Editor’s note: This article was first published in January 2011 and is based on Spanish rules at the time on self-employed (autónomo) registration and contributions and on how the tax agency tracked invoiced payments. The self-employment regime has changed since, including income-based contributions from 2023.
First of all, the clearer you are about what the word freelance means, the better, because sometimes people try to dress it up with foreign terms. A freelance professional is simply a self-employed worker (in Spain, an autónomo) who works for a company, providing services or selling its products under a commercial (mercantile) contract rather than an employment contract. With that in mind, we can move on to the points you need to succeed as a freelancer.
1. The right mindset
This is the most important point of all. If you aren’t fully committed and 100% focused on this work, there may be plenty of surprises in store. You should know that, depending on the service you provide as a freelancer, your income will depend exclusively on your sales or the services you deliver, which boils down to: “If you don’t sell, you don’t get paid.”
Of course, that applies to sales. Nowadays some companies take on freelance staff in a wide range of sectors when they have a surplus of work, instead of hiring someone as a regular employee under the general social security scheme, although this isn’t the norm. In general, your income will depend on the services you provide or the sales you make.
2. Set up your “base of operations”
It’s essential to set aside a space at home for this purpose and equip it with a computer, client files, a phone plan for the self-employed and so on. In short, you need to set up your home office somewhere quiet where nobody will disturb you.
3. Diversify your products
This part is crucial, because a freelancer sometimes works with just one product while visiting clients who could buy more than one. I understand that some companies will want this kind of professional on an exclusive contract.
See also: 4 truths about the art of negotiation
Unless you see from the very first month that the product sells well and that you’ll be earning soon and for a long time, don’t limit yourself to that single product. Remember that you work for a company, but you are a business too, so you decide which products you want to sell.
Example: imagine you’re taken on by a screw manufacturer to sell to hardware stores. You could easily combine that activity with selling work equipment, screwdrivers, nuts and building materials to those same customers.
4. Watch out for
- Exclusivity clauses: as we said in the previous point, be clear about what you’re going to sign before you start. Negotiation with companies is crucial when you’re hired through a commercial contract. Never feel that the company is doing you a favour by taking you on, because in fact they’ve chosen the most convenient way to do it. If there are no sales, or the company lets the customer down, you’re the one who loses out, not the company, which hasn’t spent any capital on hiring you.
- Non-compete clauses: these contracts often include a clause stating explicitly that once you stop working for that company, you won’t be able to sell similar products or sell to the customers you won for them for 1, 2 and even up to 5 years. Be sure you want to sign that, because you never know what you might be doing in six months’ time.
5. Financial backing
This point isn’t essential, but it’s more than proven that professionals who go into this kind of work with some capital in reserve tend to do better, because they aren’t under pressure to get quick results.
Nobody can guarantee that everything will go “smoothly” in the first or second month, so if you have income from another source, or simply some savings that can keep you going for several months, you’ll be able to focus properly on this work.
6. Keep it as legal as possible
In the past, a freelancer had one card to play: they could go for years without paying self-employed contributions while still earning money. Today, our friend the tax agency, eager to collect, doesn’t let this kind of professional slip through and keeps a very close eye on them.
The company has declared its payments to you as invoices, and for all intents and purposes you’re a business receiving payments without declaring them. You’re a wrongdoer cheating the whole country, even if you haven’t earned enough to cover your insurance. Keep that in mind too. The more legally you can do it, the fewer problems you’ll have.
That’s basically what you need to know to become a freelancer (a self-employed worker). And remember: since you’re going to register as a business under a scheme in which you’re liable with everything you own, always think of yourself first, because the company already thought of itself when it offered you this kind of contract.
Further reading
- Make money working as a freelancer
- The commercial contract: what you need to know
- How to start your own business with no money
- How to lose your fear of starting a business
- Why a business plan matters and how to structure it
Featured image: Marek Slusarczyk, CC BY 3.0, via Wikimedia Commons.
