Most people choose to freelance because they are chasing freedom.
Think about it. Being self-employed or “working for yourself” comes with the allure of choosing your clients and managing your schedule. It is no surprise that the number of freelancers is growing.
This was reported by the Center for Economic and Policy Research, which, in a study, found that during the first half of 2022, in the United States, 600,000 more people became self-employed. They were driven by a variety of reasons, such as a better work-life balance, avoiding commuting, and uncapping their income potential to whatever their salary was.
But, even if these numbers are promising, there is a background aspect of freelancing that we need to consider. To illustrate further, we can divide self-employment into two key areas. The first one is the freelancer’s core business. They are a content writer, a web developer, or a graphic designer. The second one is trickier because it is composed of routine tasks that, for the most part, no one really wants to do. However, these tasks are key to any freelancer’s business success.
These tasks or chores, if you wish to call them that way, include bookkeeping, taxes, and ongoing communication with customers. Suddenly, the freelancer is no longer only a translator or a book cover artist. Now, they are also a CFO, a COO, and the company’s accountant.
It can be easy to underestimate how much time this can consume, but in some cases, these added commitments can take up to 80% of the freelancer’s time. The good news, however, is that it doesn’t need to be that way anymore.
With the rise of artificial intelligence (AI), freelancers can now leverage the power of a personal assistant and do so without the hefty price tag that these services carry.
Here are three ways in which an AI-powered tool can help freelancers optimize their processes so that they can focus on what they do best.
When we delve into the least glamorous aspects of freelancing, bookkeeping stands out. However, as nitty-gritty as it is, this task is critical. Bookkeeping involves the meticulous scanning of receipts, methodically tracking all income and expenses, and categorizing expenditures.
Imagine this scenario: you’ve purchased a printer for your home office, and it turns out to be of great help. However, now, you need to categorize it for tax purposes. How you classify that printer–for instance, as office equipment or another expense category–can significantly impact the tax rates you ultimately pay. Now, can you imagine doing this for every single thing?
Well, it turns out freelancers are no longer alone. Thanks to the powerful emergence of AI, freelancers now have access to an app that functions as a powerful digital assistant that can set them free from this routine. AI makes it possible to automate and streamline expense categorization, making sure you benefit from the most advantageous tax deductions without breaking your head. All you need to do is snap a photo of your receipt, and let the algorithms in the app scan and extract the essential data so that the expense can be categorized efficiently.
Also, a very important element of AI’s incursion in bookkeeping is that it provides very valuable data for business owners to analyze. Instead of building complex financial statements and wasting time getting bogged down by detailed entries, now, business owners can look at their AI-generated financial reports and make decisions. For example, they can see which clients bring in the most money, and see how much time servicing those clients takes to determine the profitability per client. They can also analyze different expense categories, and identify if any costs can be reduced.
31% of self-employed workers still file their taxes on paper, and almost a third of them rely on the services of an accountant to do so. Also, around 30 percent of independent contractors admitted having trouble with filing forms correctly and keeping track of the paperwork required.
This is why, in the United States, so many people fear the IRS, and exercise excessive caution to avoid making any tax mistake. The U.S. tax system is a maze that is hard to navigate, since rules vary from state to state both when concerning taxes and licensing regulations. This makes it difficult to operate nationwide. For example, if you are a freelance graphic designer based in California, and you’ve completed a project for a client in New York, you might be oblivious to some tax obligations that could, in the future, unknowingly harm your business.
Over time, AI has the potential to help you address these quandaries, and for a fraction of the cost of a tax consultant, who could still make mistakes despite their high rates per hour. There are many advantages to AI, for example, it is precise and accurate, which ensures that all taxes are accounted for. At the same time, it keeps up with ever-changing tax laws, regulations, and deductions, which makes it possible for it to generate comprehensive, detailed reports for you to understand your tax situation.
#3: Optimizing Communication
Professional interactions are plagued with communication inefficiencies. This is detrimental to the freelancer’s productivity.
Let’s look at the example of a self-employed gardener who has a thriving business with 20 clients. As a part of their work, the gardener needs to maintain ongoing communication with their customers. This includes sending the customer an invoice for the services rendered. While many times, the client can pay promptly, this is not always the case. This means that the gardener needs to send a reminder about the unpaid invoice, which leads to wasted time and energy, and derails the gardener from focusing on their core business, which is gardening.
AI has the potential to efficiently automate these tasks in order to lessen the burden for independent contractors, all while considerably enhancing the overall experience for freelancers and their clients alike. This is why analysts are describing the relationship between AI chatbots and freelance economy workers as “the perfect partnership.”
In the previously explained case, the gardener can track the status of all of their invoices, and see who has paid and who has not. The gardener can also choose to, with the support of an AI-powered assistant, send automated reminders to customers about their unpaid fees, delegating a task that could otherwise be distracting and frustrating.
In conclusion, it is proven that the transformative potential of AI in the freelancing realm is substantial. And, as more individuals decide to embrace the self-employed lifestyle, effective AI tools that provide valuable support to them are likely to find more success.
As it has been stated, most people decide to embark on their journey as independent workers to achieve independence and feel free to do what they love the most. However, more often than not, this doesn’t happen, and they end up working “in” their business instead of “on” their business, helping it to grow and thrive.
However, by effectively implementing an AI-powered application, self-employed individuals can now streamline their invoice tracking, bookkeeping, tax management, and client communication. This will free up considerable amounts of time, increase their profits (at the very least, by saving money from otherwise costly tax reporting errors), and reignite their joy and their connection with their purpose, which is why they decided to pursue this lifestyle in the first place.
- 3 Ways in Which AI Can Help Freelancers Achieve True Freedom
- Understanding LLM Fine-Tuning: Tailoring Large Language Models to Your Unique Requirements
- Binny Gill, Founder & CEO of Kognitos – Interview Series
- AI and Blockchain Integration for Preserving Privacy
- How AI is Transforming IT Service Management