Hi Daniel,

I'm not a freelance engineer myself, but I've contracted many of them over the years - and have many friends and colleagues who are - so hopefully the following will help. My wife is also a freelance professional in another field. (I'll probably be becoming a freelance engineer myself in 131 weeks 02 days 05 hours 40 minutes when I retire!)

In no particular order, just as I think of things:

• Professional liability insurance. Get some! It is not expensive, just make sure it covers all the services you will be delivering. Hopefully you will never need to call on it, but if you do you need plenty of cover.
• Beware of IR35 (lots of information online). Basically if in one financial year you only work for a single client you may count as an employee. not as a contractor, which can really change your tax process.
• Find out everything you can claim as allowable expenses - it's a lot! A proportion of house lighting and heating costs, your tools and IT equipment used for work, IET etc membership fees, etc etc
• Be clear what value you can add, what your specialist skills are.
• But be honest, do not claim you can offer things you can't. There will be lean times when you will really want to take on work, and it can be tempting to claim you can do things just to get the work. You will get found out, and it severely affects your future credibility.
• Following on from the above, remember that most work comes form personal recommendations. Doesn't mean you always have to agree with your clients, but you have to respect them.
• Travelling time and costs. This can be difficult. Clients will very often expect you to cover this, but while you're travelling to a meeting at the other end of the country you often can't be working on anything else - it's just lost income. Be prepared to politely push back a bit to see if video calling can be used in place of travelling. It's a difficult balance, if you come across as difficult to work with you will lose work, if you always jump when the client says jump you will lose money. Be open and honest with the client about it and see if you can reach a compromise.
• Do not price yourself too low. Your rate needs to cover your holidays, sickness, time spent seeking new work, time spent working on finances and tax returns etc, insurance, tools, IT equipment, etc etc etc. It can be difficult to find out, but do try to find what engineers offering similar services are charging. It might seem a lot, but you'll find it isn't in practice. I work for a consultancy rather than being self employed, the consultancy (who of course cover all these costs for me) charge me out at three times the hourly rate at which I actually get paid (before tax). That give you an idea of how much "overhead" there needs to be between what you'll charge and what you'll actually see as your own money at the end (if you average it out over roughly 46 full working weeks).
• Do not underestimate how much time you will spend chasing people for money. Most self employed people find that this is the most painful part of the job. Some clients will pay really quickly, some, particularly the biggest and smallest clients, can be very very slow. Remember cashflow - you have to pay your bills while you are waiting to get paid.
• You will probably get some who won't pay at all. There's actually often not much you can do about this through legal processes - the cost of chasing them legally can be more than what owe you. But find out about what the process is, very often the threat of pursuing through small claims is enough to make people pay up. But find out what the correct wording is for your letter to chase this, it needs to look credible - there are usually good examples around online. 

I'll add more things if I think of them!

Cheers,

Andy

Hi Daniel,

I'm not a freelance engineer myself, but I've contracted many of them over the years - and have many friends and colleagues who are - so hopefully the following will help. My wife is also a freelance professional in another field. (I'll probably be becoming a freelance engineer myself in 131 weeks 02 days 05 hours 40 minutes when I retire!)

In no particular order, just as I think of things:

• Professional liability insurance. Get some! It is not expensive, just make sure it covers all the services you will be delivering. Hopefully you will never need to call on it, but if you do you need plenty of cover.
• Beware of IR35 (lots of information online). Basically if in one financial year you only work for a single client you may count as an employee. not as a contractor, which can really change your tax process.
• Find out everything you can claim as allowable expenses - it's a lot! A proportion of house lighting and heating costs, your tools and IT equipment used for work, IET etc membership fees, etc etc
• Be clear what value you can add, what your specialist skills are.
• But be honest, do not claim you can offer things you can't. There will be lean times when you will really want to take on work, and it can be tempting to claim you can do things just to get the work. You will get found out, and it severely affects your future credibility.
• Following on from the above, remember that most work comes form personal recommendations. Doesn't mean you always have to agree with your clients, but you have to respect them.
• Travelling time and costs. This can be difficult. Clients will very often expect you to cover this, but while you're travelling to a meeting at the other end of the country you often can't be working on anything else - it's just lost income. Be prepared to politely push back a bit to see if video calling can be used in place of travelling. It's a difficult balance, if you come across as difficult to work with you will lose work, if you always jump when the client says jump you will lose money. Be open and honest with the client about it and see if you can reach a compromise.
• Do not price yourself too low. Your rate needs to cover your holidays, sickness, time spent seeking new work, time spent working on finances and tax returns etc, insurance, tools, IT equipment, etc etc etc. It can be difficult to find out, but do try to find what engineers offering similar services are charging. It might seem a lot, but you'll find it isn't in practice. I work for a consultancy rather than being self employed, the consultancy (who of course cover all these costs for me) charge me out at three times the hourly rate at which I actually get paid (before tax). That give you an idea of how much "overhead" there needs to be between what you'll charge and what you'll actually see as your own money at the end (if you average it out over roughly 46 full working weeks).
• Do not underestimate how much time you will spend chasing people for money. Most self employed people find that this is the most painful part of the job. Some clients will pay really quickly, some, particularly the biggest and smallest clients, can be very very slow. Remember cashflow - you have to pay your bills while you are waiting to get paid.
• You will probably get some who won't pay at all. There's actually often not much you can do about this through legal processes - the cost of chasing them legally can be more than what owe you. But find out about what the process is, very often the threat of pursuing through small claims is enough to make people pay up. But find out what the correct wording is for your letter to chase this, it needs to look credible - there are usually good examples around online. 

I'll add more things if I think of them!

Cheers,

Andy

Realised over lunch there was something I should have started with:

• What you actually mean is that you've become a freelance engineer / salesperson / marketing person / accounts manager / legal affairs manager / project manager for your one person business. So remember you need to allow time to cover all of these roles.
• Meanwhile your clients will only want to see you covering the "engineer" role. So that's your "project manager" role - to somehow make time to manage the other roles while you are doing it. Your clients will not want to see you spending your time on calls chasing up other clients for prospective work (or for payment!), but the clients you are chasing for prospective work won't want to be told that you can only speak to them at lunchtimes and evenings! It needs careful management to keep everyone happy with you.

What made me think about this was thinking about the people I've known who've made really successful long term careers out of freelancing, and very often it's thanks to their partners carrying out the admin. Then of course it's back to the question of the rates being enough to cover both their incomes.

Cheers,

Andy

And don't forget to estimate as you go along how much tax and National Insurance you will need to pay, and each month put that amount into a savings account ready for when you do your tax return and get your first bill...plenty of first time freelancers have been caught out by that one!