Ask FreelanceSwitch #10

In this issue of Ask FreelanceSwitch, Travis King and Thursday Bram look at how to clock your time and how to register your business.

Ask FreelanceSwitch is a new regular column here that allows us to help beginners get a grip on freelancing. If you have a question about freelancing that you want answered, send an email to askfreelanceswitch@gmail.com.

Hit it!

Question #1

I need some advice on clocking hours and providing proof in showing how much work we’ve done on a website. Can you recommend a solution to this?

- Briant

Thursday: There are several online applications, such as Harvest that allow you to track your time. Most will even generate reports that you can hand off to a client if he or she wants to see a breakdown of how you’ve spent your time. For most clients, those reports should be more than enough, especially if you can demonstrate progress that corresponds to the time you’ve clocked.

Unfortunately, this is a topic that is actually making some news right now because certain sites where many freelancers find work, like Elance and Odesk, offer clients the opportunity to look at your desktop as you work or otherwise track what you’re doing. Personally, I think this is bad news for freelancers: our clients would never think of video-taping a plumber when he came over to do work, but many feel that should be able to ask something equivalent of freelancers. It’s important to remember that we’re not employees and shouldn’t be treated as such. Legally speaking, contractors are treated differently than employees. In the US, one of the defining characteristics of an employee is that the employer can set out when and where work should be done. Clients can’t do that to contractors, however. If the IRS finds out that a client has done so, they can reclassify a contractor as an employee.

You can discuss this in a fairly nice way with a difficult client: you’re helping them out by making sure that the IRS can’t reclassify you as an employee and charge your client a fortune in back taxes.

Travis: First thing you will want to determine Briant, is if your client wants a detailed breakdown of every minute you spent on the project, or if they are happy with just a summery.

Eg.

1. 10:00 – 10:15 – Staring out the window
2. 10:15 – 10:25 – Head down on desk
3. 10:25 – 10:30 – Trying to remember what line comes after “Stay on the scene. Get on up. Like a sex machine…”

See what I mean? Pages and pages of that would be pretty tedious. I would just bill that out as ½ hr of intense brainstorming.

There is plenty of time recording software out there, but I find a simple stop watch and text file works best. Just record your time and write it down somewhere and then if the client wants to know that it took you a further hour to come up with the line “The way I like it is the way is the way it is, I got mine (dig it), he got his”, then you can always send them a email with the detailed breakdown.

Right on.

Question #2

My name is Anurak, but you can call me ‘Pum’. I am a graphic designer whose based is in southern California.

My brother and I are planning to become freelance graphic designers, but we want to do it in form of “freelance business”. So, the question is that, do we have to register our business?

Or we can just do it without the registration?

- Anurak

Thursday: From what I understand about the state of California, you do not have to register your business if you own it by yourself. However, since you’re partnering with your brother, you would generally be expected to file paperwork as a partnership. The California Secretary of State’s office has more information and, in most other states, the Secretary of State is usually in charge of business entities.

That said, if you’re going to be equal partners in the business, whether you’re freelancing or not, drawing up a partnership agreement is a good idea. Outline both of your responsibilities — who’s in charge of paying the bills? who handles collections? — and make sure that you’re both on the same page as far as how decisions that will affect the business will be made. You’re first inclination may be just to go with it, especially if you’re working with a family member, but in the long-term, a partnership agreement will reduce arguments.

Travis: I don’t know if I really feel comfortable calling you ‘Pum’. If it’s alright with you I’ll call you – Diddles.

So anyway, Diddles, back to your question about registering your business. As usual Thursday has provided you with some useful as well as factual information. Yes, I know how annoying that can be. Let me serve you up some of my own experience.

If you’re truly serious about this, what you’re going to want to setup is a joint partnership with your bro. That means you’ll probably want to talk to an accountant and find out the best way to do this in California.

I run my business as a joint partnership business with my wife. That means we split everything 50-50. It works great, except my wife has found a way to make me do all the work and she gets all the money. I don’t know how she managed to pull that off, but maybe you can learn from my experience and work out a contract with your brother so that the workload is evenly shared. After all, with a name like Diddles, you’re just asking for someone to rip you off.