When you start freelancing, you hear “Do what you love!” thrown around a lot. “Passion!” and “Creativity!” are two more super-popular chants. These things are definitely necessary if you’re quitting your day job for a sustainable freelance life… but you’ve also got to pay close attention to the phrases that aren’t getting the enthusiastic exposure. Phrases like “Have you thought about becoming an LLC?” and “You should get a contract, even if it is your Aunt Frieda!” don’t usually come accompanied by pompons.
When I was in fifth grade, our class participated in a mock trial in which the Three Bears sued Goldilocks for damages. I’ll never forget how badly I wanted to be the lawyer. I even asked my parents if I could get glasses, just to look the part. When it came down to the “trial” date, however, I simply got up, asked a silly question about porridge, and said, “No further questions, your honor.”
It was obvious to everyone that I had no actual interest in being a lawyer… I just wanted to have fun and act like one. That’s a fine attitude for a fifth grader… but for a freelancer? Nope. Now I know that focusing only on the “fun” and skipping the legal stuff is not going to cut it.
Lawyers aren’t scary; freelancing without a lawyer is.
Now, I’m not saying that you need to run out and spend a bunch of money in order to keep a lawyer on retainer. That would put most freelancers in the hole before they ever actually start freelancing. I am saying that you should find a lawyer you trust and are comfortable with in order to help you get your business started off on the right foot.
A frequently asked question from new freelancers is, “What do you wish you would have known when you first started freelancing?” Everyone’s got their own emphatic answer, and for me, that answer is: Talk to a lawyer.
This can mean a few different things. It can mean talking to your lawyer friend (as long as you know they’re officially qualified) for advice, or hiring a lawyer for one or two consulting appointments. Like I said before, you don’t need to hand a massive stack of cash over so that you can have a lawyer at your beck and call at all times; even one meeting of legal guidance will put you miles ahead of the game.
In my early freelancing days, I was genuinely just winging it. A friend and his partner told me I should “be a blogger.” They built me a website, and asked me to write for them. Having made the huge transition to stay-at-home-mom status, this new source of income was a dream come true… and so I frolicked blindly along, signing contracts I didn’t understand, and neglecting to issue contracts that protected my end of the agreement.
I am lucky that an abrupt fizzling of our agreements was the only repercussion of that relationship.
A lawyer would have told me to never do work without a contract. A lawyer would have helped me determine what type of business structure was most appropriate for me. LLC? Sole Proprietorship? Corporation? A lawyer would have helped me increase my “freelancing street smarts” exponentially, and would have saved me from a lot of headaches.
I know. I know. No one ever wants to talk about contracts. We’re creatives, right? We use our talents and specialties to create incredible, life-changing products and content! We will face the realities of life with imagination and ingenuity!
That’s all great, honestly… but creativity is a finite resource, and you don’t want to spend all your time and energy coming up with creative ways to coax funds from someone who won’t pay you.
I’m not going to spend too much time trying to convince you that you need to work with a contract; the bottom line is that, without a contract, you are setting yourself up for a potentially devastating situation, be it loss of income or getting sued until you’re penniless. That may sound extreme, but the risk is there.
I will, however, spend a few more moments trying to convince you to hire a lawyer to draft your contract.
There are definitely some good, free options for contracts out there. Freelancers Union offers a contract creator, which is absolutely better than working without a contract… but if you can afford it, hiring a lawyer to work up a contract will serve you better in the long run. A lawyer will have the skill and experience to think of any legal possibilities that might be relative to your specific business. You’ll be able to work with him or her to build a contract that molds to your creative process, allowing you the freedom to work effectively while avoiding any pesky scope creep. Once you’ve gotten your contracts drawn up, you can always sign up for an E Signature service to make the signing process less of a pain.
Oof. That’s another one of those words that makes me want to take a nap… which, of course, means it’s also one of those words that I know I need to pay attention to.
This fits within the initial business-structuring stage, but is worth discussing on its own. If you choose to do business as an LLC (limited liability company) you gain the ability to protect your personal assets should a legal need arise. Also, if you have aspirations of getting investors to back your business or products, those future investors will be far more likely to jump aboard a ship that is protected by an LLC.
On the other hand, you may not even need an LLC. If your business is low-risk in the legal department, an LLC could be an unnecessary expense that makes filing your taxes a little more complex. Many freelancers operate as a sole proprietor and do just fine by using solid contracts and purchasing a business insurance policy.
Remember, doing what you love is awesome. It doesn’t get much better than getting paid for something you’re passionate about… but if you don’t have all of your legal ducks in a row, you’re putting yourself at risk of losing that awesome lifestyle… and all of your ducks.