CHAPTER 19
WORKING AS A FREELANCE
This chapter is intended for anyone thinking of working as a freelance in the UK. It addresses some of the key issues you will need to be considering and suggests various approaches.
Working as a freelance is not for everyone. It is insecure. You can never predict what you will be working on. You may not know from one day to the next whether you have got any work at all. You can never be sure how much or how little you are going to be earning. Unlike a salaried employee in an established company, you won’t get a company car, paid holidays, medical insurance or a guaranteed pension. You will have to market yourself and you will have to do all your own administration. You will be responsible for paying all your taxes. So why would anyone want to put themselves through all that misery?
People decide to work on a freelance basis for a number of reasons. It may be there are few permanent jobs on offer for their particular set of skills. It could be that they prefer temperamentally not to work full-time for one employer. They may have been made redundant from a full-time job and reckon that working freelance is the best way back into the job market. They may take the view that they will have a more varied and interesting work pattern or that they will have more free time and opportunities to earn more.
If you decide you want to work as a freelance you need to ask yourself:
□ who is likely to employ you – what is your market?
□ how do you let your market kwow you are around?
□ how much should you charge?
□ are you set up to handle the money side of things?
Who is Going to Employ You?
The answer will vary slightly depending on what particular skills you are offering.
• A writer or director should be targeting production companies or broadcast producers.
• An editor would need to target edit facilities but should also build up and maintain contacts with directors who will often be in a position to ask for and get a particular editor.
• A camera operator or sound recordist might target crewing facilities or agencies and, again, maintain contact with directors.
So the guiding principle is to think about who actually signs on people with your particular skills and then also think about people who are likely to recommend you or ask for you.
Letting People Know you are Around
There are a number of different ways freelances let potential employers know they around. Mail-outs, cold calls, directory listings and reminders to past clients are just a few. The brutal truth is that it mostly happens by word of mouth. This is less easy to make happen but it doesn’t require any effort.
Whatever route you choose, you are going to need an up to date and relevant CV. Try to limit it to two sides of paper at most and keep its appearance as simple and readable as possible. Make sure it features productions you have been involved with, what you have done and who you have worked for. You may also need to put together a showreel featuring your best work. Even if you don’t mail out your CV or showreel you may be asked for them.
If you do decide a mail-out is going to be worthwhile, who should you send your CV to? There are numerous industry directories that will list the companies who might want to employ you. Spend some time going through the directories sorting out what type of company is your best bet. You may find that one directory or another contains a section featuring freelances with your skill set. If so, try and get yourself listed in their next edition. It probably won’t cost you anything.
Mailing your CV out to a host of different companies addressed to The Producer or The Production Manager might produce results but you will increase your chances of success if your CV is going direct to the person most likely to give you work. Sometimes the directory you may have used to get your addresses will also list individuals. But they may not be the people you need to be talking to or the details could be out of date. Why not phone up the company, tell them you’re a freelance whatever and you’d like to know who you should send your details to. This is often a good way of making a cold call that doesn’t sound like a cold call. You never know. You could be straight through to the very person you need to talk to and you are just what they are looking for at that moment. It doesn’t often happen but when it does, you save a lot on stamps and address labels.
If you have done a mail-out without phoning anyone first, it can be worth following up with a phone call a few days afterwards. Don’t leave it too long. Don’t expect any written replies to mail-outs. The most you can hope for is that somebody files it and looks at it again sometime.
Don’t forget your existing clients in the rush to sign on new ones. If you have worked for someone in the past and haven’t heard from them for a while, give them a call and/or drop them a line bringing them up to date on what you have been doing since.
Credits on a broadcast program can often help to get your name known. Try and make sure your name is on any publicity material that a producer is putting out to the trade press.
Deciding your Rate
Once you have got in to see a potential client or taken a phone call asking if you are available one of the first questions you will be asked is what you charge. Once upon a time there used to be an easy answer to this. All you had to say was ‘the union rate’. Life is not quite so simple nowadays. In theory, you can charge what you want to charge and clients can pay what they feel like paying. In practice, though, there is usually a market rate for a particular set of skills depending on the type of production. To decide what rate you think you might be able to charge, ask around and see what other people with the same skills are charging.
Rates are usually calculated on a daily basis. If you think you might get more work than everyone else by charging a lot less per day than everyone else, think again. If you are too cheap, clients will wonder whether you are any good. Even if they do give you lots of work, you are then going to find it very difficult to raise your rate later to the market rate.
Bear in mind that when clients ask you what you charge, they will always have a figure in their mind of what they’re expecting to pay. If your rate is roughly in line with that, they’ll either accept it or tell you what they will pay. It is then up to you to decide whether to accept the rate they are offering or hold out for more and risk losing the work. One solution can be to say you base fees on a daily rate of so much but it depends on the total number of days or weeks. This allows both parties to agree an overall fee that everyone is happy with.
As a general rule it is accepted that editors, camera operators and all technical crew are paid overtime on hours worked beyond the agreed normal day. Freelance producers, writers and directors tend not to get paid overtime but it is always worth asking for more than the normal daily rate if weekend work is involved.
On some feature film productions, and very occasionally elsewhere, a producer might want freelances to work for points. What this means is that instead of receiving a flat fee, freelances get a percentage of the profits that the production actually makes. This is fine if the production is a roaring success. But you don’t know whether it will be. It is also fine so long as the production company that owns the production stays in business. Again, you have no guarantee that it will. So be warned. But don’t complain if you refused points and opted for a flat fee and the production then goes on to make millions.
Administration
Some minimal administration is essential if you are working as a freelance. You must make it easy for clients to contact you. That may mean having a separate phone line at home, a mobile phone and/or a pager. You will probably need a fax and you may need to be on e-mail.
A computer is not essential but you will need to have a system for recording the days you are booked for and by whom, the days you have worked and for whom, what you have earned, what you are owed and what you have spent in the course of working. You will need to record all this information both for yourself and for the taxman.
Purchase orders: once you have been commissioned to do some work it may be advisable to get a written confirmation of the order, particularly if you are working for someone for the first time. For a start this puts on paper the rate that has been agreed and avoids any ugly disputes later. More importantly, if you have any difficulty getting the client to pay up and have to go to court, you may need to produce some evidence that the client did in fact commission the work. If your client is too lazy, too busy or too dishonest to give you a purchase order, you will need to make a judgement as to whether you are prepared to risk working without one. If you can’t get a purchase order, one small safeguard is to put on paper to the client your understanding of the arrangement. In practice a lot of work happens without anyone writing anyone else purchase orders. This not a particularly satisfactory state of affairs but it is part of the culture of the industry. A lot is done on trust.
Invoices: if you are truly a freelance – rather than someone engaged on a short-term contract – you won’t get paid until you have sent your client an invoice. Even then you can expect to wait at least a month until you see your money. Normally you would expect to invoice at the end of the job so the golden rule is:
Get your invoice in quickly.
If you leave it a couple of weeks you will wait that much longer for your money. If a job looks as though it is going to run over several weeks or months tell the client you will be submitting invoices at various stages. If they baulk at this and tell you to wait until the very end of the project and won’t be paying out anything until then, go away and have a big think about whether you really want to commit to working for these people.
An invoice needs to contain the following information:
□ Your name, address and telephone number
□ The name and address of the company you are invoicing and the name of the person who commissioned the work
□ The date
□ A summary of the work carried out
□ The fee being charged
□ If you are registered for VAT, the amount of VAT being charged and your VAT number
□ The total amount due (i.e. the fee – the net amount – plus the VAT)
□ Your credit terms – the number of days that may elapse before the invoice is due for settlement
Credit terms: most freelances give their clients 30 days to pay. In theory these 30 days are designed to give the client time to process the invoice, clear it through their own system, raise a cheque, get it authorised and signed, put it in an envelope and send it out to you. If the client is waiting for payment from their client they should also have got their money in by then.
The awful truth is that your 30 days doesn’t actually mean a lot. It is not legally enforceable and some clients may turn round to you after the event and say ‘we only pay on 60 days or even 90 days’. Before you accept work it is worth asking how quickly you can expect your invoice to be settled. Depending on the answer, you may need to start sending the client written reminders or telephoning their accounts department once the invoice is due. If the client has a reputation for being a slow payer, don’t be afraid to badger them. If you are in a position to choose, try and work only for people who pay on time.
Keeping Records
As well as keeping a record of everything you have been paid, and what is due, you will also need to keep a record of what you spend in the course of working. This could include stationery, computer supplies, telephone bills, petrol. You should be able to claim most of these expenses against your income when it comes to calculating what tax you have to pay. You may also be able to claim for the use of a room at home to work from and some of the cost of buying assets such as a car and a computer. You can, if you wish, do all these calculations yourself and deal direct with the Inland Revenue for income tax and Customs and Revenue for VAT. Most people prefer to engage an accountant to do all or part of this for them. Even so, you will need to keep accurate records yourself so that your accountant has the right information to work with.
Administration Checklist
□ Make it easy for people to contact you
□ Get confirmation of orders
□ Get your invoice in quickly
□ Chase up slow payers
□ Keep accurate, up-to-date records
Choosing an Accountant
As a general rule it is advisable only to consider using a fully qualified Chartered Accountant. People calling themselves simply certified accountant or accountant are to be avoided. As with anything else, it is best first to ask around and talk to people you know, ask who they use and whether they would recommend using the same person.
If they are happy with the service they are receiving, go and see that particular accountant. Most accountants will offer a first meeting free of charge. If they spend all their time telling you what a great job they do and how they will save you lots of tax, don’t get too excited. You are going to be better off with someone who is actually trying to understand what you do, how your business works and what your needs will be. So look for someone who is asking you intelligent questions about your business and who demonstrates they actually understand what you are saying. Try and establish who will actually be doing the work. Will it be the person you are actually talking to or will it all be done by a trainee? If it is going to be someone else, ask to meet them.
If you go and talk to two or three accountants you will probably find the advice they are offering is fairly similar. What really counts is the quality of the service. How long do they take from receipt of all the information you will be sending them to preparing accounts for submission to the Inland Revenue? Can you call up at any time for advice? Do they issue bulletins, summaries of tax changes, etc. If so, ask to see the sort of information they send out on a regular basis. And, of course, what does the service cost? Try and get them to agree to a fixed annual fee. Make sure they tell you in advance if any additional work could mean you are charged more than the annual fee.
As well as taking all these factors into account, your final decision will also depend on whether you feel comfortable with the person you are dealing with – and whether they explain what they will be doing on your behalf in language you understand.
Book-keeping Basics
Your accountant is unlikely to be keeping detailed, accurate, up-to-date records of all your income and expenditure. This is something you are going to have to do for yourself, unless you also want to pay for the services of a book-keeper.
You can either keep manual, handwritten records or put everything on a computer. On a computer you can either use an off-the-shelf accounts package or set up a number of spreadsheets. Whichever you use, you will need to understand some of the basic principles of book-keeping. And it is easiest to understand book-keeping in terms of two separate ledgers - your sales ledger which records all sales and income – and your bought ledger which records all expenditure. If you are starting from scratch get your accountant to show you how this information should be recorded and the details that will be required. As far as expenditure is concerned, your accountant will probably want you to record it so that it is easy to see how much in total you have spent under individual headings such as stationery or travel.
VAT
If your turnover (the total you earn before deducting expenses) is over a certain amount per quarter or per year you will need to register for VAT and add VAT to all the fees you are charging when you invoice clients. It can be a good idea to do this anyway for image reasons. If you are selling yourself as top-flight director who might just be able to fit in another job before flying off to shoot a commercial in the Caribbean, your story isn’t going to look too good if your invoice shows you don’t charge VAT. If you do charge VAT it is no skin off the client’s nose. They will be registered and be able to claim back the VAT you have charged. Similarly, you will be able to claim back the VAT on goods and services you have had to purchase in the course of your work.
The downside of VAT is that you have to file a return once a quarter showing the VAT you have earned and the VAT you have spent. Not only that, but you have to hand over the difference in the form of a cheque for what you owe. Don’t try to get clever with the VAT people. They come and inspect you soon after you have registered to make sure you are doing everything properly and they’ll be back again periodically to make sure you are still behaving yourself. Play fair with them and they’ll play fair with you. They’ll even advise you on what you could be claiming for if you are not already doing so.
And Finally …
Not everything you earn is yours to keep or spend. Unlike your friends with jobs whose employers pay their tax for them every month, you’ve got to pay your own tax bills both to the Inland Revenue and maybe the VAT too. So put enough aside for those unhappy moments. And don’t forget – one day you may want to retire. You’ll need to think about a pension.