Freelancing as a Student: Managing Your Finances & Taxes

Freelancing as a student is an excellent way to build your professional network and portfolio, as well as develop a plethora of skills that are relevant to your career choice. It also presents an opportunity to establish financial freedom and stability.

However, taking on freelance work in the U.S. also comes with responsibilities that have to do with paying your taxes and keeping your finances in check. Not to mention, it can be overwhelming to find a freelancing opportunity that aligns with your schedule and expectations.

Fortunately, this article will provide you with all the freelancing student tips you need to know as a hardworking and independent high school or college student! Let’s dive right into it!

Key Takeaways

• Freelancing as a student provides opportunities for high schoolers and college students to develop their skills, expand their networks, and gain financial independence.
• Between freelancing and being an independent contractor, the latter is more suitable for students because it offers more flexible work hours and requires a less demanding commitment to the job.
• The key to becoming a freelancer while studying is to know your skills, narrow your job options, have clear objectives for working, and maximize your resources.
• Freelance tax comprises Social Security and Medicare taxes, as well as a contractor’s estimated income taxes.

Understanding Freelancing as a Student

When you’re freelancing as a student, you’re taking on paid, short-term projects or part-time jobs while simultaneously continuing your education.

Some of the most common freelance jobs for high schoolers and college students include:

• Copywriting
• Data entry
• Graphic design
• Photography
• Social media management
• Transcribing
• Translating
• Tutoring
• Video editing

Presently, students can find part-time jobs online through job posting sites. They can also get referrals from their professors and school counselors.

Freelancing vs. Independent Contractors

Understandably, freelancing is often confused with working as an independent contractor. In truth, despite the similarities in terms of the work setup, there are key differences between being a freelancer and an independent contractor.

These include the following:

• Work commitment. Freelancers can simultaneously accept short-term jobs from multiple clients. Independent contractors usually work on long-term projects that follow specific timetables.

• Work schedule. Freelancers have more control over their work schedule and typically can work whenever it is convenient for them. Meanwhile, independent contractors often follow the schedules required by their clients.

• Contracts. Legally binding contracts are more common for independent contractors than freelancers, as contracts outline the agreement between contractors and their clients in terms of the expected deliverables, payment, and schedule.

It is worth noting that several freelancing gigs and independent contractor jobs are either the same or overlap. The only distinction lies in the client’s demands and expectations from the contractor or freelancer.

Since being a contractor entails a certain level of expectation and commitment to reach the client’s target objectives, students may find freelancing more suitable for their daily routine.

The flexible work hours and non-exclusive work commitment of freelancing enable students to earn money while still fulfilling their responsibilities and activities in school.

5 Easy Steps to Start Freelancing as a Student

The five steps you must take to start freelancing as a student focus on exploring and narrowing down your options based on your skills, objectives for freelancing, and available resources. Let’s discuss these steps one by one:

#1. Know Your Strongest Skills

Today’s freelancing market is so diverse that choosing a freelancing gig that suits you best can be overwhelming. As such, you should assess your current knowledge and skill set and compare it with the requirements of the part-time jobs that pique your interest.

If you’re a high school student, you can start with freelancing student jobs that only require basic skills. These basic skills can include editing, posting, and sharing content on social media, transcribing, and proofreading.

On the other hand, if you already have previous freelancing experience from the past, you can take on job opportunities that require more advanced skills and expertise.

#2. Create a Selling Point for Your Expertise

One of the main challenges of freelancing as a student is the need to stand out among other job seekers with far more stellar credentials and portfolios.

But don’t let your competitors discourage you! Once you’ve identified your core skills and the specific job roles that are relevant to your field of study, you can establish a distinct type of service to market to your clients.

For instance, if you’re skilled at writing, video editing, and social media management, then you can promote your freelancing expertise as a creative and tech-savvy social media expert.

Or, if you have impressive communication, problem-solving, and decision-making skills, then underscore your potential to take on jobs that entail strong leadership capabilities.

#3. Register Your Business (If Applicable)

Not all freelancing students work for a company or fulfill tasks for a client. Some earn part-time income by starting a small and humble business. For students who are sole proprietors, you may or may not need to register your business.

The process will also depend on the nature of your business and the specific business regulations implemented in your state. For instance, if you operate your business or services under your legal name, you are not required to register your trade.

On the downside, not registering your business prevents you from maximizing its benefits, such as tax benefits and legal and liability protection.

Meanwhile, if you’re an F-1 student visa holder or an international student in the U.S., you can create a business plan and invest in your business, but you may not be in charge of running or operating it.

Instead, you can either delegate the responsibility of overseeing your business to trusted friends or schoolmates who are non-F1 holders. You can also apply for Optional Practical Training (OPT).

An OPT gives you employment authorization, provided that your freelancing job is connected to your course or field of study.

#4. Set Your Goals

Having a clear purpose for doing freelance work as a student ensures you align your work schedule with your activities and responsibilities at school. Perhaps you need money to pay off your student loans, support your family, or pursue a dream job.

Whether your objective is to attain financial stability or build your professional portfolio early on, your goals will serve as your guide in choosing a suitable freelance job and managing your time well.

#5. Take Advantage of Online Tools

Thanks to the internet, most of the resources and tools you need to start freelancing as a student are now at your fingertips. A simple Google search will give you an endless list of job openings near your area.

Not to mention, the availability of remote and hybrid work setups enables you to find freelance gigs that adhere to your demands and work expectations.

Create a LinkedIn profile to project a more professional image to potential clients. You can also look up free editing tools to build an impressive student resume and job portfolio.

2 Advantages of Freelancing as a Student

We’ve briefly mentioned the main advantages of freelancing as a student, and these benefits include growing your finances and your professional and social network.

Finding ways to earn money while studying teaches you the value of every penny you spend.

Meanwhile, expanding your professional and academic connections enables you to have solid references who can help promote your skills to potential employers and business partners later on.

Apart from those, here are other notable freelancing advantages for students:

#1. You Are Not Required to Work Overtime

Freelance work is not covered by a legally binding contract. As such, your client cannot force you to work beyond the hours that you can dedicate. In the U.S., part-time students are only permitted to complete up to 20 hours of work in a week.

Working for 40 hours is permitted only when classes are not in session.

#2. You Can Enhance Your Skills or Develop New Ones

Whether your part-time job is relevant to your course or not, you will likely hone new and existing areas of specialization. You will also likely discover more about yourself by developing skills that you never thought you would be able to explore and improve on.

For instance, you may tend to shy away from taking on leadership roles in your school activities but, later on, find it more comfortable to lead a team in a work setting.

That said, your freelance work gives you a chance to branch out and tap into your unexplored potential, thereby opening the door to becoming a more multifaceted professional.

2 Drawbacks of Freelancing as a Student

The drawbacks of freelancing as a student are not meant to stop you from pursuing a freelance or part-time job.

Rather, the inevitable disadvantages of freelancing enable you to reflect more clearly on whether being a working student is something that suits your lifestyle and future goals.

With that in mind, here are two of the possible risks of freelancing that you should be wary of:

#1. You May Experience Burnout

Unless you religiously take enough time to rest amid your busy work and school schedule, the combined demands of your freelancing and school responsibilities will eventually take a toll on your health.

Avoid overburdening yourself with excessive part-time responsibilities. Remember, freelancing as a student does not need to be complicated. Sometimes, taking light and easy jobs that do not demand much time and attention from your school activities should suffice.

#2. You Must Keep an Eye Out for Scams

Be wary of scammers posting fake job opportunities online. These fraudsters often prey on students, fresh graduates, and unsuspecting victims who are not well-versed in how dangerous the internet can be.

Some tell-tale signs of a job scam include:

• The work offers a very high starting rate for a beginner-level task or job.

• You can spot multiple grammar and spelling mistakes in the job advertisement.

• Recruiters charge a fee for you to secure an interview or get booked for the job.

• The recruiter requests your bank details or personally identifiable information.

3 Best Freelance Jobs for College Students

The secret to finding the best freelance jobs for college students is to gauge whether the job description requires the knowledge, skills, and experience that you already have, even as a student.

Or, the role is convenient enough in such a way that you can easily pick up new skills and follow the instructions needed to fulfill the required tasks.

In that regard, here are three of the best jobs that are worth looking into if you want to be a freelancing student:

• Social media manager. Most teens and college students are social media-savvy and up-to-date with online trends these days. As such, managing social media pages should be a task that’s easy to navigate and enjoyable.

• Transcriber. A transcriber produces text-based documentation of an audio or video file. It entails keen listening skills, accurate typing skills, and spelling and grammar skills.

• Virtual assistant. The beauty of earning extra income as a virtual assistant is that, depending on your level of expertise, you can try a broad range of jobs. You can be an administrative assistant, graphic designer, or even do simple data entry jobs.

How to Manage Your Payments as a Freelancing Student

The moment you start earning money while freelancing as a student, you begin to embrace the responsibilities associated with handling your finances. Here are some pro tips on how you can regulate your expenses and keep your hard-earned money from going down the drain:

#1. Set Up a Separate Bank Account

Setting up a separate bank account keeps you from combining or mixing up your savings with your daily and monthly expenses. At the same time, you can have your client send your income directly to your bank account.

In that manner, you cannot easily access your money and should refrain from spending it compulsively. Your bank account also proves instrumental in setting up your emergency funds.

#2. Choose a Payment Method

Managing your freelance finances as a student also entails choosing a payment method that’s convenient for you. For instance, if you want to receive your money in a quicker and more secure manner, you can suggest online bank transfers or mobile payment apps to your client.

#3. Send Invoices to Your Clients

It is wise to document all the services and tasks you’ve completed for your client on a weekly or monthly basis. The idea is to send invoices that serve as proof of your work.

In doing so, you can justify the rates that you’ll be charging your clients upon completing the tasks delegated to you.

A cost-effective and convenient way to do this is to use Paystub.org’s invoice generator. Our invoice generator offers ready-made templates, which you can fill in with the necessary information about your services and rates.

You can also use our built-in calculator to help you add and multiply your rates with your total hours worked. Best of all, you can print or download a PDF copy of your invoice, depending on your needs.

Furthermore, since you’re earning your own income as a freelancer, you’ll likely start paying taxes as well.

Fortunately, Paystub.org also offers a 1099 form generator, an instrumental tool in preparing your tax returns as a freelancer, as well as a W-2 form generator, which basically serves the same purpose but will come in handy once you become a full-time employee in the future.

#4. Set up a Policy For Late Payments

In line with creating and sending invoices to your clients, you must start learning about how to establish your invoice payment terms. Your invoice payment terms specify the key information about the transaction or services that you provided to your client.

These terms include the date when the invoice was issued, your preferred payment method and currency, and the total amount owed to you by your client.

You can also specify the payment due date and late fee policies that your client must adhere to in case they fail to compensate you on time.

#5. Create a Pay Stub Budget

A pay stub budget serves as your guide for regulating your expenses and ensuring you don’t make any unnecessary expenditures. Your pay stub contains all the essential details about your gross income or your earnings before taxes and other necessary deductions are subtracted.

At the same time, you can check your net earnings or your total income after taxes and use it as your basis for allocating funds for your basic needs and other daily expenses.

Do You Pay Taxes as a Freelancing Student?

Yes, and the freelancer taxes you pay will usually include income taxes and Medicare and Social Security taxes.

Medicare taxes help fund the federal government’s Medicare health program. Meanwhile, Social Security taxes provide funding for disability, retirement, and survivorship benefits to U.S. citizens aged 65 and above. As a freelancing student, you must pay a 6.2% rate for Social Security and a 1.45% rate for Medicare taxes.

For high school students, you might also be wondering whether minors pay taxes. The answer is still yes since age is not an issue or a factor for the IRS when it comes to implementing tax regulations.

That said, if you earn at least $14,600 from your freelancing job or $400 from your self-employment gig, then you must file a tax return and pay taxes. You’ll also be required to fill out a 1099-NEC form to file your returns.

A 1099-NEC form is an IRS tax form used to report all income paid to a nonemployee. In this case, you’re considered a nonemployee because, as a freelancer, you are not bound by an employment contract.

Aside from taxes, you can also qualify for certain independent contractor tax deductions and tax credits, such as the American Opportunity Tax Credit.

Legal Considerations of Freelancing as a Student

The legal considerations of freelancing as a student underscore the need for employers to recognize and implement labor policies that protect minors and students from unethical work practices.

While a freelancing job typically does not require employment or a legally binding contract, as explained earlier, there may be exceptions where creating one benefits and protects both the client or employer and the student better.

For instance, creating a work contract can help establish more solid and clear limitations as to what the client can expect from the student in terms of their job description.

Similarly, students can have a legal basis for ensuring they get paid the correct rates and even qualify for some benefits, such as healthcare coverage, bonuses, and paid time off.

Final Thoughts

To sum up, freelancing as a student is an exciting journey. Not only does it help you develop your confidence and hone your skills, but it also gives you a preview of what the world can be like after you finish your studies.

Make it a point to do research about the job opportunities you’re interested in. Also, try to balance your work schedule with your commitments at school and your family.

More importantly, be careful not to fall for job scams, and remember to treat your freelancing job as an enjoyable learning experience!