Freelancing has become a popular career choice for those in industries such as graphic design, photography, writing, web programming, tutoring, and many others because it offers the flexibility of being able to work for several clients on a contractual basis, rather than being bound to one company for an extended period of time.
As the work-from-home profession grows in size, and more contractor-client relationships develop, freelancers are faced with questions they may not have encountered when they were employees.
Here are some of the legal basics to protect yourself throughout the self-employment landscape, including how to navigate copyright, contracts, and clients.
What Legal Paperwork Do I Need?
As a freelancer, your first line of defense against any sort of potential dispute with a client is a solid contractor agreement. This contract sets out the terms of a project between you and your client and includes:
- Information about both parties.
- The scope of the project or service, including what exactly is being provided.
- Duration of the contract, including a start and end date, timelines, or a deadline for the project to be completed.
- Your hourly rate or project price, payment type, and payment schedule. Also, how many revisions are included in your rate.
- A cancellation or termination clause.
- Who retains ownership rights to the material.
- Reimbursement for supplies and/or if you get use of the client’s equipment or resources.
- Dispute resolution methods.
- Liability, insurance, and indemnification clauses.
- Non-compete, non-solicitation, and confidentiality clauses.
Make sure the contract is clear, detailed, and signed by both parties.
Who Retains Ownership Rights to Work I’ve Created for a Client?
Work for Hire
If a client has hired you to create something for them, such as website copy or a logo, you may be under what is referred to as “work for hire”, which is a type of work where the client retains full ownership rights to the product you created, much like an employer would if you were working for them.
In order for the job to be considered “work for hire”, the work must have been commissioned by the client (e.g. they hired you specifically to design their company logo), and both parties must have agreed to who has rights over the work once it has been completed.
Copyright: Licensing and Assigning Rights
By default, artists, authors, and other creatives automatically have copyright to their own intellectual property when they create it, which allows them to sell it, license it, or do what they please with the material.
For instance, if you shoot a short film, you could license the use of its contents to clients for specific purposes, such as for use in their television advertisement. In this case, the creator (you) still retain the rights to the material, but have approved the customer’s usage of your intellectual property.
A freelancer can also assign rights to a client, which give them varying degrees of privileges. Some common types of rights include:
- First serial rights: first publication to print the work. It might specify region as well, such as “First North American Serial Rights” which grants the first publishing rights in a specific area. The rights then transfer back to you.
- One time rights: the ability to publish the work once (e.g. newspaper story).
- Electronic rights: the right to publish the work online.
- All rights: allows a client to use the work as they like, perpetual and unlimited, including republishing, reselling, or even licensing the material.
Can I Use Work I’ve Created For a Client in My Portfolio?
You may use work you have created for clients in your portfolio so long as you are not selling it or violating any confidentiality terms, and you have credited them. To be safe, it’s best to ask them for permission and include a clause about portfolio use in your agreement.
If you created sketches or designs that the client did not use or choose, you should also ensure that you can retain ownership to any unused work and display it in your portfolio.
Bottom line: a freelancer’s portfolio is one of his or her greatest assets. Do not overlook discussing a portfolio clause with your client and miss out on the opportunity to proudly display your work (and enlist new clients). If you don’t, the client can ask you to remove it and you will not have a valuable addition to your catalogue of work.
Can I Conduct Business Under My Own Name or Do I Need to Register it?
When you are working on your own as a freelancer or consultant, it’s perfectly fine to conduct business under your own name because you are the business and your income is reported as part of your personal income tax filings. You do not need to register your own name.
Whether you choose to use a business name other than your own is up to you and your career goals, including how you want to build your professional reputation.
If you later wish to form a separate business entity, such as an LLC or corporation, where you will have employees or partners, then you will need to choose and register a business name.
How Do I Get Paid as a Freelancer?
The best way to prevent not getting paid is to have a written agreement where the client agrees to compensate you. That way, you have covered your bases by introducing a legally binding agreement, which is proof of their commitment and can be used if there are payment disputes.
On your end, keep track of your income, expenses, and the hours that you work. Devise a system for invoicing as well so you don’t forget to bill a client. There is nothing worse than waiting for an outstanding payment when you need to pay your own bills. If the client has not paid you on time for your services, you may charge a late fee, such as an interest rate on top of what they owe you, but you must specify this in your agreement.
What if I Need to Exit The Agreement?
Things can get tricky when you enter into an agreement and are unable to fulfill your duties as a hired freelancer or vice versa, the client cannot hold up their end of the bargain.
Both you and the client should address termination in your contract so the terms are clear from the beginning. Specifically, include a clause about notice periods, where you indicate a set number of days that either party needs to inform the other about terminating the contract.
If I’m Working For One Client, Can I Work For Another?
Freelancers make their living off of working for several clients. At the beginning of any freelancer-client relationship, laying out the terms of your arrangement can prevent misunderstandings later on.
A non-exclusive relationship means you are able to conduct business for other companies or individuals without worrying about any competing interests.
If the contract states that you cannot do work for a competitor while employed by your client, make sure you understand that throughout the duration of the project, you cannot develop ties with a direct competitor or do any work that would conflict with the work of your client’s.
Know Your Rights
Freelancing has become an increasingly viable way to make a living, with perks such as low overhead, no commute, and increased control and flexibility as a worker. Business owners also benefit from outsourcing work because it provides the specialized help and quality results they need, without the long-term commitment and cost of a full-time employee.
With that said, freelancers have a lot more responsibility to be diligent. It’s on their shoulders to educate themselves about their legal rights, financial obligations, as well as other aspects of running a business so they can avoid liability, protect their work, and make a decent living.
Are you a freelancer? What questions do you have about self-employment?