5 Things to Do Before Even Considering Quitting the 9-5

As amazing as freelancing can be, there is a certain drawback to the career – it’s fickle. Constant marketing can help keep things rather steady, but trading a salaried 9-5 career or even the full-time trivial job for a career in freelancing is dangerous if you’re not adequately prepared. As ready as you are to be your own boss, step back from the dream world and take a look at reality.

What’s Your Business Plan?

Too often, online freelancers take the leap into full-time work before they fully realize what they are doing. They realize they’ve made enough to live on for a few months and decide they can make even more staying home and writing or designing full-time. So they quit. In a simple world, this plan has merit. But this is not a simple world.

Working online is dynamic and ever changing. You must have a plan for the next few months, the next few years and the next few decades. How are you going to proceed from here and where do you want to end up? What’s your retirement plan? Fill in the blanks in between here and then until you can see where you’re headed and what it will take to get there.

Do You Have the Right Contacts?

What sort of freelance work are you doing? Are you writing haphazard articles for clients as they appear in various webmaster forums? Unfortunately these clients come and go for the most part. If you don’t have a well developed collection of clients in all walks of life, your basis is not covered for future and steady work. Likewise, you need to know others in the industry to network professionally if you plan to make freelancing your new career. Who you know in a freelance sense is almost more important than what you do.

How Much Do You Have in Savings?

The current economy has made it abundantly clear just how dangerous it can be to live from one paycheck to the next. Stashing a bit in savings is fine for the occasional emergency repair while you still have a steady paycheck. However, you should have a minimum of three months income in savings to cover your bills should you lose your salaried job. As a freelancer, you need even more.

The internet marketplace goes up and down dramatically. While this can take a hit on your earnings, the real risk is from life itself. Should you break your hand while an employee the company will be all but required to make accommodations. If you break your hand as a freelancer, you’ll be out the higher insurance costs for medical care and be limited in your productivity if you happen to need that hand to type or design. There are no safety nets in freelancing – you create your own.

Have You Considered Tax Implications?

Many freelance writers don’t initially realize the full tax implications of their new part-time career. The money you make as a freelancer is part of your income and must be declared on your tax return. Unless you’ve been putting 20 percent of those funds aside for the tax man, you’ll wind up with a bit of a surprise come April 15.

As a freelancer, you’ll need to be even more prepared. Learn about the benefits of different tax structures and how to file quarterly and set up withholding on your own freelance income to be sure you can pay your taxes on time. Your freelance earnings will be taxed at a higher rate because you’re self employed and must pay your own social security. Include all of those variables in your current freelance income and you might realize your earnings aren’t as comfortable as you thought they were.

What’s Plan B?

The corporate world isn’t always kind to freelancers seeking to return to the corporate world, especially if you aren’t freelancing in a field that translates directly back to the office job. If freelancing becomes problematic or you simply can’t handle the stress of the variable income, you need to have a Plan B.

Will you beg for your old job back? Look for one in the field you’ve been freelancing? Go back to school so that your resume is a bit fresher? Leaving the corporate world with connections will give you some lifelines should you need them down the road. Be sure to continue cultivating those relationships and develop marketable skills.

This post first appeared on GoingFreelance.com