How to transition from freelance to full-time employee (or vice versa)

Transitioning from full-time employment to freelancing can feel like working without a net. It's wise to start a transition to freelance early—ideally before you quit your day job. You might start out by picking up some small side gigs. This way, you can get a feel for the workload while still receiving a regular paycheck and benefits. Take the time to compile a portfolio of work, build your reputation, and find your target clients.

Changing specialties or finding your niche market may avoid noncompete clauses and establish a future framework for the kind of services and clients you want. Existing clients and contacts can be great sources for referrals and opportunities, but don't burn any bridges. You never know when you might want to return to full-time work or seek assistance or recommendations from former colleagues.

Setting a rate for freelance services can be complicated. When calculating the costs, you'll need to earn enough to cover health benefits, retirement planning, marketing, and other business expenses such as accounting and paying taxes.

Companies have whole departments dedicated to payroll, human resources, and branding, but as a freelancer, these are now your responsibilities. Being disciplined with your time and dedicating work hours to address these new tasks all factor into overhead costs—and don't forget to pay yourself.

Networking is essential for freelancers.

As an employee, your workload and the accounts and clients that come with it are often assigned to you. But as a freelancer, you're the business developer and decision-maker. Join industry groups and attend networking events to connect with experienced professionals who may not only be a lead to work, but can also provide invaluable advice and experience within the field. Some of these organizations require paid memberships, but access to conferences, newsletters, and information from successful freelancers is invaluable.

People often hire from within these organizations, so establishing relationships with industry influencers can yield profitable rewards. Networking is about playing the long game: You never know when it will pay off.

Finding a tax professional is another important step in transitioning from full-time employment to being your own boss. Paying taxes as a freelancer is very different from working for a company and receiving a W2 form once a year. New freelancers may not be familiar with 1099 forms or paying taxes quarterly, or where to find tax breaks and write-offs to save the most when operating as a contractor. Depending on your work, you can often deduct qualifying home expenses and other supplies. Taxes can be difficult for anyone, so finding a good accountant is something to put on the list and factor into overhead costs.

Before putting a 9-to-5 job behind you, research documentation and workflow processes. You'll want to make sure your home office keeps up with professional industry standards and is ready to go, so identify software packages or free online services that can manage communication, project organization, and invoicing. 

Time management, organization, scheduling, and email notifications are important for you and your clients. And depending on the type of work you're taking on, you may want to ensure your computer and home devices are secured and protected at the right level.

Returning to a job may seem like no big deal at first—after all, you have been there and done that—but the transition comes with its own challenges.

Alerting clients about your upcoming change is more than a professional courtesy. Your clients could become your new employers, so be clear about the kind of work you want. If your existing clients know that you are interested in making the change, they are more likely to think of you when a job opportunity appears.

Here is where the connections you made while networking can really pay off. You have established relationships with other freelancers and are also a vetted member of a professional organization. With today's unpredictable and dynamic job market, belonging to these groups positions you as a strong candidate before you have sent off the first resume.

Networking within the company or companies you would like to join has multiple benefits—remember, you are interviewing them just as they are interviewing you. Get to know hiring managers, and let them get to know you. Find the people and the teams where you could thrive, so jumping back into the full-time work pool doesn't have to be a cold shock for you or your new colleagues.

Companies are looking for employees who add value to their company, and a freelancer looking for full-time work has a lot to offer. The time spent marketing your skills, generating clientele, and improving your portfolio can enhance your value, especially if you can translate these qualities into quantitative statistics. Be prepared to demonstrate your success with the hard data companies want, even if it's your interpersonal skills that drive your value to your clients and future employers.

While they may not top the list of reasons to transition to a regular job, health insurance, retirement benefits, and growth opportunities may be exactly what the freelancer wants. However, bosses often want to hear more about your goals for growth.

Recall the ever-popular interview question, "Where do you see yourself in five years?" The best answer is not "securely employed with a steady paycheck and health insurance." Whether you have a five-year plan or not, be prepared to describe future goals and how you can fulfill your ambitions by working at a specific company. Think about two or three ways you want to grow professionally, such as learning a new software program or getting a certification for skills like Google analytics or project management. Think also about a few ways you can apply your strengths to help the company or your department grow, such as identifying existing pain points and offering to develop a plan to improve a process or business development strategy.

Measuring productivity is one of the biggest adjustments the freelancer makes when transitioning to full-time employment. Linear work patterns yield the most financial success for freelancers, but productivity has different metrics beyond churning out as much work as possible in the least amount of time.

Activities that would have been frivolous are now integral to working collaboratively with team members. Meetings, answering emails, and looping in other people all influence a company's productivity metrics, and making this shift can be unexpectedly difficult.