Three types of people think about starting a freelance business. The first is the planner. Planners want all their ducks in a row before starting a new venture. They want to make sure that all their bases are covered, and that they’re not going to be left struggling financially in case of an emergency or in case their business fails. The second is the type who’s ready to quit their job and instantly earn six figures by “doing what they love.” They saw it on an internet ad once, and now they think they’re ready to roll. The third lies somewhere in between.
No matter which category you fall into, there are some things that you’ll at least need a basic understanding of before starting a freelance business. If you haven’t done it already, we recommend checking out The Online Writer’s Companion by our own P.J. Aitken. But for a few quick pointers, read on.
Set Reasonable Expectations
Before you do anything, think about your goal. Do you want to make extra money in addition to your regular salary? Do you want to fully replace that salary with earnings from starting a freelance business? You can do either, but please don’t think that you’ll be earning thousands a week right off the bat.
Consider starting small. Join a platform like Upwork and bid for a few jobs so that you can get a feel not only for how to bid, but also for how much time you realistically have to work. A common misperception of new freelancers is that they’ll be able to keep their kids home with them or manage their household while they’re working. If this is your objective, great! But you probably won’t be able to earn more than a little bit of extra spending money.
Treat your freelancing business like a business, and it’ll become one. If you treat it as a hobby, it will be nothing more than a hobby.
Handling your Finances
Alright, so you’re not thinking that you’ll be a millionaire tomorrow. What’s next? The first thing you want to do when you’re starting a freelance business is decide if you’ll have a business name. Now, this can serve two purposes. First of all, it can help to create your brand. But secondly and most importantly, it can help you keep your taxes in order.
Freelancers have to pay taxes just like everyone else, but since we work primarily as independent contractors, there’s no one to take our taxes out. Choosing a business name can help to separate your personal income taxes from your business taxes, depending on how you’d like to file. Once you choose your name, you’ll need to use that name to fill out a W-9 form for every single client you work with.
The idea of hiring an accountant can sound both enticing and expensive. If you’re working across a number of platforms, though, it may be worth it to you. Some sites will give you a form 1099, which will help you to keep records of your income all in one place. But others like Upwork and Fiverr will no longer provide these. Make sure you keep thorough records of your income so that April 15th doesn’t sneak up on you.
Remember that desk planner you bought to help track your clients? Or the voice to text software that you purchased to help you “write” faster? Save the receipts. They’re tax deductible. Ask an accountant about your workspace, too. Sometimes you can take a deduction on your taxes if you have a dedicated room where you work.
Taxes were a pain when you were at your desk job, and they’re going to be even worse now. Keep very close track of your invoices and your receipts, and you’ll be fine come tax time.
Local help with Starting a Freelance Business
Did you know that the Small Business Association can help you get your business running? You probably already know that they can help you get a loan for a startup, but they can also help you determine what licenses and tax forms you’ll need. They offer other resources as well; don’t hesitate to contact your local office.
Starting a freelance business isn’t all about taxes, though. You need actual paying clients. So how do you get them? First, we strongly recommend you join a platform like Upwork, or even Fiverr. These sites will put all the clients you’ll ever need in one place – all you’ve got to do is get hired. But if you want a few local clients, reach out to your networks. Put Facebook to work for you by asking your friends to share your service. Get in touch with your college buddies. And look into joining the Chamber of Commerce as a service provider.
Hiring on with local businesses may not be the most lucrative opportunity for you. But it’ll definitely help you to build a portfolio that you can use to land higher paying clients later. And practice makes perfect: the more you write for these smaller clients, the better and faster you’ll become.
Keep it Simple
When you’re just starting a freelance business, it’s easy to find yourself with too many balls in the air. The tips in this article only just begin to cover the launch of your business, but please do read other articles on this site. We’ve all been where you are now, and mean to help you succeed in your business.
As with any business, you’ll need to establish a client base, advertise your services, and manage your time very wisely. You’ll also need to be sure that you’ve got an understanding of your local laws. But the great thing about this job is that in some cases you can learn and build as you grow.
We can’t stress it enough – you need to treat your freelance business like a full-time job if a full-time income is your goal. There’s no quick way to earn a living; if you disagree, please feel free to let us know your plan! But by keeping it simple and starting slowly, you can build a reputation as a legitimate business, and your client base will soon follow.