When you’re running your own freelance translation business it means you’re self-employed, which means that you need to know how to handle various benefits, such as retirement planning, health insurance, disability insurance, and so on. In this post, we’ll review freelance benefits and what you may need. Remember that the benefits referred to in this post apply mostly to United States freelance workers and they’ll vary from location to location. You should also note that before implementing any benefit you should seek professional advice.
Our first piece of advice is that you need to acknowledge that when you’re a freelancer, benefits will take a large chunk out of what you earn. This is probably the biggest argument for charging appropriately for your services. You may clear $50 an hour for your translation work, but once you’ve deducted health insurance, self-employment tax, retirement contributions, and donated to your vacation fund, the truth is that you could end up netting about 40% less than if you worked for an employer. Then, if you add on other benefits such as professional liability insurance, dental and/or disability insurance, suddenly 50% of your gross income has been gobbled up in benefits!
So, the next point is to look carefully at the types of benefits you think you need for your own particular situation, and don’t necessarily follow conventional wisdom. You may decide that you don’t need life insurance, but this will depend on your particular circumstances. If you’re (say) a single parent and you want to ensure that your children will be well taken care of should anything happen to you, then it’s a good idea to take out a life insurance policy.
Let’s now take a look at some specifics –
Health Insurance
If you live in the United States and you’re healthy, and if you have some savings to cover deductibles and out-of-pocket expenses and you have no pre-existing conditions, it’s possible to get a reasonable health insurance policy at a reasonable cost. The problems with health insurance occur if you have to disclose a past health condition on the insurance application, or you have a pre-existing condition. In this case, it may be wise to use an insurance broker because they have the contacts and know-how to give you the best possible chance of being accepted for cover. This seems to be particularly true if you’ve experienced a health problem in the past that’s now considered under control or even resolved: an example might be if you’re previous high blood pressure issue is now being controlled with medication. We understand that some States offer the option of a group of one, which basically means that even though you’re only one person you get a group rate on health insurance.
Retirement Savings
It’s not difficult to create a Simplified Employee Pension Individual Retirement Account (SEP-IRA), an individual 401(k), or a Roth IRA. An individual 401(k) is also known as a Super Simplified. 401(k) or a Solo 401(k). Most of these accounts offer similar features but with the Individual 401(k) you can contribute more to this type of account then you can to others, due to the fact that the base contribution limit is not a percentage of your income, but a flat amount. Obviously, this is not going to be a factor if you’re only wanting to contribute a few thousand dollars each year; however, if you prefer to contribute more then you should check out the Individual 401(k).
