Whenever I speak to someone with a full-time job and they get that wistful look on their face and say “I might try working from home”, I kind of smile.
If they notice, I’m generally asked “What’s so funny?” I’ll respond with “Do your work. Pay your taxes.” Mostly they’ll wave their hand and give me a “pfffft.”
Here are the two big problems* with working from home as opposed to being employed full-time:
1. No-one tells you to go to work. Sure you get emails or phone calls from your client and their team, but you can successfully ignore them for days on end. I know this for a fact. When you’re in a crap mood and just want to play video games, watch movies, eat ice cream out of the container, there is literally no way anybody can cause you to do otherwise. However, this doesn’t get your job done and is remarkably harmful to your career. You become the unreliable guy.
What’s the answer? Freelancing is your job. You find a location where you will work and that’s your office. Your work day needs to be just like when you go to an office. Wake up, make coffee, eat breakfast, wash up, go to work. Sit down at your desk and get your work day started. That’s what you do in an office. That’s what you do in your office. Do that all day. Stop for however many breaks you would take in an office environment. Smoker? Take your smoke break. Take a lunch break. Stand up, walk away, have lunch. But spend your work day as you would spend your work day in the presence of your coworkers. Do your job.
2. Pay your taxes. When you work for a company full-time, they do your deductions for you. You get paid and that money is yours. You never have to think “Hmmm, I need to take one third of this money and set it aside for income tax. I need to take the HST off this and set it aside for my quarterly payout.”
When you’re freelance, you look at a cheque and start immediately doing mental deductions. If you don’t, I’ll tell you what happens; You’ll do your taxes at the end of the year with your accountant, he’ll raise an eyebrow when you say, “Yeah, I didn’t pay any taxes yet.” Then he’ll (or she’ll) say “Ok, so you owe *insert amount anywhere between 15,000 and 30,000*” Now when that happened to me the first time, it was the last time. I had to work with the government and took a long time paying it off. In one of the conversations I had with a Revenue Canada employee, I asked “Can’t I set you up as a payee in online banking?” And he got quiet and said “Yes, possibly.” I was looking at my account online at the time and found Revenue Canada, added them and said “Can I just pay my income tax as it comes in?” and he replied, “I wish all self-employed individuals would.”
Now, when I get paid, I deposit the cheque and immediately transfer my income tax payment. Maybe at the end of the year, I’ll owe a little money, possibly even get some back, but I know for a fact I have been paying my taxes.
*There are plenty of problems and advantages to working from home, but these two? HUGE.