The legal aspects of freelancing can be very confusing. If you don’t have experience working in business the legal jargon can be somewhat overwhelming; but don’t let that put you off. The ability to make your own money is one of the most satisfying things you can do, and when you get into the flow of operating, the legal aspects will come naturally. If you’re thinking about starting a career as a freelancer, you should always consider these four legal requirements for freelancers before you begin.
Write Accurate Trade Descriptions
This step is commonly ignored, yet it’s without a doubt one of the most important. The Trade Descriptions Act of 1972 states that you can’t make misleading claims – verbal or written. This includes website content and other promotional materials. For example, if a watch manufacturer produces timepieces in the US, but states that they’re produced in Switzerland, they are breaking the law.
One of the most common mistakes freelancers make is producing website content with false testimonials and brand associations. Even if you have worked with a decent brand in the past, make sure you get written permission to use their name, preferably in the work contract. For a list of relevant cases, visit this page on brand association law.
There are literally thousands of laws regarding business and accounting. While certain rules and regulations apply across all fields of freelancing, there’ll always be some which relate directly to certain industries. Assess your sector with close scrutiny and if you’re ever in doubt, call on a legal professional for help. Paying for consultation will work out a lot cheaper than paying for legal fees and court costs if you make mistakes.
Register with a Certified Tax Authority
At some point during your first three months of freelancing, you must register with a certified tax authority. At the end of each financial year you’ll need to submit your tax return to them. If you fail to complete your tax return properly you could be subject to penalty charges, even if you haven’t made any money.
While hiring an accountant may seem like an unnecessary expense, in the UK some accountancy firms offer free protection insurance, a standard achievable in many countries across the world. In the US, protection insurance can protect you against penalties if mistakes are made as they will cover the costs and deal with further enquiries on your behalf. Fundamentally, the savings a professional accountant can make you will almost certainly cover their costs. For more information, check out this guide for individuals.
Always Create Contracts
Contracts are tricky and unless you have a solid legal background you probably won’t know much about your rights. When you acquire work as a freelancer, even if you don’t have a written contract, there could still be a legally binding agreement. Contracts can be verbal so don’t let anybody swindle you out of money just because you don’t have anything on paper.
That said, a written contract agreement will make the whole process a lot easier and ensure the terms surrounding your work are clear for both parties. E-mail counts as writing, so even if you arrange work over the phone, get your client to confirm the logistics of the job in an email, along with the agreed price. Again, in these situations it is important to be particularly aware of disclosure of income, you can find more information regarding disclosure of income on this page.
Never underestimate the importance of insurance. Even if you work from home, you may need public liability insurance as your home insurance probably won’t cover damages that occur during working hours. This is especially important if you regularly meet clients in a home office.
In addition, your home insurance may not cover the cost of broken or stolen office equipment. If you ever find yourself subject to such damages it could completely ruin your business. Insurance will help you get back up and running as soon as possible if this ever happens.
Working as a freelancer can be both rewarding and stressful at times. The legal aspects of freelancing are particularly difficult to manage if you don’t have a background in law. With these four legal requirements for freelancers, you will be well on your way to running a successful business as a freelancer and complying with all laws.
But, as always it is highly advised to consult a local attorney for advice on legal matters that may be unique to your line of work, or dependent on the local laws in your area. LawKick is a great free resource where you can find a good lawyer.