It's no secret that you get paid more on the hour for freelancing than when you have a full-time job (most of the time it's way more!), but it's because there are additional costs you need to be aware of. Some are obvious like health insurance, but others are more sneaky!
Here are a few I've run across in the last few years that you might want to keep in mind when you're thinking about taking the leap (this is not meant to 👻 u off from freelancing! Just a heads up!):
Most design agencies and companies cover the cost of design programs like (Adobe Photoshop and Illustrator), stock image sites (like Stocksy or Shutterstock), so you'll need to purchase these yourself when you go out on your own. Not to mention custom email (I use Google), website hosting, extra iCloud or Google Drive storage. You might also need to fork out cash for an invoicing system (I use Freshbooks), project-management sites (I use Toggl and Todoist), etc.
Most of these are fairly inexpensive alone, but when you add them all up, it can be a lot. Ask yourself what you REALLY need. If it helps you run your business more efficiently, be more organized or reduce stress...it might be worth the extra cost.
Most of the time, if you have to print something for a client project, you can include the cost in your invoice. So definitely do that whenever you can. However, you will still have to cover the cost up front. It's often way more expensive than you think it will (or should) be.
You can buy your own printer to save money, but honestly it's hard to get the same quality as industrial printers. I bought a top-of-the-line printer when I first started freelancing, but it wasn't cutting it for me, so now i just try not to print as much as possible.
3. Your phone's data plan
Yeah, there's free wifi in lots of public places like coffeehouses, parks, hotels and airports. But honestly, they're often not that good. I've found that to be efficient and reliable, I often have to use my phone as a hotspot for my laptop...so I can get work done when I'm away from my desk. I've had to increase the data plan on my mobile wireless 3x!
4. Nonbillable time
This is one of those hidden costs you may not see on your balance sheet. Especially when you're first starting out, but really all throughout your freelance career, you will have lots of nonbillable time that you spend on your business but can't bill to the client. Things like marketing, networking, invoicing, finances, email, organization, etc. After all, you are doing more like 5 people's jobs now vs. only 1.
5. Tax help
Taxes when you're a freelancer are A LOT more complicated. You'll need to track lots of expenses you didn't even pay attention to before...and you need to pay taxes quarterly instead of annually. Many freelancers pay a tax consultant to help them with this. They can help you get more deductions and understand what you need to do to pay the least amount possible.
6. Project help
If you want to enroll other resources or partners on a project, you may have to pay them before you get paid by the client, which can take 30–90 days. This can be hundreds or thousands of dollars, so you'll need to have some cash stored up to help with this flow.
7. Additional resources
You may find that you need (or want) to pay someone to help you with tasks that you don't enjoy, aren't great at or simply because it's more cost efficient (their rate is less than your own hourly rate). For example, I pay for part-time help with bookkeeping and marketing/social media, plus I have an intern to help with design/photography and other business-related tasks.
Also think about hiring help for other things like house cleaning, landscaping, etc. If it saves you time and money, so you can focus on the things that matter most to you, hiring it out instead of tackling everything yourself might make the most sense!
Remember, your time is your most precious commodity!