Eight months. I can't quite believe it has been that long. In fact, this post was supposed to be titled "6 months in," until I did the math and realized the true timeframe.
So yes, the time has flown. But, unlike the saying, it hasn't all been fun. That's not to suggest I have any regrets … I don't (not a single one). It has simply been the learning experience — and challenge — I expected it to be.
From making important legal and tax decisions, to designing a logo. From figuring out invoicing and project management to dealing with expenses. Nothing has been easy. And yet everything has been entirely worth it.
For my own often rose-colored memory, I want to be sure to take the time to acknowledge the transition to self-employment for exactly what it was. And maybe help someone else along the way.
Getting a Grip on the Money Situation
The first thing I did after I quit was think about the money I was walking away from. To be honest, I didn't think about it before I quit, because leaving the job was an unexpected decision. I hadn't really planned it. So once I gave them the proverbial "fuck off you fuckers," the reality of losing my cushy paycheck and sweet benefits smacked me right in the face.
Crack Open the Piggy Bank
Fortunately for me, I had a nice little nest egg left over from selling my house when I moved to Albuquerque, and I didn't have a single drop of debt. This bit of financial security was probably why I didn't think about my financial situation before giving notice; I knew I had a cushion.
But this cushion is supposed to be for my next house, not a new business. So, I carefully looked at my financial statements and decided exactly how much of this cushion I would feel comfortable using to sustain me as a freelancer. I also decided that the minute I got close to using that amount, I would consider going back into the "workin' for the man" world.
Thus far, I haven't used the full amount I allotted for my business. And I'm pleased to say I haven't had to dip into it for almost three months. What is clear, though, is that without my extra savings, I wouldn't still be freelancing right now.
Bye-Bye Unnecessary Expenses
In addition to turning to my savings, I also decided to cut back on my unnecessary spending and look for ways to reduce my monthly expenses. This was probably the easiest part because I live pretty frugally as it is, but every little bit counts:
- No more monthly waxing appointments. I've got tweezers, and my brows ain't that bad.
- So long quarterly haircuts and highlights. I'm a natural blonde, there's really no need for me to be blonder. Plus, I've got a great collection of baseball caps.
- I'm back to doing my own manicures and pedicures.
- I've stopped giving in to my sushi addiction every other day. Sushi is now a monthly treat, and my mercury levels are returning to normal.
- I cancelled my Comcast DVR service and reduced my monthly cable television package to basic.
- I changed my Netflix service to the lowest level, since I'm really mostly watching On Demand these days anyway.
- I reduced my phone text and data package, after Verizon informed me I've never even gotten close to reaching the text limits.
- I contacted my car and renter's insurance company to see what adjustments we could make to save a few bucks. Since I work from home, reducing my claimed annual mileage also reduces my monthly premium.
With these small changes, I started saving an extra $200/month. And the best part, if things get difficult, there are even more places I can cut back if needed.
Hire an Expert
I suck at math. I suck at talking about money. I suck at understanding tax shit. So, I was understandably very concerned about the financial aspect of working for myself. The only solution for me was to find an accountant.
Rather than turn to the internet, though, I turned to Anna Brown, a colleague who has been very successful with her own business here in New Mexico. If figured if she's doing so well, I want to work with the accountant who is helping her be successful. And I'm glad I did, because her accountant is now my accountant.
Kefauver CPA is run by Rachel Kefauver, who is now my favorite person on the planet. She takes time to explain stuff to me in the idiot terms I require, and remind me of important things like when my quarterly gross receipts taxes are due. Most importantly, I trust her with my money and my business.
Having an expert on my side to handle what I know I'd eventually fuck up, is probably the single best decision I've made these past eight months.
Becoming a Business … in New Mexico
Once I started working with Rachel, I learned that being a business isn't just deciding it, especially in the state of New Mexico. Most businesses in NM have to register with the state Taxation and Regulation Department. Additionally, most business in the state must also pay quarterly gross receipts taxes.
While this sounds complicated, it is just the typical red tape needed so that the government can rape you of your hard-earned money and keep tabs on you. That said, there are some steps you have to take first.
To Incorporate or Not to Incorporate?
There are many different ways to organize a business, and I'm sure it varies from state to state. You really should have an expert help you figure out what will be best for you.
For my situation, Rachel and I decided that I would file articles to be a Limited Liability Company. This is pretty much just a classification that gives me some legal protections, but, from a tax perspective, I'm still considered an individual. In time, if I am successful and bringing in more serious dough, I may incorporate. For now, though, LLC works for my needs.
To get the LLC finalized, Rachel and a lawyer prepared my articles. I then got them notarized and sent them to the state Public Regulation Commission along with a check for $50. About three weeks later, they send me the approved articles and I was officially an LLC. Super simple.
Once I had my LLC status, Rachel then helped me file with the state and federal government to get my state and federal tax IDs. And by "helped me," she did it all. I don't even know what she did, but about three weeks after she received my approved articles, I had a tax ID for my LLC.
The Business License
In order to get a business license in NM, you have to have a tax ID. If you are an individual, this can be your Social Security Number. But, because I was organizing as an LLC, I had to wait until I was assigned a tax ID.
But once I had that ID, I simply filled out some paperwork, wrote a check for $35 and had my business license in-hand in less than 15 minutes.
And, fortunately, all of these steps are one-time deals. I don't have to do this every year. I don't even have to think about it again unless I want to incorporate.
Gross Receipts Taxes
The one thing I do need to think about regularly, though, are my gross receipts taxes. These are quarterly taxes I have to pay the state simply for the the "priviledge" of doing business in New Mexico (aren't I so lucky). Currently the rate in my county (Bernalillo) is 7% of provided services, but it changes quarterly and it is my responsibility to be up–to–date on any changes.
Thus far, I'm simply passing these taxes along to my in-state clients. I factor it into their estimates and include it in their invoices. Not too big a deal. And fortunately, I only need to assess NMGRT on my in-state clients. Any work I do for clients outside of New Mexico is free from this taxation.
That said, even though I don't have to pay NMGRT for my out–of–state clients, I do have to report the income earned from those clients quarterly. If I fail to do this (which I learned the hard way), I have to pay fines (god, don't you just love the taxman?).
I don't know much more about NMGRT. That's what I pay Rachel for. But there are many other nuances you should be aware of if you are doing business in NM. Make sure you don't screw yourself through ignorance.
When I left my job, I also left my benefits. Ciao medical and dental. Sayonara 401k with matching contributions. See you later paid vacation and federal holidays.
I quickly set about getting those bases covered.
Thanks to many lectures from my mom, I've always saved for the future. And just because I decided to go freelance doesn't mean that has changed. So, after I rolled over my employer-sponsored 401k into a pre-tax IRA, I also set up a Roth IRA for future contributions. Additionally, I moved some of my savings into a high-interest account.
While I don't have the extra cash now to put in these accounts, I want to be ready for when I do.
Insurance (Companies Can Suck It)
In terms of getting medical insurance, my process was pure hell. I hope it isn't this way for everyone, but I basically wish a troop of face-fucking monkeys on anyone who is part of our current medical insurance system.
I was turned down by three major insurance companies and one regional provider. And of course not a single one of those fuckers gave me a reason why. I can only speculate it is due to the fact that I reported I have a soft-tissue back injury as a result of a car accident 8 years ago … a back injury for which I don't take any medication or see any doctors. I just see a chiropractor a few times a month.
While it doesn't feel like a good thing, once you are declined, you can apply for insurance from the high-risk pools. New Mexico has one such pool and, recently, the federal government created a program.
What sucks with these high-risk plans is that the "affordable" coverage is, essentially, catastrophic coverage. And it is what I ended up with. Lucky me gets to pay $200/month for a $10,000 deductible. I pretty much have to be dying for the coverage to kick in.
It still pisses me off, and I hate writing that check everyone month. But at least I have some coverage.
As for dental insurance, I passed. The monthly premium would cost more than bi-annual visits for cleanings and checkups, so it just wasn't worth it.
Forming an Identity
Of course part of starting a business is creating an identity for that business. In fact, during the LLC process, I had to decide what to call my business.
I toyed with some ideas, but ultimately decided "Fuck Yeah! Web Design" isn't all that professional. Plus, I want to promote myself and my name. I don't know how long freelancing will last, but I know my name will always be with me.
And so Emily Lewis Design, LLC was born (it also helped I already owned the domain name).
Beyond deciding on a name, I didn't make too many "identity" decisions. I'm not a marketer. Branding often bores me. And at this early stage of my freelancing business, the only things I knew I wanted to convey were style, simplicity and professionalism.
Logo & Web Site
My logo was a bit of an evolution, but I always wanted to utilize my initials in some capacity. I'm quite pleased with my final design and to those who think it is trite and expected to use initials, go fuck yourselves. My business. My logo.
Once I had a logo, I started on the web site. I already posted about my design and development process, but one thing I didn't mention was my "we" vs. "I" decision.
More often than not, I see single freelancers referring to their businesses as agencies and as a "we." I guess it gives them more street cred with certain clients; makes them seem more official. But, honestly, it has always bugged me because it's a lie.
So when it came time to writing content for my site, I had to decide whether Emily Lewis Design is about me or some fictitious "we" I invent to make my business seem bigger than it is. I always favor transparency, and I'm not even slightly ashamed it is just little ole me. So that's the route I took. I'm a single web designer, and I make that clear on my site.
Managing My Business
Another important decision I had to make was how I was going to manage my business. How would I do estimates? Invoices? Time tracking? Project management?
As it turns out, organization is one of my strongest skills. Seriously, I'm an organizing freak. While this can drive my live-in boyfriend crazy, it happens to be a huge bonus as a freelancer.
I've been a faithful Basecamp user for over five years, so that was a no brainer. I got myself my own account and started using it for everything related to my business. Not just clients and projects, but the tasks and milestones related to my LLC. It has been a breeze getting my clients to use it, as well.
I took a long look at several accounting/invoicing services, including FreeAgent, Harvest and FreshBooks. I did the trials for all three, and after much hair-pulling and cursing at my math-related retardation, I decided on FreshBooks. FreeAgent came in a close second but, ultimately, FreshBooks was easiest for me to grok and use.
These were my key decision points:
- I couldn’t entirely suppress tax information from my invoices in FreeAgent, which I need for my out–of–state clients.
- Liked the dashboard view FreshBooks has for my clients.
- Liked the PayPal integration in FreshBooks.
- FreshBooks has a built-in time-tracker that I like.
- FreshBooks' date format is better for my US clients than FreeAgent.
- FreshBooks helps me assess hours worked vs. hours estimated.
- I can connect with contractors and sub-contractors who are also using FreshBooks, making invoicing easier.
This doesn't mean I like everything about FreshBooks, though. It's Basecamp integration is a joke and completely not worth it as it stands right now. The invoices are pretty plain, and you can't customize too much. But, all in all, it does what I need right now.
FreshBooks does have an expense tracking feature, but I haven't found too much use for it. I haven't had any expenses I can bill back to a client yet, and I really like the ability to attach scanned receipts to expenses … something FreshBooks doesn't offer.
So I turned to Shoeboxed and I've been very pleased thus far. I haven't used their mail-in service, because I just can't get comfortable with the idea of someone I don't know handling my credit card receipts. But it has been a breeze to enter my business expenses, categorize them and attach scanned copies of receipts. Come tax time, I'll just have to export the information and pass it along to Rachel.
Getting Work & Staying Afloat
The one area of my business where I haven't quite figured things out yet is actually getting the work. I know there are job boards out there and freelancers sites. And maybe someday I'll use them. But so far, I haven't had to because every single project I've gotten since going freelance has been because of a referral.
Work Your Network
Ever since I moved to Albuquerque, finding my place in the community has been a huge priority for me. I've also spent several years boosting my position in the broader web community. And thank goodness, because I already had an established network when I quit my job.
This network has given me referrals, projects and, most of all, support. It proves to me every single day how important my colleagues are to my sanity and fledgling business.
Beyond my network of fellow web geeks, I told everyone I was freelance and looking for work. Everyone. College friends I haven't seen in years, former employers, family members who don't even understand what I do for a living. And these folks, too, have proven to be a great source of work and support.
I'm convinced more than ever how important it is to be genuine with people, honest about your skills and abilities, and open to helping others achieve their goals. Karma can be a wonderful thing if you aren't a douchebag and don't burn bridges.
Pay the Bills
I'm a web designer. It is what I love. Nothing makes me happier than spending an entire day in HTML. And I dream of the day when all the projects I work on are exciting web designs, with easy-going and responsive clients who trust me.
Today is not that day, though. Today, my priority is to pay my bills so that I can develop my business so that I can someday realize that dream.
When paying the bills is the priority, that means I'm willing to take on "problem" clients. I'm willing to do non-web work like consulting and marketing. I'm even willing to get a part-time job.
And good thing I'm willing, because that's exactly what I've had to do. I've earned almost as much from writing gigs these past eight months as I have from web design and development. I've also dealt with some very needy clients who I wanted to kill. I took a job as an instructor for UNM's continuing education program, and I even applied for a part-time job at the local Apple store.
It may not sound like a web designer's dream. And it isn't. But it is Emily's dream. I'm working for myself, on my terms and with my own schedule.
I'm willing to do whatever it takes to keep this dream going and evolving. Those folks who poo-poo taking on problem clients or work that isn't in your specialty must be rich or have a Sugar Daddy or Mama. I don't. I'll take work where I can find work until I don't have to anymore.
And the Verdict?
I hope by now it is obvious: I want to continue freelancing.
The challenges have been trying. The learning experiences never seem to end. I've had a few days where crying was the most activity I could muster. Stress is still a major part of my life, along with a new friend, anxiety.
But I'm not angry all the time anymore. I don't hate the people I work with. I don't feel undervalued or disrespected. And even on the worst of days, I have a sense of empowerment because I'm in control of my own life.
Totally worth it.
Legal Blah Blah
I hope it goes without saying, but please don't take anything I've posted here as anything other than my own personal experience. What works for me is just that … what works for me.
If you need expert advice, seek an expert.