Taking Care of Business as a Freelancer

You’ve probably heard the term “gig work” or the phrase “gig economy” in the news quite a bit over the last few years. A lot of that conversation has focused on the new category of gig jobs created by app companies like Uber and Instacart. 

But for years — long before you could order up a ride to the airport or a tofu breakfast burrito from your phone — there’s been a workforce of independent contractors or “freelancers,” doing professional, often high-paying jobs for clients and businesses. And the prevalence of freelance work has only increased since the COVID-19 pandemic.

A study by Upwork found that 36% of American workers freelanced in 2020, and three in five say they’re making the same or more money freelancing than they would be working for a traditional employer. The study also found that as much as half of the total Gen Z workforce has freelanced at some point in the last year, and nine out of 10 plan to continue.

Freelancing has been a way for some people to get by after losing their job or needing to scale back during the pandemic. But for many, freelancing is a career choice. They enjoy the freedom that comes with working for themselves, choosing the projects they take on, and working remotely on their own time. Both small businesses and large corporations (and everything in between) hire freelancers to help with various projects, from copywriting to graphic design to data science.

There are plenty of benefits to freelance work that you might find enticing — setting your own hours, avoiding office politics, or even a “pants optional” dress code. But being a freelancer also means you are your own employer — there’s no sales or accounting team to take care of things for you. Finding clients and managing the business is up to you. There’s a lot to consider and plan for, especially when you’re just getting started. So let’s dig into some basics.


Establishing your business 

Obviously, the first step to becoming a wildly successful freelancer is to buy one of those placards for your desk that says “Every Day I’m Hustlin” or “Girl Boss.” But after that, it’s probably important to make sure your business is legally established.  


DBA vs. sole proprietorship

The most common ways freelancers set up shop is with a sole proprietorship (i.e., an unincorporated business under your name) or a DBA (“doing business as”) if you want to establish a business name other than your own. As a sole proprietor, you don’t have to register or file any paperwork with the government; however, there is a bit of risk. You’re personally liable if the business (you) gets sued or incurs any debts. For a DBA, you’ll have to file an application, and each state has different laws and requires different permits or business licenses. LegalZoom has some good resources to help you decide which route to take and how to get started.


Finding clients

As a freelancer, you are your own salesperson when it comes to securing clients. You can tap into your existing network, make new connections, market your services online, or ideally, all of the above. 

If you don’t already maintain a portfolio or personal website, that’s a great place to start. Having an online presence gives you a place to send potential clients who want to take a look at your work to see if your skills might be a good fit for their project. You don’t need anything fancy, and there are plenty of sites where you can build a basic website — like Squarespace and Wix — that require little to no coding or design abilities. There are also free portfolio sites where you can host your work, like Contently and Behance.

Networking online via LinkedIn and at in-person events (when it’s safe to do so) is a great way to put yourself out there, whether it’s to learn from others in your field or solely to drum up business. And reaching out to acquaintances and friends in your professional networks (like your Alpha Kappa Psi brothers!) is a great way to get referrals or intros to potential clients.



No matter the size or scale of a project, it’s essential to have clear, detailed parameters in place with written agreements on both sides. Having formal documentation to sign shows your clients that you’re a professional and protects you legally should any problems arise with important things like, you know, getting paid for your work.

A “freelance contract” or “letter of agreement” is a document you should have in place with each client and project you take on that explains the terms you’ve agreed on — what work will be performed, at what rate, for what length of time, etc. It’s a legally binding document that sets expectations and ensures both parties are on the same page.

Sites like LegalTemplates and even Microsoft Office provide free, downloadable templates for freelance contracts as well as other documents you’ll need, such as invoices and statements of work.



One of the most challenging things for many freelancers is deciding how to structure their fees. There’s no formula or algorithm that can tell you precisely what you should charge, as there are so many factors that come into play. The tricky thing is finding that sweet spot in which you’re not selling yourself short by charging too little (know your worth!) but not setting your fees way too high and pricing yourself out of the running with potential clients.

Hourly pricing is pretty typical for freelancers as it keeps things relatively simple. You set a fixed rate and bill by the hour. The only thing to be mindful of when charging by the hour is making sure expectations are clear, and the lines of communication are open between you and your client. For example, it can be helpful to estimate upfront how many hours you think a project will take and let your client know if you feel something may require more time.

With a project-based or “fixed” pricing model, you charge one fixed rate to complete a project. This is a good option if the project has clearly defined deliverables. But keep in mind, some projects tend to grow bigger than anticipated (creatives often call this “scope creep”), and the final deliverable can end up taking way more time than you bargained for — and you still only take home that same set amount of money. 

Doing a little research can help when setting your rates. Sites like Upwork and Glassdoor can give you an idea of average hourly rates for freelancers in different regions and industries. You can also ask around. Network with other freelancers (ideally, those you’re not competing with) and see what they charge and how it compares.


Financials & taxes

To keep your personal finances separate from your work finances, you might consider opening a business account to deposit your earnings and pay for any business expenses. Another important thing for someone self-employed is to have a safety net in savings, in case you were to lose a client. Intuit recommends having at least 4-6 months’ worth of earnings saved. 

Another consideration with freelancing is that you don’t get some of the same benefits you might have when working for a traditional employer, namely health insurance and retirement benefits. But there are options available for self-employed people; you just have to decide which ones are right for you. A qualified financial advisor can help you understand what your options are for retirement plans. As for health insurance, The Freelancers Union recommends researching your options and checking your eligibility for any free or subsidized plans. They also have an online tool for finding handpicked insurance plans for freelancers


Filing taxes

As if filing taxes every spring wasn’t painful enough, being a freelancer can make things a bit more complicated when settling up with Uncle Sam. As a freelancer, you’re considered self-employed by the IRS, meaning you have to file your taxes as a business owner. 

You’re probably familiar with working for a traditional employer and getting a W-2 that reports all the income you earned that year. As a freelancer, you’re responsible for gathering and reporting all your sources of income from all the projects you’ve done. (This is again why having written documentation with all your clients is important, as well as maintaining a separate business bank account.) You should also receive a 1099-NEC form from each of your clients if you did work for them exceeding $600.

When you’re self-employed, you also get stuck with the self-employment tax on top of your regular income tax (the current rate is 15.3%). This is in place of the Social Security and Medicare taxes deducted from your paycheck with a traditional employer.

It’s not all bad on the tax front, though; there are also some benefits. When you’re considered self-employed, the government allows you to take deductions for business-related expenses, like home office equipment, internet, business travel, etc. (Check out Investopedia’s list of 15 Tax Deductions and Benefits for the Self-Employed.)

If you’re considering a career (or even just a side hustle) as a freelancer, definitely talk to a qualified professional for advice on all the financial and tax-related implications. The Smartasset Advisor Match tool is an easy way to find financial advisors in your area.


*Disclaimer: This article is for general informational purposes only and not intended to provide specific advice or career recommendations. It is only intended to provide education about the financial considerations for freelance work. Any ideas or strategies discussed should not be undertaken by any individual without consultation with a qualified financial professional or career consultant.

Winning at the Side Hustle with Nick Loper

Exploring the option of a side hustle? We’re learning all about it this week with Nick Loper, the creator of sidehustlenation.com. Nick left behind a corporate job to explore a few side hustle ideas, and now Side Hustle Nation is enough to cover his living expenses and more. Tune in today to hear how he did it, and how you can, too!

Nick Loper helps people earn money outside of their day job. He’s an author, online entrepreneur, and host of the award-winning Side Hustle Show podcast, which features new part-time business ideas each week. As Chief Side Hustler at SideHustleNation.com, he loves deconstructing the tactics and strategies behind building extra income streams.

External Links:

Connect with Nick Loper

Side Hustle Nation website

Employee Stock 101: Get to Know Your Options

When you think about your benefits package as an employee, you might think about health insurance, 401k, or paid time off. But some employers offer an additional benefit to their employees in the form of equity in the company. 

Many companies — particularly startups or scale-ups — will offer stock options as part of your overall compensation package to recruit and retain top talent. The idea behind offering company equity is that you will essentially share in the company’s success, and will have the potential to sell your shares one day for a little (or a lot of) money. 

For public companies (i.e., those trading on the stock exchange), equity is typically offered to employees in the form of a discount on their stock. Private companies are owned by a group of individuals, like the company’s founders and/or private investors, and the stock can’t be traded publicly.

For this article, we’ll focus primarily on private companies and what to expect when you’re granted stock options as an employee.


The offer letter and option grant

When you get an offer of employment with a new company, you will typically get a document to sign that lists your compensation package, including your salary and any bonuses you’ll be eligible for. If the company is offering you stock options as part of that package, those details will be listed in your offer letter as well. 

While signing your offer letter means you’re accepting the job, there will be an additional step in the process if there are stock options included. You’ll need to sign the stock option agreement or “option grant” as well. It won’t cost you any money up front to accept the agreement, and signing it doesn’t mean you’re obligated to exercise your options in the future. It simply means you’ll have the opportunity to exercise if you choose. 

Now to really throw you for a loop… stock options aren’t actually shares of stock. (Wait, what?!) The keyword here is “option” — the company is essentially giving you the option to buy a set number of shares in your company at a fixed price (i.e., the “strike price”). There are two types of employee stock options: incentive stock options (ISOs) and non-qualified stock options (NSOs). (The main difference between the two is how they’re taxed.) Your option grant will include details like: 

  • the type of stock 
  • number of shares
  • the strike price
  • your vesting schedule

It will also include an expiration date. (ISOs typically expire 10 years from the date they’re granted.)


Vesting schedules

If your new company offers you 1,000 shares as part of your compensation package, that doesn’t mean you have 1,000 shares on day one of employment. As I mentioned above, your option grant will include what’s called a vesting schedule. “Vesting” means you have to earn your stock options over time. Companies do this to encourage employees to stay on board for a more extended period. It helps with employee retention and makes employees feel more invested in the success of the company. 

Most companies follow a traditional vesting schedule which includes what is called a “cliff.” A one-year cliff is the most typical, with 25% of your options vesting after one year with the company. (So, to get any shares at all, you must be with your company for at least a year.) After you reach your cliff, your remaining options (the other 75%) will continue to vest at regular intervals each month for the total length of your vesting schedule, which is typically 3 or 4 years.

So, for example: Upon hiring, your employer grants you 1,000 shares of stock with a vesting schedule of 3 years. On your first anniversary with the company, 250 shares (25%) will vest. Then, over the next two years, the rest of your shares (the other 750) will vest — about 31 shares each month for the next 24 months. Then, by your 3rd anniversary with the company, your options will be fully vested.

If you decide to leave the company before then, your shares will stop vesting, and you can only exercise the amount that has vested to date. You’ll have a window of time after leaving your company (usually at least three months) to exercise those vested shares, called a post-termination exercise (PTE) period. If you leave after three years, you’ll be able to exercise all 1,000 shares, should you so choose.


Strike price and exercising (no sweatband required)

Whether or not you want to exercise your vested shares will probably depend on how well the company is doing (or how well you expect it to do in the future) because you will have to purchase your vested shares. How much you will pay depends on your strike price. 

The strike price is that fixed price listed on your option grant and is the price you’ll pay to exercise your vested shares. Companies set the strike price based on fair market value (FMV) on the day it’s granted. (So, depending on when you start at the company, your strike price may be different than someone else’s who started before or after you.) FMV is essentially what the price would be if the stock were publicly traded. 

The difference between the FMV and your strike price is called “the spread.” So when the stock value is up, and the spread is positive, your options are considered “in-the-money.” If your spread is negative, your options are considered “underwater.” (So, for example, if your strike price is $1 and the FMV is $5, you’re essentially up $4/share.)

Another thing to consider when it comes to when/if to exercise is stock dilution. This happens when a company issues additional shares of stock, and in doing so, reduces how much of the company shareholders own. It typically occurs when the company raises money. Those new shares that have been issued would now cause the percentage of your ownership in the company to decrease. 


So, when can I make money?

If you’re lucky enough to find yourself with stock options in a successful, growing company, there are a few main ways you may be able to cash in on your stock. Once you’ve exercised your vested options, you can choose to either hold onto them until there is an “exit event” or sell the stock to investors in a private transaction. The most common exit events are mergers, acquisitions, or an initial public offering (IPO).

Typically, in an acquisition and some mergers, your exercised shares are either paid out in cash or converted into common shares of the acquiring company. If your company goes onto an IPO, the private company is now public, and the company starts selling its stock on the market. There will be a “lock-up period” (of up to 180 days) in which employees aren’t allowed to sell their stock. After that period ends, you’re free to sell.

If you think your company has the potential for an exit event in the not-so-distant future, you’ll want to learn more about how your options might be affected. There are several complex factors to consider — including tax implications — when selling stock options. Talk to your human resources and/or legal team, and consider seeking out the advice of a qualified financial advisor to help you best understand your options.


*Disclaimer: This article is for general informational purposes only and not intended to provide specific advice or recommendations to any individual on any specific investment product or strategy. It is only intended to provide education about investments and the financial industry. Any ideas or strategies discussed should not be undertaken by any individual without consultation with a qualified financial professional.

First Job Out of College? Time to Start Investing

Whether you’re a recent grad or have already been in the workforce for a few years, it’s never too early or too late to start investing in your financial future. The sooner you get started, the easier it will be to achieve your financial goals and build a comfy nest egg for your later years. 

While you may already have some level of understanding of the different investment options available to you, making the big decision to hand over some of your own hard-earned money can be intimidating — and more than a little confusing. 

To simplify things, let’s dip our toes into the investment basics, then we’ll point you to some trusted resources for a deeper dive. 


Why starting to invest in your 20s pays dividends (pun intended)

It’s not just the glowing skin and higher metabolism you should appreciate in your 20s; it’s also the gift of extra time to invest in your future self. Just like exercising or eating more veggies is something you can do today that will benefit your health for years to come, making smart financial decisions is a way you can ensure a more financially healthy future. 

The sooner you start investing, the more you’ll earn over time. According to U.S. News & World Report, if you start investing $200 every month from age 25 until age 70, (assuming a 7% annual rate of return based on the long-term average stock market return of 9%, less average inflation of 2%) you could end up with $976,000 in earnings for a total portfolio of $1.1 million. Not too shabby! And think about how much more that could be if you increase the monthly investment as your salary increases over time… you’ll be well on your way to a comfortable and financially secure retirement.


Start with a budget and set some goals

Maintaining a budget is always smart, but it’s crucial when you’re just starting out. Before you think about investment opportunities, you of course want to make sure all your bills get paid, and you’re able to build up some savings. The investment experts at SoFi recommend thinking of your money in terms of three buckets:

  1. Immediate money: Dollars set aside for groceries, utilities, rent/mortgage, car payments, and any other bills you have to pay every month.
  2. Mid-term money: What you might need in the next couple of years, like money for travel, a wedding or other significant life event, a down payment for a house, and an emergency fund (experts recommend saving enough for three to six months of expenses).
  3. Long-term money: Money you’ll use 20+ years from now (e.g., retirement, your kids’ college fund, etc.). 

Once you subtract your immediate money needs from your income, you can figure out your mid-term savings goals and set aside the amount of money you think you’ll need each month to hit them. (You might consider a high-yield savings account to build on that mid-term money while you save.) Once those buckets are filled, you can use what’s left for long-term investment. 


Know your long-term investment options

As someone earlier on in your career, you have the luxury of taking a bit more risk with your investments than someone closer to retirement age. You can also increase investments over time as you earn more. The first step is to decide what type of accounts or other investment options will work best for you at this point in your life (and beyond). 


Retirement accounts

A retirement account is a great place to stash that long-term money — and most give you some sweet tax advantages. Here’s a quick overview of some different types of retirement accounts to consider:



Many employers offer a 401k plan that qualified employees can take advantage of. (Or, if you work in government or public education, you might have a 403b retirement plan.) 

Your company will typically provide a few options to choose from for your 401k account that may include an assortment of stocks, bonds, guaranteed investment contracts (GICs) issued by insurance companies, or even your employer’s stock.

A cool thing about the 401k is that many companies will offer a match as part of their benefits package — they’ll match what an employee contributes up to a certain amount. So say you contribute 3% of your salary to your 401k, and your employer has a dollar-for-dollar match and throws in another 3%… now you’re contributing a total of 6% of your salary. Of course, some may only offer a partial match, like 25% or 50%, but hey, that’s still extra money in your (future) pocket!

Another nice thing about contributing to a 401k is that it’s generally pretty easy to set and forget. You choose your contribution amount, and your employer deducts that money directly from your paycheck. You can choose any amount up to the contribution limit that is set by the IRS each year — the 2021 limit is $19,500. 


Traditional & Roth IRAs

If your company doesn’t offer a 401k or you’re self-employed (in which case you may also qualify for what’s called a Solo 401k), an IRA may be another good option for you. There are two main types: Traditional IRA and Roth IRA. With Traditional, you can contribute up to $6k a year, and it’s tax-deferred, so you won’t have to pay income taxes on that money until it’s withdrawn. 

A Roth IRA also has a $6k contribution limit, but in this case, you’re investing money you’ve already paid taxes on. This can be a great option for those that are just starting out in their career and may fall into a lower tax bracket. That being said, there are income limits — eligibility for Roth IRA starts phasing out at $124,000 a year.

If you think an IRA might be a good option, you can open either type at most banks, a mutual fund house, or other financial institution. Some are even available online


Stocks and bonds

When you think of the stock market, maybe you picture Michael Douglas as greasy-haired Gordon Gekko making shady deals. Or perhaps you’ve been following the recent GameStop/Reddit saga and wondered how you can get in on that action. The truth is, investing in stocks isn’t that exciting or dramatic for most people.



A stock is a small piece of ownership in a publicly traded company. Stocks are also called equity investments because as an investor, you essentially own equity in that company. When you invest in a stock, you can earn money through capital appreciation or dividends, which are payments made by the company to its shareholders. The average stock market return is about 10% per year.

As we learned from the GameStop fiasco, the stock market can be volatile — supply and demand cause prices to fluctuate as trades are made. But, if you choose to invest in the stock market earlier on in your career, your portfolio will have more time to recover from that market volatility, which means you’re able to take a bit more risk to get those higher rewards. When investing in your 20s, experts recommend focusing more of your investment on stocks and slowly moving more into bonds the closer you get to retirement age.



A bond is essentially a type of contract with which you loan money to a company (or the government) for a fixed period. They’re considered “debt investments” because you’re literally investing in the company’s debt. It may sound a little shady, but bonds are actually considered less risky than stocks because they come with a stated rate of return. 

Treasury bonds (aka the ones grandmas like to buy when their grandbabies are born) are the safest type of bond because it’s unlikely the U.S. government will go bankrupt (at least we hope). Unfortunately, they’re not paying out as much as they used to — a 10-year T-bill now yields less than 1% annually, compared to interest rates closer to 10% in the 1980s. 


Mutual Funds and Exchange-Traded Funds

Unless you want to spend a ton of time and effort researching individual stocks to invest in, funds are a great option to do that work for you. A fund is like a bucket of different investments — stocks, bonds, other investment types, or a combination of each. Funds help you diversify your portfolio and protect against putting too many eggs in one asset basket. 

There are two main types of funds — mutual funds and exchange-traded funds (ETFs). Mutual funds let you purchase small pieces of several different stocks in a single transaction. Mutual funds often have minimums of $1,000 or more, so if you’re just starting out, an exchange-traded fund (ETF) may be a better option. ETFs trade like a stock, so you purchase them at a share price, often less than $100.

Not sure how to choose a fund? That really smart rich guy Warren Buffett has said a low-cost S&P 500 index fund is the best bet for most Americans.


Ask the experts

Hopefully, you learned a little something from this investment overview, but if you’re thinking about making some investment moves, it’s always a good idea to seek the help of a qualified financial advisor (which I am definitely not*). 

Financial advisors typically charge fees based on how much money you invest with their firm. They call this “assets under management” or AUM. The industry average is about 1-2% of AUM per year. If you have friends or family members that “have a guy” (or gal) they recommend, that’s always a good place to start. But if you don’t have any solid recommendations, there is a neat little Smartasset Advisor Match tool you can check out. It asks you a few questions about your financial goals and matches you with qualified advisors in your area.

“Robo-advisors” are also a good Gen-Z-friendly option if you’re looking for low-cost financial advice. There’s a range of options that come with all different types of services. Check out Nerdwallet’s 12 Best Robo-Advisors for help finding a good fit for you.


*Disclaimer: This article is for general informational purposes only and not intended to provide specific advice or recommendations to any individual on any specific investment product or strategy. It is only intended to provide education about investments and the financial industry. Any ideas or strategies discussed should not be undertaken by any individual without consultation with a qualified financial professional. 

Life on the Frontlines with Caitey Sosnowski

Frontline workers experienced COVID-19 differently than most, but we rarely hear their stories. Caitey Sosnowski, a floor nurse at a Midwest Hospital, joins the show today to walk us through her harrowing experience with the pandemic, from patient care to PPE to end of life decisions to personal mental health. She hopes this will encourage other nurses to use their voice and share their stories, too.

After graduating from St. Mary’s College with a BSN, Caitey Sosnowski started working as a nurse at a Midwest Hospital in August 2019. Caitey pursued nursing because it just seemed right, she always knew being a nurse was what was meant for her life.