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Freelancers: Challenges and Solutions

According to Upwork’s Freelancing in America: 2017, 57.3 million Americans (36% of the U.S. workforce) are freelancing. Freelancers contribute an estimated $1.4 trillion to the economy each year, and the numbers are growing.  It’s predicted that the majority of the U.S. workforce will be freelancers by 2027.  

Freelancers experience challenges that employees do not. But there are solutions to these challenges.  As someone who’s essentially been a freelancer for 35 years, here are some of my ideas about these solutions.


It’s long been assumed that having a job means security. That assumption was assuaged in the Great Recession, when no job was sacred. Still, freelancers have concerns about the stability of their jobs and income.

Solution: Build a portfolio of customers and clients. Spreading out work over a number of jobs ensures that there’s always something going on. Don’t rely on any single customer or client, no matter how profitable it seems to be. As an observation, freelancers with a diversified portfolio of customers and clients may have greater stability because they aren’t dependent on a single employer as are employees.

Income predictability

Employees have a steady paycheck, making it easy to budget for their personal needs. Freelancers’ income ebbs and flows, depending on the jobs that come in. According to the Upwork survey referenced earlier, 63% of full-time freelancers turn to their savings at least once a month, compared with 20% of full-time employees.

Solution: Segregate business earnings in a separate bank account and then transfer a regular amount each month to your personal account. In this way, the money coming into your personal account is similar to taking a paycheck and you can budget accordingly for your personal needs. Let the funds in the business bank account build in the good times so there will be enough to tap in the lean times.


Employees enjoy health coverage, retirement savings, and other benefits offered by their employers. Freelancers have to provide their own benefits.

Solution: Use tax breaks to underwrite the cost of benefits. For example, by setting up your own SEP or other retirement plan, you effectively shelter your business profits (you get a tax deduction for your contributions). In a sense, the government is paying the cost of the contributions to the extent of your tax savings.


Employees can meet their counterparts at the watercolor in the office. Freelancers usually work alone. But they don’t have to be alone all the time.

Solution: Plan for community. Depending on personal preference, freelancers can opt to work in spaces surrounded by other freelancers. There are co-working spaces and other arrangements designed with freelancers in mind. Nomad Capitalist has a list of the best co-working spaces in the U.S. in 2018. And if there isn’t such a space near you now, there likely will be one soon (e.g., Verizon is converting 150 of its buildings once used for landlines into co-work spaces). For a freelancer who primarily works from home, there’s the option of scheduling in-person meetings or collaborating online. This can create a sense of community, and it be done as frequently as desired.

Bottom line

Freelancing, as a full-time or part-time activity, is increasingly likely to be in your future if it isn’t already.

My book J.K. Lasser’s Guide to Self-Employment, which came out several years ago but is still relevant, recognized the growth in freelancing and the need for freelancers to master “back office” chores like taxes, insurance, and benefits. There are solutions to the challenges you face, but it’s up to you to act upon them.