A Realistic Day in the Life of a Freelancer/Small Business Owner
by Yuwanda Black

As I read again and again how wonderful it is to be a freelancer/business owner, I inevitably find myself murmuring, "Yeah, but you didn't say this." Or, "You forgot to mention that."

The joys of freelancing/owning a business are many. Here, however, I want to address the cons in order that a more realistic view be realized. First, let's define the term "small business" (which is what being a freelancer is).

According to the SBA, a small business is one with less than 500 employees. Many are surprised at this definition because we don't normally think of a company with 300, 400, or 500 employees as small. Other small business facts:

**In 2001, there were over 22 million small businesses in the United States; this represents over 99% of all businesses.

**Depending on the industry, the annual revenue of a small business can range from $0.75 to $28.5 million (most small businesses don't begin to approach these numbers).

**Sole proprietorships account for over 72% of all small businesses.

"Well," you think, "it can't be all bad if so many have taken the plunge." Moving ahead, are you ready to:

**Take a pay cut: Most freelancers work more hours and make less money than in their previous salary-based jobs (I know this from personal experience).

**Fund your own 401K (or not have one): According to a 1999 Survey by the Employee Benefit Research Institute, less than 25% of companies with fewer than 100 employees offer a retirement plan.

**Purchase your own health insurance (or go without): More than 43 million Americans are uninsured, and 60 percent of them are self-employed or work for themselves and/or small businesses that can't afford to buy and/or offer health insurance.

**Act as office cleaner, accountant, marketing director and bill collector: Over 72% of all small businesses do not have employees according to the 1999 Census Bureau non-employer statistics (and you, lone freelancer, are really alone!).

Still ready to freelance? Read on.

Depending on how you structure your entity (sole proprietorship, corporation, partnership, etc.), taxes must always be considered. Before deciding on a structure, you should consult a lawyer and an accountant who specialize in working with freelancers/contractor/micro-business owners.

Why both? Obtaining solid professional advice up front can save untold dollars in future taxes. In many instances, corporate taxes have to be paid quarterly, not yearly, as in personal taxes. If you are lucky enough to afford employees, quarterly employee taxes must also be paid, in full and on time, or severe penalties will be assessed.

Finally, let's not forget insurance: liability, property, and unemployment, to name a few. "Okay," you say, "overwhelming, but I can handle it." Read on.

As a freelancer, you will be called on to perform many tasks -- some none too pleasant. Many new freelancers are overwhelmed with the amount of paperwork and regulation involved. Scanning through old day planners, I pulled a few. Among them were:

**filling out forms from the Department of Labor;
**obtaining insurance (what kind must I absolutely have versus what I would ideally like to have);
**collecting W-2s and 1099s;
**calling a delinquent vendor for payment (I absolutely cringed with nervousness the first time);
**calling a vendor to inform them I would be late with payment (reason: see duty just above);
**securing a payroll specialist (outsourcing this duty was one of my happiest as a business owner);
**filing quarterly tax forms; and my least favorite,
**deleting my name from the list of employees to be paid (after paying everyone else, I sometimes could not afford to pay myself).

Sometimes, a whole day can elapse attending to these matters and work would then be taken home in order to meet client deadlines. So, how does one handle all of these duties? The key is organization. -- servicing your customers. One tax year with unkempt records and you will become organized quicker than you can breathe "audit!"

You may now be wondering if I advocate freelancing? Without a doubt, yes. In spite of the economic uncertainty, paperwork and long hours, freelancing is wonderful and can be well worth it.

Proof? According to the November 2001 issue of Forbes, fully 80% of American millionaires are small business owners-entrepreneurs who accumulated their wealth in one generation - and they are powering the ranks of the newly wealthy.

The Greek philosopher Epictetus said, "First say to yourself what you would be; and then do what you have to do."

Or, to quote Nike, "Just do it."