help run my business.
- Life insurance, salary, equipment, travel
- Internet access fee
- My portfolio on Squarespace
- The server for my blog
- Various office supplies
- Hardware — in my case camera, lenses, computers, accessories and so on
- Hotels if applicable
- Transport if necessary
Open multiple savings accounts
Another thing that my financial advisor suggested to me was to open several savings accounts to properly manage my money inflows and outflows. For too long, I had only one bank account in which all my money was floating. My advisor urged me to open an account for my taxes, taxes, emergency fund, holidays, savings and other projects.
Now, with each check or transfer I receive, I put aside the total amount of taxes into my Tax Savings account and I pay a certain percentage of the amount remaining in my Taxes account. The money left over is allocated to my emergency fund, debt repayment and my other savings accounts.
I feel so light since I operate this way. Before I started as a freelancer, I often lived on payroll and now, with large irregular cash inflows, it was imperative that I become more forward-thinking with my money, because when you do not have financial strategy, it’s easy to spend everything in candles and clothes!
Personally, when I started, I found it imperative not to throw myself into the void, to have a financial cushion in case it did not work. Since each person has a different relationship with money, you may be comfortable leaving a steady income job while not having this cushion. However, if you are like me, I recommend a minimum of 3 months emergency fund — after determining your recurring monthly expenses, multiply that number by 3 and you will get the total amount you should put in a fund of emergency.
Personally, it happened a little randomly, I received several large payments that allowed me to put aside an amount of about $ 15,000 — which was enough to cover more than a year of my monthly expenses at the time.
Determine what your are your fees, smartly
An imperative part of your finances is definitely related to your fees.
- How much will you charge for each of the services you want to offer?
- Do you have equipment to buy to offer these services?
- Do you have to travel to provide these services?
- How much would you like to earn per year?
- How many hours do you want to work per week? Per month? Per year?
- Will you have subcontractors to hire for certain mandates?
- Do you have to rent a space for the performance of your duties?
There are a ton of questions to ask yourself when determining your fees.
Personally, it was not done overnight and I have different rates for my different services. In the same quote, I can have several rates depending on the service that is rendered, the difficulty, the equipment that I have to use, etc.
There is no right or wrong answer, but you will at least have to earn what you pay for basic monthly expenses — personally, I set myself a goal of 4 to 6 times the amount of my monthly recurring expenses to be certain to be able to put money into savings accounts and live well.
Deposit at the beginning of the project
Some do it, some don’t. Personally, I prefer to request a deposit of a certain percentage at the beginning of the project. This is a way for the customer to commit 100% after signing the contract. It happened to me a few times, that even when signing a contract, the client withdrew after signing and thereby lost me considerable time and income.
Paying yourself a salary as a self-employed worker
A good practice for having healthy finances easy to manage is to pay you a salary (weekly, bi-monthly or monthly). You can do this, regardless of the legal form of your business, but some corporate statutes will offer tax benefits. It’s a great idea to consult an accountant and a lawyer to see what is best for you.
Clients of a freelancer
Who are your clients? Do you have any, or will you have to find some? Do you have monthly agreements with some of them?
The first thing you need to keep in mind when talking about customers is: “What do I have to offer?” This question will help you determine who you are talking to and who your potential customers are. The clearer your offer, the easier it will be for customers to understand what you are doing and want to work with you.
For example, if I say that I’m doing photography, it’s very vague. There are so many genres and topics in photography that it will be difficult for a customer to determine if you are the right supplier to engage if you only say that you are doing photography. For my part, I have identified 3 fields of interest that help me define my offer: travel, gastronomy and lifestyle. Obviously, I can definitely do photography outside of these 3 areas of interest, but it helps my clients understand what I do or do not do — for example, I do not do wedding photography and events so I don’t advertise myself that way.
Once you have defined your service offer, it’s time to contact both new clients and former clients with whom you have already done business to let them know you are available and want to work with them. It often happened to me that I had contracts because I outreached. Do not be afraid to do it because: 1. the worst answer you can get is no and 2. you are the only one responsible for the success of your business, you can not wait for everything to happen magically.
Also, you have to listen to your instinct, when you do not feel it at first contact with a potential customer, listen to yourself. Too often I did an assignment even though I did not feel the vibe going through the first contact and then I did not want to.
Depending on the type of goods or services you offer, from an entrepreneurial point of view, it is good to diversify your offer instead of putting all your eggs in one basket.
Allies of a freelancer
After determining your service offer and the type of clients you want, you will have the chance to have your first mandates. Why do you think Customer X has chosen you to fulfill this specific mandate? Probably not for your beautiful eyes, but rather because you are a professional in your field, you inspire confidence and your client does not have the resources internally to fulfill this mandate. Your customer therefore makes the decision to delegate the task and to bet on you to achieve it — because you’re a professional.
Too often, I see self-employed people with no notion of law, accounting and finance venturing to try to do everything by themselves.
It is important to know how to surround yourself with professionals who can help us grow our business.
For example, it is often mistaken to think that a lawyer will be useful only in litigation, but the lawyer is an unparalleled ally in starting a business or laying the foundation for your self-employment services. From drafting of a service contract to advising you on the structure of your startup, the lawyer is there to help us. Personally, I met a really great lawyer who specializes in creative environments and who understands our reality 100%: Aicha Tohry from ARTY LAW.
An accountant can help you on a number of fronts, including the basics known as bookkeeping, tax returns and taxes. But a good accountant with whom you develop a relationship can help you grow your business to new heights and give you tax advice that you would not have had otherwise. There are several great accountants comfortable with entrepreneurs and self-employed like A/F Accounting and Axiome Solutions. Many accountants have even automatically refused to do my accounting when I told them I was self-employed.
Also, as I mentioned above, one of the allies who contributes enormously to the growth and stability of my business is my financial advisor. This is definitely an asset that we should not deprive ourselves.
Personally, I have never had a mentor in my career yet, but I know that many self-employed people and entrepreneurs have a mentor to help them grow in their career and lay a solid foundation for the future.
All these allies are like any good or service you get, you can do your shopping and you’ll eventually find the perfect match.
Schedule of a freelancer
Many people think that by becoming freelancers and entrepreneurs, they will be able to control their schedule. This is partly true since we will have to follow a schedule that is consistent with our clients for the various communications with them.
A technique that helps me a lot to have a normal schedule is to write everything in advance in my calendar and then every day to use the post-it method combined with the Pomodoro method. The Pomodoro technique really helps me get through my days in a healthy and organized way.
Planning a vacation — not just a date, but the budget that goes around this vacation — is very important in order to keep a normal schedule. One can easily forget to take time for oneself and to have the impression that there is something to do infinitely.
Integrity, values and pleasure
Remember why you started your business. The important thing is to be happy and also to realize that being your own boss has many ups and downs and you have to be solid to be able to evolve in this environment.
After some time being self-employed you might realize that this is really not for you — it’s definitely not done for everyone. It takes a lot of organization, courage and time. There will always be regular jobs for everyone if ever entrepreneurship is not your cup of tea.
Also keep in mind that you are always worth something and that if you want to volunteer, there are many causes to which you can contribute. When a company wants to use your services for a specific need, make sure you get paid at your fair value. Ask yourself, what would a mechanic or dentist say if you asked them to offer you their services for free?
At the beginning, you will probably have lots of offers from people who promise you a lot of things if you make a good price “for the first time” or “to try your services”, implying that there will be many other mandates thereafter. In 3 years, never a customer who made me that kind of promises came back to me … I asked the question to long-time entrepreneurs friends and the same for them. So, as I said earlier, as an entrepreneur, you really have to learn to trust your instinct, it’s almost always right.
On this, have fun, work hard and take vacations!
Ressources pour travailleur autonome
Be Focused is an app made to use the Pomodoro Technique everyday. It automatically creates intervals throughout the day.
I couldn’t live without Momenteo — my online accounting software for invoicing and estimates. There’s a lot of alternatives out there like Freshbooks and Zero, but Momenteo is the one that’s made for me. I can do estimates in a few clicks and quickly convert these estimates to invoices and it automatically produces different reports for accounting.
Everything governmental about entrepreneurship at Registraire des entreprises.
Focus is an app to keep you away from distractions while working on your computer.
Trello helps me a lot on project management and my different ideas for upcoming projects.
Timing will help you track how much time you spend on your different tasks. It’s all automatic and really easy to manage.
Calendar or agenda
iCloud, Google Drive, Dropbox or WeTransfer
Any spreadsheet app — I personally use Numbers by Apple for convenience with integrated iCloud.
Post-it that stick really well, don’t go for the cheap ones, they’ll fall off your surface.
Good pens that don’t bleed under your hand while writing. I only use Le Pen pens.