How to start freelancing: Part Two – Negotiating a Contract

All of my posts on this subject will be under: How to become a freelancer

Now that you have a contract, CONGRATULATIONS!

If you don’t have a contract, here’s how you can get started.

What else?

GETTING PAID

For fixed rate jobs, it is easier to ask for 50% up front, 50% on delivery so that you are both on the hook and both liable to lose money.

Otherwise, if you start but then don’t get paid, you’ll have wasted time and your money on this deadbeat client, when you could have taken another one.

To limit the risk of NOT getting paid (trust me, this happens more often than you think), you better be sure you invoice them ON TIME (you’d be surprised how many freelancers do not do this), and you can set in your contract that you get paid more frequently. Weekly is best, but bi-weekly is more accepted.

I personally get paid monthly, so this means I could technically be working a whole month before I realize they are skipping on the bill.

At that point, if you don’t get a cheque or a direct deposit, stop coming to work or doing any more work until you get PAID, and then switch it to a more frequent payment.

It has never happened to me, but I knew people who worked for 3 months on good faith until they realized they were never going to see a dime.

They lost a good $80K of income and are now tied up in legal fees to get it.

WHAT ABOUT PRO BONOS?

Pro bonos are fine to get your portfolio or experience going, but unless it is a high-profile one, I’d stop doing pro bonos unless you get something better than money out of it (exposure and networking!!).

Pro bonos have their place — goodwill built in the community, more work promised in the future, or that it is for a high-profile client whom you can talk about and have as part of your portfolio.

GET YOUR CONTRACT SQUARED AWAY

Have it clearly written up with at least:

• Start / End Dates
• Deliverables / Statement of Work
• Contract end clauses – when can you or they give WRITTEN notice to end the contract early? Any penalty?
• Non-compete disclosures – many clients I work for put in there I cannot work for a competitor for a year; this screws me for jobs sometimes but then I just take the time off

You need a CLEAR statement of work.

Mine is pretty general when I start because I am willing to do quite a lot of things. When it starts to get hairy, you can always end the contract and start a new one with a clearer, more defined statement of work.

I have only had to do this once with a client (Read: Week of Money – Where I Quit my job because they started getting ridiculous with their requests of what my scope of work entailed.)

For anything about ending a contact, make sure it is clear how it is done.

Is it by written notice? Verbal is enough? (I prefer written), and do you have to give 2 weeks notice? None? A month?

Make sure the terms are fair for both sides. If they want you to give a month’s notice, you need to make them give you a month’s notice.

In addition, if they are unhappy about anything, it has to be IN WRITING for it to be justifiable.

Without a WRITTEN complaint or expressed unhappiness, you should put in there that it is not acknowledged and they cannot use it as a basis to refuse to pay you.

This has happened more often than you think (GET PAID! GET PAID!), and it can be costly and too time consuming to take them to court, which is exactly what these jackasses are counting on when they screw over freelancers.

LIMITING LEGAL LIABILITIES

If you are a sole proprietor, they can come after your personal assets. I’d stay a sole proprietor as long as possible because the taxes are much easier to handle, however once you start making more than $50,000 I’d get incorporated to limit any personal liabilities.

Becoming a corporation is not difficult, and they can’t come after your personal assets.

A lot of my clients prefer this setup and I cannot go as myself when I start. I always need to be incorporated, and with that comes a lot of paperwork to register a name, set up your sales taxes, your corporate tax numbers, and remittances.

Plus, doing corporate taxes on a yearly basis as well (I do this myself, but you should get an accountant to start.)

SET UP YOUR PORTFOLIO

Never give documents away for free — templates or anything, as “examples” of your work.

I had to learn this the hard way when I was younger and more naive, and these sharks were just trying to get these documents for themselves for a project, and to not pay me (they just followed what my template said to do).

If they want your work products, they should pay you for it.

You can give portfolio EXAMPLES, but nothing so specific or like a template that the can follow and replicate on their own without paying you.

You can also give project examples (talking), but nothing again, specific like actual documents.

DO NOT TRUST ANYONE

Under no circumstances, should you ever trust a broker or a third party you have never worked with or do not know personally.

They can be the worst of all, and until you have worked with them and they are indeed a reputable firm, do not trust them. Don’t even give them your resume because they will (and have in my case), taken it, changed the name at the top to a candidate they were proposing, and then submitted it.

Or in other situations, they have taken my resume, and submitted me without knowing or me confirming that they are indeed my broker for this contract, and I didn’t know this and another broker I had chosen submitted me as well.

As there was a conflict about he said, she said, who got her resume in there first, the client decided not to bother with this legal battle and just eliminated my resume from the pile.

Even accountants should be on a short leash.

Do not give them access to your bank accounts or anything personal. Make sure they talk to you before they do anything, and make sure you know what they are putting, where and why.

And that’s it for now! Questions?