- What insurance do I need as a freelancer?
- Register as self-employed with HMRC
- How much to charge for freelance work
- Building a portfolio or website
What insurance do I need as a freelancer?
Insurance is essential for freelancers and self-employed ‘sole traders’, as you face lots of potential risks. If you were employed, you probably wouldn’t give it a second thought.
But freelancing without insurance could leave you open to legal suits and compensation claims, which are expensive to defend. The right insurance can keep you protected.
While you may think you have enough on your plate, freelance insurance could be the best business decision you make. When you need it, you’ll be glad that you have it.
Types of freelance insurance
There are lots of different types of freelance insurance. Here’s a quick overview of the popular policies that may be relevant to you:
- Public liability insurance: If you deal with members of the public, such as customers or clients, public liability insurance could protect you if you’re sued by someone claiming an injury or accidental damage due to your work.
- Product liability insurance: If a product you manufacture, design, repair or sell causes bodily injury or property damage, product liability insurance can pay for your legal fees.
- Professional indemnity insurance: Professional indemnity (PI) insurance protects freelancers who sell advice or professional services. If you worked for a client who decides to sue you for negligent advice, PI could protect you.
- Employers’ liability insurance: If you employ other workers, even on a temporary or casual basis, you legally need employers’ liability insurance.
- Contents insurance: If you rely on essential equipment to do your job, contents insurance will pay for a replacement should your work equipment get stolen, damaged or lost.
- Vehicle business use: If you use your car for work, you should declare your business use with your car insurance provider. Failure to do so could make your insurance invalid.
- Cyber insurance: Anyone can be a cybercrime victim. If you’re hacked or have customer data stolen, it’s essential to have this insurance in place.
- Personal accident insurance: If you can’t work due to an injury or accident, personal accident insurance can help replace lost income as a weekly or lump sum.
- Private health insurance: Without sick pay or income protection, private health insurance helps you get back up and running as soon as possible.
Do I need business insurance?
Certain professions are required by their trade or regulatory bodies to take out professional indemnity insurance. This is because some lines of work, such as financial advice, accounting and architecture, can be very risky.
While not a requirement many lines of work, like management consultants or graphic designers, freelancers in lots of different professions can benefit from the protection of PI insurance.
If you also employ other workers—even on a temporary or casual basis—it’s a legal requirement to take out employers’ liability insurance and you could be fined for not having it. Take note of this in case you need an extra pair of hands in the future.
Register as self-employed with HMRC
If you're a freelancer and earn more than £1,000 in a single tax year, you need to register as self-employed with HMRC - also known as a ‘sole trader’. Double-check with HMRC’s Employment Status Checker to confirm your employment status.
You will need to register by October after the end of the tax year that you begin taking income. For example, if you began freelancing in March 2021, then you would need to be registered with HMRC by October 2021. Remember that the tax year runs from 6th April to 5th April.
To pay your tax and National Insurance, you need to submit a Self Assessment form. Make sure you’ve kept not of your income and business expenses. But don’t worry if you’re confused about what exactly you need to do. There’s plenty of information out there on paying tax and National Insurance as a freelancer.
How much to charge for freelance work
It can be difficult to decide how much to charge as a freelancer. But there are a few things you can do to decide how to work out your fee, as well as whether you go for an hourly or fixed-fee strategy.
Working out your fee
To help work out your fee, you should count up all your expenses. Think about anything you need to do your job, like a computer, software, your Internet bills, and insurance. Also, make sure to consider tax and National Insurance deductions.
The next thing to do is work out the hours you will be working. For example, deduct weekends, holidays as well as sick days from the total days in a year. Think about your non-billable time too, such as time spent looking for work or doing admin.
Together, these two numbers will help you set your Minimum Acceptable Rate (MAR). This is the lowest rate you are willing to work for, but importantly still covering all the essentials and leaves you with enough in your pocket. The calculation looks like this:
((Living costs + business expenses) / hours worked) + tax = MAR
Your MAR is a good starting point. When providing your fee to a potential client, always ask for higher than your MAR. This will then give you wiggle room in case you need to negotiate.
Hourly or fixed-price per project
Once you have your rough fees worked out, decide on whether you will be charging on an hourly or fixed-fee per project. Each has its pros and cons, so it’s best to decide early on.
Hourly charging can be useful if you’re doing more ad-hoc and irregular work for a client. This is quite flexible and straightforward and can be good if you’re working on short term projects.
But if you’re more experienced or you’re offered a longer-term project, a fixed-fee per project can be best. This will generally be based on the value you provide to the project, rather than just how long it will take you.
Building a portfolio or website
When selling yourself to potential clients, a portfolio is an important part of your online presence. Use it to show off your best work, or to provide a place to build your personal brand and show information on your services.
Portfolios aren’t just relevant to creative or visual jobs like graphic designers, either. For example, if you’re a freelance public relations consultant, you could use a portfolio to show the successful projects and campaigns you’ve worked on.
There are lots of different builders out there to help you regardless of your ability. Some of the popular portfolio and website builders include Squarespace, Wix, and WordPress. Research the different options out there and go with what works for you.
For portfolios where you’re just showing off your past work, only include the best examples that you’re most proud of. But, don’t be put off if you don’t have an impressive portfolio just yet. Present a few good pieces and feel free to include work you weren’t paid for, like projects you’ve completed in your free time.