I’ve had an eventful few months expanding my client base. I’ve been actively engaging on various freelancer sites and my go-to platform, LinkedIn. I was sitting in an online room with 40 other applicants and listening to another VA business pitch for applications to expand their team. This has me questioning whether our local VA service industry understands the difference between the contractor or subcontractor role and the freelancer role.
I want to clarify that although they are similar, they are not the same. I feel the need to say something to help clear up the mix-up and give myself peace of mind.
A Subcontractor:
- Works exclusively for your team
- Works a full week
- Gets paid monthly (either based on hours or a fixed rate)
- May work on various tasks within your team
- Does not work for anyone else
A Freelancer:
- Works part-time for your team
- Has 80-20 mixes of clients
- That means that they have income from more than 1 client
- You may have 1 main client (80% of your income) but the other 20% is from another client or other activities
- It’s the question that our local Reciever uses to clarify the difference between a freelancer and a subcontractor or employee
- Gets paid for work done or on a retainer basis
Both individuals still need to handle their taxes, office setup, insurance, medical aid, and pension.
As a South African VA, we rely on the exchange rate always being in our favour, so it’s important to ensure you are being offered a “market-related” reimbursement.
Not sure what that would look like for you? Here’s a quick formula to help you calculate your minimum hourly rate:
Costs breakdown:
- Laptop (Take the price of a new one and divide it by 24 months)
- Operating System (This is paid yearly, divide this by 12 months)
- Storage (dropbox or Google storage)
- Insurance
- Medical Aid
- Rent
- Food
- Internet
- Home office set up (Cost your ideal chair, additional screen, printer or scanner – divide this initial cost by 24 months)
Add them all up, this is your minimum monthly income requirement.
Remember you haven’t allocated tax yet, so add 18% to your minimum amount.
Now divide that by 21 days – this will give you a daily rate, then divide your daily rate into the amount of hours you want to work in a day. This is your minimum hourly rate to cover your expenses.
I assure you that the figure will be surprising. It’s important to remember that you are a skilled professional, and you have every right to decline any work that doesn’t meet your minimum hourly rate.
I have a passion for making order out of chaotic numbers and papers. With 20 years experience, I have mastered getting those admin ducks to obey and stay in their rows.