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How to Start Your Own Freelance Business in 8 Simple Steps

During the past few years, freelance work has been on a steady rise. For companies, hiring a freelancer means fewer overhead costs. For freelancers, not being a full-time employee means freedom to choose which projects to work on.

Seeing that it's such a win-win situation, it's no wonder that nearly 47% of the current global workforce is now self-employed. But as exciting as starting your own business may be, it also comes with a lot of responsibility.

Whether you're thinking about freelancing as just a side gig or you're getting serious about turning your side hustle into a full-time job, we've got you covered. Here's everything you need to know to start your own freelance business.

1. Decide if freelancing is the right choice for you

Let's be honest - for anyone who wants to escape the 9-5 lifestyle, going freelance is very tempting. No more sitting in meetings that could have been emails, no more projects you don't want to work on, no more office politics.

As a freelancer, you get to choose when you work, where you work, and who you work with. Every day is different and you're unlikely to get stuck in a rut. That said, the freedom of freelancing also comes with more uncertainty and can cause a lot of added stress. So, before you quit your day job, answer the following questions to make sure the freelancing life suits your personality. Furthermore, considering part-time jobs as a transitional option could provide you with some stability while you explore freelancing opportunities.


Are you okay with working on your own?

Freelancing can be a lonely career choice. More often than not, you'll only have yourself to rely on when it comes to completing work.

And while it's true that freelancers sometimes collaborate on projects, you have to be prepared to work on your own for the majority of time. So, if the thought of spending many hours by yourself makes you nervous, freelancing might not be right for you.

Do you have good time management skills?

Being in full control of your own hours is a double-edged sword. The success of your freelance business rests entirely on you, so it's easy to let your work spill over into your personal life. For most freelancers, their home is also their office, so it can be difficult to maintain a work-life balance.

As a freelancer, you don't only need to make time for the work you agreed to. You're also responsible for finding new projects, communicating with existing clients, and running a business. If you're generally an organized person with good time management skills, then freelancing will simply be an adjustment. But if you never have enough hours in a day, you might end up micromanaging every minute with time tracking apps.

Are you good at multitasking?

Running a freelance business is more than just working on clients' projects. Freelancers wear many different hats, often switching between several roles in a single day. Being a successful freelancer means handling tasks related to:

  • Marketing
  • Contract negotiating
  • Networking
  • Invoicing
  • Bookkeeping

And that's just to name a few. As exciting as being your own boss sounds, it also requires you to learn new skills and take on responsibilities you wouldn't have as a full-time employee.

freelance networking

How much unpredictability are you comfortable with?

There is no such thing as a typical day for a freelancer, especially when you're just starting out. You need to be ready to adapt to different clients and their needs, which means you'll need to be flexible.

Some projects will inevitably take more time than you initially planned on. Sometimes, you'll be faced with last-minute opportunities that are too good to miss out on. There will be days when you have a full workload, and others when your schedule is completely free. And if the thought of that leaves you more anxious than excited, a freelance career might not be a good choice.

What is your current financial situation like?

Simply walking out of the office in the middle of the working day with a grin on your face might seem tempting, especially if you've had a rough patch at work. However, dropping anything without a plan of action can quickly backfire. No matter how much you want to pursue your passion and start freelancing, doing it on a whim isn't a good idea.

Before you start a freelance business, it's important to know where you stand with your personal finances. Analyze your personal expenses and list initial business expenses to get an idea of how long you can rely on your savings. This will not only help you figure out how much you need to make as a freelancer to sustain your lifestyle, but will also help you anticipate issues that may arise.

How will starting a freelancing career impact your future plans?

Did you plan on getting a car in the near future? Or maybe buying a house? If you're like most people, you'll need to apply for a loan first. However, getting one as a full-time freelancer will be much harder than as a full-time employee.

For most freelancers, there's no such thing as steady, regular income. Earnings fluctuate month in and month out, which doesn't exactly signal job security to creditors. So, if you're thinking about going freelance but also want to get a loan or a mortgage in the future, consider your timing.

Most lenders require three years of income history for freelancers. In practical terms, that means that you can either delay starting a freelance business or getting a mortgage.

future plans

2. Define the skills you can turn into services

Now that you have a better idea of what a freelance career looks like, it's time to identify the skills you can offer to prospective clients. Whether it's something you already have professional experience in or a hobby you want to turn into a job, defining your product or service is the first step towards freelancing.

To avoid getting distracted by all the possibilities, start with a general idea and break it down into specifics. Whatever industry you choose, you'll need to find a focus when first starting out. Let's say you want to become a freelance writer. In that case, your process for starting a freelance business could look something like this:

  • What type of writing do I want to do?
  • What personal interest do I want to incorporate into my writing?
  • Who are my potential clients?

By specializing, you're sending a message that you are an expert in your field. As such, companies will be more likely to hire you than another freelancer with a more general skillset. With time and experience, you will gain contacts and credibility that will help you expand your offer later on.

3. Find your potential clients

Once you've defined the niche you want to focus on, you'll need to attract the clients you want to work with. If you're just starting out, a little guesswork here is to be expected.

Start by targeting clients you think would be a great fit for delivering quality work. Once you've finished a few individual projects, you'll have a better idea of whether you want to go after similar ones.As your freelance business grows, your target market will become clearer. You'll learn what kinds of businesses you work best with, which projects you enjoy most, and what types of clients to avoid.

online brochures

5. Develop a pricing structure

Determining the products or services you're going to offer is the easy part. Putting a price tag on them is where it gets tricky. If you charge too little, you'll end up with more work than you have time for. But if you charge too much, you'll have difficulty finding new clients.

And then there's choosing a pricing model as well. Will you charge on a project basis? Will you settle for an hourly rate? Or maybe a flat fee? The truth is, finding the right price points for your products or services can be a bit of an experiment and you probably won't get it perfect the first time around.

That said, if you do some market research on freelance services and find out how other freelancers in your industry determine their pricing, you'll have a good starting point. And if you're not sure where to start, check out our detailed guide on setting your freelance rate.

6. Learn how to write a great proposal

Once you find a project you're excited about, it's time to submit a proposal. And since the freelancing business is competitive, not just any proposal will make the cut. A poorly written and designed proposal can make you stand out for all the wrong reasons and ultimately cost you the job.

If you're just starting out and you've never written a proposal before, you might feel like you don't know what you're doing. But don't worry - all great proposals outline two main key points:

  • Your understanding of the client's problem
  • Your solution to the client's problem

You obviously understand the problem and have the solution for it, otherwise you wouldn't be sending the proposal in the first place. Now it's just a matter of putting it into words and presenting yourself to prospective clients as an authority. To help you do just that, we've compiled various resources that enable you to send winning proposals:

  1. Proposal Writing University is a course that guides you through the structure and main elements of a proposal. In addition to that, it also helps your client email writing skills and guides you through creating a template that you can personalize for each project.
  2. Proposal Design University is a 20-minute crash course in creating proposals that stand out. You don't have to be a designer to create an impressive document, and this course will show you how.
  3. Proposal Breakdown Show analyzes real-life proposals. From content to design, this is four seasons of pointing out the good, the bad, and the unbelievable things you can find in business proposals.

If you want to set up a freelance business, you'll have to get familiar with how you're seen in the eyes of the law. When first starting out, the simplest freelance business structures are the most common choice: a sole proprietorship in the US and a sole trade in the UK.

United States: Sole proprietor

As long as you don't have any employees, you don't have to take any formal steps to form a company. All you need to do is report income and expenses on your personal tax return. And since you are now self-employed, you also need to make estimated quarterly tax payments.

By default, your full legal name is also the name under which your business operates. However, if you want to use a trade name for marketing purposes, you'll need to register a DBA (doing business as) name.

When collecting payments as a sole proprietor, you can use your personal bank account. The same goes for online payment services such as PayPal. If you want to separate your personal and business finances for organizational purposes, you can, but it isn't a legal requirement. If you’re considering other business structures, explore different types of LLCs (Limited Liability Companies) and their implications for your freelance venture.

United Kingdom: Sole trader

If you want to register as a sole trader in the UK, you first need to tell HMRC and get a UTR number. Once you've done that, you'll pay taxes trough Self Assessment which you can file online by January 31 for the previous tax year. At the same time, you will be automatically signed up for payments on account. These are two advance estimated tax payments for the current year that are meant to keep you on track by splitting up your tax payment.

When it comes to naming your freelance business, you can either operate under your legal name or choose a trade name. That said, if you choose to operate under a trade name, you still need to include both your legal and business name on official documents (e.g. invoices). If you're struggling to come up with a business name, there are a number of business name generators available online that can help you brainstorm ideas.

As a sole trader, you can use your personal bank account to collect payments. That said, you can also have a separate one for business purposes if it helps you stay organized.

price of freelancing book

8. Build and maintain relationships

These days, connecting with fellow freelancers is as easy as joining LinkedIn or Facebook groups. And while other professionals might be your competition, that doesn't mean you should avoid networking altogether.

For example, you might have a large project you need a reliable hand with. Or you might get a great project opportunity, but no time to take it on. In any case, helping someone land a job is a sure-fire way of having that favor returned in the future.

Depending on what industry you're in, it might also be beneficial to build relationships with freelancers outside of your field. For example, if you're a web developer or designer, knowing a copywriter who shares your way of thinking can speed up your design process and save you from a lot of headaches. Similarly, for those aspiring to start your own writing company, building a network of diverse professionals can provide invaluable insights and opportunities for collaboration, enhancing the scope and quality of their services.

Final thoughts

If you have a marketable skill, starting a freelance business isn't a difficult process. However, as rewarding as working for yourself may be, freelance work comes with its own unique set of challenges. So, before you take the leap into freelancing, make sure to do some soul searching and define clear business goals.

The tips above are enough to get you started and help you understand what you're getting yourself into. But don't worry too much - as long as you pay taxes on the money you earn, you can figure out the rest as you go.

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Patricija Šobak's profile image
Patricija Šobak puts her talent in spotting questionable grammar and shady syntax to good use by writing about various business-related topics. Besides advocating the use of the Oxford comma, she also likes coffee, dogs, and video games. People find her ability to name classic rock songs only from the intro both shocking and impressive.