Taking up work in a freelance capacity has become increasingly popular over the last few years, with more people choosing to become their own bosses and provide services to several clients. Even though there are many benefits of working as a freelancer, there’s always the problem of not receiving the full protection as a traditional employee would, which is why you need to put measures in place to safeguard your personal assets.
Reducing Liability
When you’re carrying out freelance work, you most likely won’t need to keep a lawyer on your side. However, there are still legal encounters you may need to deal with. For example, you may unknowingly submit plagiarized work and have accusations brought against you. If a court judge agrees with the claim, you’ll have to pay fines.
To protect your personal assets from being targeted by lawsuits, you must put legal measures in place. For example, instead of acting as a sole proprietor, you should consider setting up an LLC (limited liability corporation). If you do this, courts will only be able to come after your business assets.
Getting Insured
Being employed by a company means that you’re protected by a business’s workers’ compensation insurance policy. However, as a freelance service provider, you will fall under the workers’ compensation exclusions list. Therefore, you will need to put your own insurance measures in place, which will cover you no matter where you’re working. Here are common types of insurance for freelancers to consider:
- Professional. If your negligent actions cause a business to suffer, this insurance covers the costs.
- Property. Protects your work equipment against damage and theft.
- General liability. If you carry out business at home and someone injures themselves, you will be covered.
- Cyber. If your computer loses a piece of a client’s work, you’ll have to pay for it.
- Commercial auto. Your regular vehicle insurance may not cover business uses.
- Business interruption. If your business is interrupted by natural disasters, this insurance can help pay for loss of earnings.
Current Contractual Restrictions
Depending on the nature of your previous employer, you may have restrictions on the type of work you can carry out immediately after leaving. Here are some of the legal documents you may have signed:
- Non-disclosure agreement. You aren’t able to disclose certain parts of your previous position. This may not feel like a huge deal, but it can limit how you conduct business.
- Non-solicitation agreement. You can’t steal (solicit) your previous employer’s customers. Additionally, you aren’t able to hire previous coworkers.
- Non-compete agreement. Prevents you from directly competing with your employer for a given time.
Putting Contracts Together
Some freelance workers are okay working with a verbal agreement in place. However, this won’t stand up in court if a client doesn’t pay you or you face any other problems. Therefore, you should always make sure there’s a written contract in place and it’s signed by all parties.
Working as a freelancer can be liberating, but it can also bring a world of problems when disputes with clients occur. Make sure you’ve put enough measures in place to protect your personal assets and your business.
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