Overcoming fear of taxes and legal issues

The flexible and self-starter nature of freelancing can be a double-edged sword. While the freedom to pick your hours and work anywhere can be a dream to some, the pressure of having to rely on yourself for almost every aspect of your working life can sound like a nightmare to others. And while working on projects can motivate people, the fear of filing your taxes and dealing with legal issues can deter many people from freelancing full-time.

Freelancing, as we've established, is a global profession. Each country has its own set of rules and regulations to follow, and therefore, providing detailed support to everyone would be impossible. What is expected of a freelancer in Germany might not be an issue for a freelancer in the USA or India, for example. We've made an extensive guide for freelancers in Belgium, but now we'll provide an outline of the basic legal principles you need to follow, and advice on the common issues you can face.

Knowing what type of self-employed professional you are will determine the rules and regulations you need to follow throughout your work, so it is extremely important you know your status. Outside factors such as family situation and full-time or part-time work, as well as whether you have another job, can all affect your status.

Usually freelancers work as either a sole trader or form a limited liability company. Registering as a sole trader is usually straightforward, with less paperwork to keep a track of, but can be riskier if your business encounters difficulties. Forming and running a limited company involves more paperwork, but will make your business appear more legitimate, and as it is a separate legal entity, it provides more support.

Our best advice is checking with your local authorities, which will help you determine which business structure is right for you, as this is the foundation of your legal and tax status.

It might be tempting to ignore the contact that nobody will read anyway, but that's not the wisest move. Contracts lay out the basic terms of your relationship with clients and prevent misunderstandings! A contract helps ensure you're paid on time, covers any legal issues, on top of allowing you to weed out untrustworthy clients who refuse to sign the contract and to prevent trouble down the line.

And the best bit? You don't have to struggle writing one yourself, or even hiring a lawyer to do it for you (although that can be advisable, depending on the type and scale of the project). There are many online resources for contact templates, which will offer the right contract for you for a reasonable fee. Obviously make sure they are applicable to your country and business type first.

We have looked at contracts in more detail in our guide.

Benjamin Franklin famously said that nothing in life is certain: except death and taxes. Knowing how to complete a self-assessment and submit your tax forms is essential for any type of freelance work for which you get paid. Each country will have its own government body for taxes, with its own rules and requirements, which you need to be familiar with.

The difference between a sole trader and a limited company is vast, and you can't afford to be on the wrong track. Keeping your invoices and other documents in perfect order will help you when submitting self-assessments. Be aware of the deadlines to send in your tax if you want to avoid a fine.

For both full-time entrepreneurs and part-time freelancers, an accountant can help with filling out forms and giving advice, especially if you open a company in a foreign country. Accounting services can range from a full audit and tax return, to a free consultation to answer your burning questions, so choose according to your needs. If you're based in Belgium, our guide will provide plenty of advice.

Getting paid and reporting expenses can bring its own set of headaches for freelancers. If you struggle with payrolling, there are services which offer payrolling services for freelancers – they act as your employer and deal with the administration of payrolling for a fee. Companies like Rimuut, Tentoo and Terra offer different solutions, and it's worth knowing how you can take advantage of them.

Taking legal action for a breach of contract or non-payment of invoices is something we hope you won't have to do, but sometimes you need to defend your rights as a freelancer. Just like taxes, laws change from country to country, so researching your legal circumstances is a must.

Contacting a debt collection agency or hiring a lawyer to send a formal letter to the troublesome client can resolve the issue without involving a court. If those fail, you can contact courts which deal with smaller claims - for example, the Country Courts in England, or the Sheriff's Court in Scotland. Submitting a small claim will allow for a simpler and more accessible process, where a lawyer might not be necessary.

If you need to resort to a lawyer, the main thing to keep in mind is your expenses: if you want to get a payment for $1000 cleared, but the lawyer's fee will be over $5000, it is just not worth pursuing litigation.

Taking legal action is usually the most extreme course of action, but it can be the most effective. Contacting a lawyer for advice and knowing your budget are the most important steps. If you live in Belgium, you'll find plenty of free legal resources in our blog.

We've shared more detail on insurances in our blog, but it's worth repeating that you should keep insurances in mind. Why? Because things go wrong. And as a freelancer, you have a huge responsibility for your work and business. Professional liability insurance, health insurance, car insurance, cyber insurance – consider what aspects of your working life are most valuable to you, and think about insuring them.

Yes, freelancing can be scary, and it may seem like there is nobody to help you. But in our world support is only a click away. Don't be afraid to ask questions and seek advice from people who have more experience. If you're having troubles with the legal side of freelancing, the fees that you pay for professional help now will outweigh the fines you risk to pay in the future.