Lately, it feels like everyone has joined the self-employed brigade, or at the very least, has toyed with a side hustle. A BNN Bloomberg study revealed that nearly 40% of millennials have participated in the gig economy in 2019, and that number has only grown with the rise of hybrid work.
Whether you’re an award-winning juggler or goat yoga instructor, there are a lot of mysteries when it comes to being a self-employed person. Let’s try and demystify some of those woes with these best practices for freelancers in Canada:
Being responsible for your own worth and potential income is both exciting and…terrifying. How do you know how much to charge? Are you charging too much, not enough?
There isn’t much transparency in the freelance world to gain insights for each specific industry, but in recent years there have been resources popping up that can help. Our partners over at Women Who Freelance have built a Rate Transparency Guide for Canadian self-employed individuals and have broken it out into seniority, sector and city.
While this resource isn’t exact, it does give you a general idea about what pricing looks like in your specific industry. Compare your current rates with this transparency guide and adjust to your personal expenses and financial goals. Get paid, pals!
Self-employed doesn’t have to mean that you go at it solo. There are many communities that you can be part of and feel like you have folks in your corner. Women Who Freelance or Toronto Freelancers are great Facebook groups to check out. If you’re looking for communities that are closer to your industry, search your field of work on Facebook with the words “contractor”, “freelance”, “self-employed”, or “gig worker” and see what groups come up. You’ll be pleased to find endless opportunities to collaborate, connect with peers and even find a mentor!
(Psst, at Livelii, we’re also launching our own Slack channel for Canadian self-employed individuals and Independents to unite, collaborate and share your experiences navigating freelancing in Canada. Stay tuned for more info to join in the coming months!)
3) Personal Finance
We’ve talked about personal finance tips for freelancers and contractors in the past, but it’s always worth putting on the list for self-employed essentials. You don’t need to scour through Reddit or Google your way into personal finance tips for gig workers, but this Livelii blog is a pretty solid place to start. TL;DR, make sure you’re putting aside enough of your invoices so that when tax season arrives, you aren’t greeted with a terrible, sobering hit of reality.
4) Incorporation VS Sole Prop
First, what does it mean to incorporate? Here are the deets right from the Government of Canada:
“The act of incorporating creates a new legal entity called a corporation, commonly referred to as a company. Your corporation will have the same rights and obligations under Canadian law as a natural person. Among other things, this means that it can acquire assets, obtain a loan, enter into contracts, sue or be sued, and even be found guilty of committing a crime.”
Incorporation is an important step in the growth of your business, especially if you intend to have global clients or want to have easier access to capital down the road. Incorporation does cost more money at upfront in order to register with the government, so you should be prepared to shell out a few thousand dollars for incorporation.
Additionally, incorporation involves a lot of ongoing paperwork even after you’ve signed on the dotted line, as you will have to maintain strict paperwork filings and bookkeeping to the T. But something you may not know: If you set up a corporation, the owners usually get paid as employees! Hello salary and goodbye messy personal tax returns. Depending on your needs as a self-employed Canadian, incorporating isn’t for everyone (and that’s okay!)
If you’re looking for a simple and speedy option, being a sole proprietor may be best for you. In this scenario, you are the owner of your business and you incur all the responsibilities, profits and debts that your company may encounter. The startup cost is very low to get started, and you can also deduct business losses/expenses from your personal income when you file your taxes.
However, the major downside of sole proprietorship is that you are 100% liable for any debt that occurs within your business. Additionally, if your sole prop becomes very profitable, you will jump tax brackets and likely pay high personal taxes that you wouldn’t otherwise pay if you were incorporated.
So, if you
Have global clients (or want to in the future)
Earn high profits
Want more tax advantages
Intend the business theoretically last forever
Seek capital or loans down the road
Incorporation may be best for you.
But if you
Just want to get started ASAP
Want full control with no partners, shareholders, etc
Have a side gig you aren’t sure you want to keep doing for the long term
Don’t mind personal taxes being a bit complex
Then sole prop may be best for you.
5) Personal branding
If I build it, they will come? I think?
Your client pipeline doesn’t just fill itself overnight for funsies. As a contractor or freelancer, you are responsible for keeping your client roster filled so you can pay those bills. Especially as a gig worker, you probably know better than anyone that most of your jobs have been referrals.
A strong personal brand can be the dealbreaker between choosing you and choosing another contractor for the same gig. If the client can connect with you and get your vibe just from your online presence, you’ve already made the decision easier. Our partner at Women Who Freelance has a great post about how to add extra flavour to your personal branding and market yourself the right way.
When was the last time you used your resume to land a freelance job? Exactly. That’s why your social media presence needs to be top-notch. Add personality to each post you make, and celebrate those wins so that your audience knows what you do best. Most importantly, give them something to chew on! Clean up your portfolio website and drive traffic to your site so those potential clients know exactly how to reach out.
6) Health and Dental Deductions
Personal health and managing your health deductions as a Canadian self-employed individual can get complicated. While we’ve already talked about what qualifies as a health or dental deduction and how to claim them, we thought it was important to include it again just to bring it home.
Here it is: Don’t forget to set aside a cushion for health and dental expenses. Life happens and surprises will, well, surprise you! Whether you sign up with Livelii for $99/month or you set aside a big emergency cushion for that surprise root canal or broken arm, please keep your health and wellbeing at the forefront. K? K.
Being a self-employed freelancer, contractor, gig worker — whatever you want to call it, that’s the glory of it all: it’s up to you. There are a million and one ways to run your business and earn an income that lets you live comfortably. As you continue to expand and succeed in your niche, don’t let your health and wellbeing be forgotten in all the hustle and bustle. For just $99/month, you can get competitive health, dental and life insurance as a sole proprietor or freelancer in Canada. Learn more about how Livelii is giving freelancers the access and transparency they need in order to put their health first.
No gimmicks, no hidden fees. Just solid health and dental insurance for self-employed Canadians. Livelii comes together as a group to tackle challenges, reduce fees, remove barriers, and provide transparent pricing each calendar year. Visit https://www.livelii.io/ and discover how even freelancers can get their benefits covered.