Results of a 2017 study suggested that 36 percent of the American workforce at that point comprised of freelancers. At the existing growth rate, it is estimated that freelancers will make up for more than 50 percent of the nation’s workforce by 2027. In addition, around 58 percent of all freelancers in the U.S. have an international client or more.
With the freelancing marketplace filled with international projects, how does a freelancer make the most of what’s available?
Do Time Zones Matter?
There is no dearth of freelancers who shy away from seeking international clients because they feel different time zones might serve as a hindrance. What you need to understand is that clients looking for freelancers from other countries are often aware of this aspect. Is some instances, you might need to make yourself available for meetings according to your clients’ time zones. Typically, being timely in your communication matters most.
Time zones can play in role when it comes to meeting deadlines. Consider this — you’re an American freelancer working with a German client. Your client wants a project completed by the end of day. Only, by the time it is 5:00 pm in New York, it is 11:00 pm in Berlin.
Start by determining which currency any given client plans to use to make payments. In most cases, you will end up receiving payments in foreign currencies, which will then be subject to currency conversion before getting to your local bank account.
Freelancers who work with international clients often end up losing a share of their earrings as transfer fees. In addition, exchange rates provided by most banks and high street forex brokers often leave room for improvement. Fortunately, you may make the process more cost-effective by working with a suitable service provider.
Overseas money transfer companies such as TransferWise, WorldFirst, and OFX provide freelancers with free receiving accounts details in different currencies such as U.S. dollars, euros, and pound sterling. You may then receive payments from international clients in accounts denominated in the same currencies without incurring any fees. When you choose to withdraw your money into a local bank account is entirely up to you.
Taxation laws for freelancers vary from one country to another. In the U.S., if you owe more than $1,000 in taxes, you have to make payments to the Internal Revenue Service (IRS) four times each year. In addition, while a 1099 might not be a part of your international project’s contract, any income you earn will still remain subject to taxation.
Freelancers may benefit by identifying expenses that qualify as tax deductions. If you are not sure about how tax deductions work, do not hesitate to get in touch with an accountant. What you also need to remember is that not paying taxes on time can result in hefty fines down the line.
An opinion poll conducted by Greenberg Quinlan Rosner Research in 2016 showed that around 40 percent freelancers did not have any kind of a formal retirement plan in place. Given that a freelancer’s income is often changing, it is important to plan for the future. Some of the instruments that can help you get on the saving bandwagon include certificates of deposits and mutual funds. As someone who lives in the U.S., you may even think about investing in a Solo 401(k) or a Simplified Employee Pension Individual Retirement Arrangement (SEP IRA).
Working with international clients does not have to be complicated, provided you know what aspects to consider. Make sure you communicate regularly, determine what the best way for you to receive payments is, and stay on top of your taxes.
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