How to Protect Yourself Financially and Legally as a Freelancer

The recent bloom of the digital workforce has brought on a massive wave of people eager to join the digital ranks. Your next-door neighbor is likely running a graphic design course online, there’s an app developer selling their skills to a foreign company, and your aunt might just be one of those creative writers. No matter if you wish to become a versed programmer, someone’s virtual assistant, or a travel blogger, being a freelancer comes with its own set of challenges – most commonly, of legal and financial nature.

In spite the recent developments and the promises many platforms and companies make, there are still those (you know who you are!) who don’t respect the terms of your agreements, send out late and partial payments, ignore the pleadings, or not pay at all. Still, there are ways for any eager freelancer to protect their work and time, but you’ll need some patience and plenty of preparation.

Structure the scope of your services

Being a freelancer often means working with several clients at the same time, from different time zones, with completely different needs. This lack of consistency doesn’t imply that you should simply go with the flow, work at a haphazard pace and base your expectations on sheer goodwill of your clients. How you treat your services will define how your clients treat them, and setting clear expectations from the get-go is key in establishing a long-term relationship.

No matter how many different clients and services you provide, you need to make it crystal clear to each and every one of them as to what they can expect from you. If it’s 24/7 support, so be it, but you need to clearly set boundaries, otherwise, you’ll get trampled. Decide on how much you will charge for each service and what falls under your services exactly. Transparency is vital from day one.

Seal the deal with a contract

Some businesses you work with will have their own sets of legal expectations, while others, the new ones in the game, might be uncertain as to the best route forward. Make sure that every single entity you work with has access to legally binding contract templates, which will serve both sides to determine the scope of work and expectations on both ends. Now that you can use digital signatures and customize them as per your needs, it’s all the easier to build a solid collaboration on legal grounds.

If any company or a person tries to ask for work without a contract in place, never ever say yes. That way you’ll relinquish any and all rights to the work delivered, and you will not have a legal basis to claim any payments. There is no place for “she said, he said” disputes in the world of freelancing; rest assured, you cannot afford them.

Define your rights

Ownership is often a dirty word in the freelance world. While certain ads are clear and simple, for instance, the ones that seek ghostwriters, meaning that you do not retain any rights to the writing you deliver, there are those that remain vague on how you will be credited (if at all) for your work. Get the basics on your own country’s copyright law, and how intellectual property is treated.

Then, make sure that your contract, as well as your services, clearly state your role in the process with each client, how you expect to be compensated, and the ownership of the produced work. It also matters if you will have the right to showcase your work, in the form of a portfolio, so that you can attract more clients in the future – make sure your contract clearly states that as well.

Make sure you’re a legal entity

How else would you be able to protect yourself in case of a legal dispute? Without officially legalizing your business, no contract would be considered valid, and you wouldn’t be able to protect your work. Many freelancers avoid taking this step simply because it comes with added expenses and compliance issues, but it’s still a necessity in order to protect yourself in case of an issue down the road.

While there’s no perfect, one-size solution for every freelancer in the business, you should evaluate your options carefully before you settle for a sole proprietorship, an LLC, or a corporation. Weigh your options and take your time, but protect all of your assets accordingly.

Build a payment schedule

Another vital component not just of a contract, but of any collaboration is a clearly defined payment schedule with your client. You’ll soon discover that every business has their preferred method of paying and exchanging data. Plus, timing is as important as the act of payment itself, otherwise, you may find yourself chasing one client after another who neglect to fulfill their duty and pay their invoices in time.

Even as a freelancer, or especially as one, you need to have a steady cash flow and a steady income so as to cover your lifestyle needs and keep your services and your business afloat. Let your clients know that there will either be penalties for late payments, or incentives for early ones – or both, whichever works for you.

Freelancing may not be the dreamy ideal it seems at first, but with the right preparation and some strategizing, you’ll find yourself in the position to build a reputation and become a self-sufficient entrepreneur in no time!

David Webb is a Sydney-based business consultant and an online marketing analyst and a senior editor at