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How To Not Go Broke as a Digital Freelancer 💸

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As a freelancer or solo consultant, one of the most stressful things you will deal with is billing and cash flow.

After all, doing great work itself doesn’t pay the bills. And even if you are charging fantastic rates that should have you sleeping on Benjamins, you’re not going to be successful if you’re not running your business profitably.

I am an entrepreneur, but I do not have a business background other than my work experience. I learned how to manage marketing budgets during my time working for others and have learned personal finance and fiscal responsibility out of necessity, but when you run a business that goes to a whole new level.

Freelancers and the self-employed are often like me, where you have no formal business experience but are trying to build something of value that pays you well and allows you to hire a great team to help you take the business to the next level.

At least, that is the dream.

While the reality of growing and running a business is often very different from what you see on Instagram, there are some lessons I’ve learned that can help you run a profitable business and not go broke as you try to live your dream of self employment.

These are:

  • Charge 20% more than you think you need to;
  • Consistent check-ins on your cashflow and expenses;
  • Save for taxes every month;
  • Pay yourself a set amount each month.

Let’s talk about each of these individually.

How To Not Go Broke as SEO Freelance

Charge 20% more than you think you need to

If you want to not go broke as a freelancer, then you need to charge more.

Most freelancers I know who are just starting out charge by how much they think their time is worth based off what they previously made when they were working for someone else full time.

This is the worst way to price yourself.

First, call yourself a consultant and not a freelancer. “Freelancer” connotes cheap hourly work, whereas “consultant” communicates high value strategic work that they might still execute on.

If you want to make good money as a self-employed services offerer, then you need to frame yourself as a consultant.

Next, benchmark yourself against others in your industry. Digital marketing pricing can be challenging, but if you have a good network of people doing adjacent work to you then you can pretty easily ballpark where to start your pricing. Try it – go ask five friends what they charge per hour and how they structure their projects. You’ll learn a ton, and I’ve found that other consultants/freelancers are more than happy to share knowledge.

Next, recognize that as a knowledge worker you will realistically only be able to bill 25-30 hours per week on average. If you bill yourself out at $100/hr, then you’ll make ~$2500/wk before taxes which works out to approximately $10,000/mo pre-tax. At 30 hours a week, that’s about $12,000/mo before taxes. This is a great success!

Realistically though, some months will be leaner and some will be thicker. Depending on the work you are offering, you can raise your rate as you become busier and busier and are able to be more picky about the types of clients you take on.

Finally, to really run a profitable business and to be able to take on only the best clients you should take your base rate and raise it by 20%. This allows you build in a buffer of revenue to cover you in slower months (summer is often slow) and in better months to save away cash and say no to the wrong clients.

If you charge enough, you will be happier as a consultant and your clients will be happier because you have more time to dedicate to their project and thus they will see better results.

Consistent check-ins on cashflow and expenses

Many entrepreneurs and freelancers I’ve spoken with do not enjoy cashflow and expenses. You started working for yourself to build a great product or do great work for clients (or both), not to manage cashflow and expenses.

But herein lies the rub – if you don’t manage your cashflow and expenses, you will not be able to build a profitable and scalable business with consistent cash flow that allow you to pay yourself (and any employees) consistently and well.

How to manage cashflow as SEO freelancer

For a long time I hated managing finances and cash flow. I knew that I should be logging into my bank account and bookkeeping software (I use Bench) monthly to review all of my expenses and know exactly where my revenue was being spent, but the thought of this was anxiety producing.

Eventually I learned the hard way that this caused more anxiety rather than less, and if I wanted to grow my business consistently and strategically then I needed a good handle on my finances.

So I found a system that works for me.

First, I have a bookkeeping service. Because I don’t like the minutiae of finances, I learned very early on that I would therefore not do it. So from early on in my business I signed up for, which has been an amazing way for me to have someone every month asking me to review and categorize expenses.


Next, in the middle of each month (around the time my books for the previous month are done) I sit down and look at my profit and loss (P&L) statement and try to understand where my revenue was spent and how the business is doing overall.

Third, once a quarter now I sit down to review all of my expenses from the last three months and look for trends of areas where we are spending revenue that is not returning itself in either direct revenue or time saved. This is also a great time to review all recurring expenses and remove any that you are not still actively using.

When I did this at the end of 2017, I recovered over $700/mo in recurring expenses that we were not using anymore but we were still subscribed to.

Had I done this exercise earlier, I would have saved literally thousands of dollars. Lesson learned.

Save for taxes

When you go to work for yourself, the sky feels like the limit.

Then comes taxes.

Note: I am not a tax attorney, accountant, or bookkeeper. All learnings here are from my own experience and should only be taken as such.

If you’re based in the United States, then you can be sure that Uncle Sam wants his cut of the money you’re making. The US government also likes to layer on self employment taxes which can further make running a business and working for yourself tenable.

That said, with smart planning you can plan ahead for taxes and make sure your business stays profitably afloat.

Advice For Freelancers On Taxes

There are two pieces of advice I give every freelancer around taxes:

  1. Save 30% of your pre-expenses revenue into a savings account dedicated for taxes that you do not touch.
  2. Pay your quarterly taxes.

Paying your quarterly estimated taxes is straight forward. It’s required (unless you are ok paying penalties), and a good CPA will help you determine how much you need to pay each quarter.

The reason I advise people to save 30% of pre-expenses revenue to put towards taxes is twofold:

  1. You will be guaranteed to have enough to cover your taxes;
  2. With the saved money you have left over from that, you can give yourself an owner-draw pre-taxes bonus to put into a SEP IRA or Solo 401k to save towards your retirement.

I see too many entrepreneurs and freelancers not saving anything towards their retirement, which is a real shame because as a freelancer you should be able to keep your expenses low and start setting yourself up for financial freedom.

Pay yourself consistent amounts

It’s hard to run a consistently profitable business without knowing how much your business will spend every month.

At the beginning of your freelance/consultant journey, you’ll be stressed out by money. Trust me.

After a while, hopefully you can build yourself a consistent pipeline of leads and potential customers that you can draw on when you need more revenue or happen to lose a client for whatever reason.

Pay yourself a pre-set amount as a freelancer

Once this happens, I recommend starting to pay yourself a consistent amount every month. This allows you to do two things:

  1. Know exactly how much you will make each month personally, which lets you manage your life better;
  2. Know exactly how much money is going out of your business each month so that you can plan for the future.

Whether you want to eventually build a larger business or simply put away good money for retirement, spending less than you earn is much easier when you consistently know where it is going.

When I was first starting my company, I paid myself just from consulting revenues. Any consulting I did, I saved 33% and then paid myself the rest. After about a year and my main product Credo taking off, I began to pay myself a small amount from that revenue as well.

Once revenue reached a consistent and higher level, I began using Gusto to pay myself and contractors. Not only does this make it easier for me to pay everyone and for Bench to categorize payroll, but it’s done easily and I don’t have to manage payments in multiple places.

About Me As A Entrepreneur

John Doherty is the founder of where they help businesses hire the right SEO or digital marketing provider as well as advertising full and part time inhouse digital marketing jobs. John is a veteran SEO and digital marketer with experience across agencies, inhouse, and as a solo consultant and entrepreneur. He’s worked on some of the coolest startups and largest websites in the world to drive them traffic and revenue. He lives in Denver Colorado with his wife Courtney and their very large black labrador Butterbean.

What About You & Your Freelancing?

So how about you? What are the lessons you’ve learned about running a profitable freelancing/consulting business, or what questions do you have about it that I can help answer?

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