BYOB : How to Build Your Own Benefits Package
Do you love the idea of freelancing, but also love the perks of corporate world benefits?
In addition to salary, employer-sponsored health insurance, a retirement account, and paid vacation are standard benefits of full-time employment. These benefits are the main reason professionals choose the employee model vs freelancer.
You don’t have to give up all benefits to become a freelancer! As a best practice, add 15-30% to your rate to offset costs like payroll taxes, 401k match, insurance and workman’s compensation. As a freelancer, your rate should include the cost of providing those items yourself.
Healthcare
Many freelancers participate in an employer-sponsored health plan through a spouse or domestic partner. If under 26 years old, you can also get coverage under your parent’s insurance. If you are a former corporate professional, you may consider taking advantage of the 18-month extension of your former company health insurance via COBRA coverage.
If none of these apply to you, check out these options:
Get Healthcare Coverage, Health Insurance Marketplace® | HealthCare.gov
The Freelancers Union is a perfect resource for additional information. For insurance options, click here.
Vacation
Even though PTO may be a thing of the past, Freelancers should still take sick days and vacation. Plan out potential days when negotiating each new contract. Be sure to take mental health days just like you would if you had PTO.
Pro Tip: Charge enough that you can afford to take vacation or sick days. Factor this into your hourly rate or flat fee or negotiate in your contract.
Retirement Savings
A traditional IRA is for people who would like to save on their own or supplement their retirement savings. Anyone who earns taxable income can open a traditional IRA. In 2021 you can contribute up to $6000 a year.
Learn more about different types of retirement plans by visiting the IRS website here.
Want to stay updated on more freelancing tips and resources? Join the Soundings Thrive Freelance community today! Learn more and join for free here.