Disclaimer: Please note that this article contains general legal information and doesn’t contain legal or tax advice, and isn’t intended to constitute legal or tax advice.
Every year, more and more people are joining the freelance revolution. They’re turning to a more flexible, autonomous, rewarding, way of work – with increased earning potential to boot!
In this article, you’ll find our comprehensive checklist of the most important things to consider when you begin your freelance journey. Find out how to start freelancing and do it right from the beginning!
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Checklist for Starting a Freelance Business
1. Write Your Freelance Business Plan
- Write your freelance business plan – even if it’s not strictly required in your situation.
- You need a plan of action so you’re fully aware of where your freelance business should be heading, and have a grasp on ballpark figures showing the most likely cost to get there.
- Your freelance business plan will help you:
- Identify how you want your business to operate.
- Focus on your goals and give you and your freelance business direction.
- Pitch yourself to your potential clients.
- Create freelance proposals.
- Build a powerful online presence, brand, and online portfolio.
- Create other legal documents that you’ll need, such as your business terms and conditions.
- Understand your business structure and current market possibilities.
2. Create a Buyer Persona
- Your buyer persona (also called a customer, audience, or marketing persona) is a fictional representation of your ideal customer that describes their common characteristics and behaviors. A buyer persona is based on deep research of your existing or desired audience.
- The product or service you provide has less chance to meet your customer’s needs if you don’t understand what they are, or how and why these needs arise.
- In the future, specifying your buyer personas will be critical for:
- Shaping your business’s web design.
- Highly-targeted content creation.
- Personalized marketing.
- Sales strategy and follow-up.
- Product development.
3. Conduct Competitor Analysis
- Conducting competitor research and analyzing what’s working or what’s definitely not can provide insight into verifying and defining your customers’ needs.
- Compare your business’s service or product with your competitors’, focusing on the price, quality, buyer persona, and customer experience.
| How To Conduct Competitor Analysis? |
|---|
| You can start your competitor analysis by simply browsing the websites of your competitors. The aim isn’t to lose motivation and worry about how others are already ahead of you, but to critically pay attention to the following: • PRODUCT/SERVICE: What are the distinguishing features of their product/service? • PRICE: What price do they charge? • QUALITY: Does the price represent value for the customers? • BUYER PERSONA: Who is their buyer persona/who is their target audience? • CUSTOMER EXPERIENCE: What did you enjoy about their online presence, regarding: – Business’s web design (including layout or color scheme)? – Social media presence? – Quality of their blog? – How do they accept payments? – What didn’t you like? – How would you improve the customer’s online experience? – Did the shopping cart timeout after five minutes or was there no way for you to save your details for a repeat visit? Quick Tip: Remember you don’t have to “discover the undiscovered” but rather improve upon what’s already on the market. You can also use online competitor analysis tools such as Ahrefs to reveal competitors’ top keywords and high traffic pages. |
4. Choose the Best-Suited Legal Structure
- Choosing the right structure for your business depends on a number of factors including your workload, the costs that you can carry, liability and risk management, tax planning, potential benefits to your clients, as well as your planned future growth. To know these things about your business, the business plan comes in handy once again (step 1 above).
- Think about it carefully at the start, since the legal structure you choose for your freelance business will significantly affect your:
- Accounting.
- Regulations you must follow.
- Business’s legal and operational risk.
- Asset protection (level of personal liability).
- Tax and business obligations and arrangements.
- Legal and organizational costs.
- Clientele.
Keep in Mind
When starting as a freelancer, you should set up the legal structure for your freelance business that’s best suited for your current and future needs. For most freelancers, there are in practice 2 main options:
- Operate as a sole proprietor, or
- Form a limited liability company (LLC in the U.S., or its closest equivalent in the UK: a private limited company).
5. Select the Right Bank and Use a Separate Bank Account
- Even if it isn’t strictly required, consider using a separate bank account that’s only for your freelance business’s finances.
- If not explicitly required, this doesn’t have to be a proper ‘business’ account. In this case (for instance, when you’re a sole proprietor) it can simply be another current account in which you receive payments from clients, and from which you pay your business expenses.
- Look for an account that’s free to set up and run, and that makes it simple (and cheap) to exchange between currencies and make and receive international transfers – especially if you’re working with multinational clients.
| Important When Choosing a Bank for Your Freelance Business |
|---|
| Service fees: • Monthly maintenance fees • Minimum balance fees • Wire transfer fees • ATM fees and surcharges • Overdraft fees |
| Account features and services: • Online banking • Mobile banking • Online bill pay |
| Branch banking and ATM access |
| Daily, weekly, and monthly transaction limits |
| Introductory bonus offers |
| Different currencies available |
| Exchange rate |
| Customer service standards |
| Integration with your accounting tools |
| Bank insurance |
6. Use High-Quality Accounting Services / Manage Your Tax Responsibilities
- Firstly, knowing how to invoice for freelance work is a must. Apart from that, unless you have enough time and knowledge to manage your tax responsibilities by yourself, you need high-quality accounting services that suit your business.
- Find an accounting firm that’s experienced with freelancers or an accounting platform to handle your financial paperwork. It’s even better if they also offer tax advice through their in-house tax advisors. Remember to get advice on what can reasonably be billed for, how or if you can deduct some of the business’s costs, how to bill abroad etc.
7. Set Your Rates and Monitor Your Finances Closely
- You have to fully understand how your freelance business is performing at any given time. You need actual data to be aware of how your numbers fluctuate so you can meet your local legal requirements, tax obligations, and be sure that your rates are set correctly.
- How you price your freelance projects and services will depend on several variables, including the amount of work required (project deliverables), the urgency of the work, current market rates, and more. Make sure you aren’t under-pricing yourself, even at the beginning! Nonetheless, always be transparent about your pricing with your clients.
- When using an agreed-upon payment processor, always remember to find out how much they’ll subtract in fees – and how much you should ask for to get your intended amount after fees. Here you’ll find our completely free PayPal invoice fee calculator, Stripe fee calculator, and Fiverr fee calculator.
8. Create & Protect Your Brand
- Create your logo, portfolio, website, or profile on social media. You don’t need anything fancy to start with – just a platform to showcase your expertise, past work, and provide contact information.
- However, if you decide to work with other creators while building your brand (such as while creating your logo) make sure you own the copyright to it. Always use a written contract stating that they:
- Transfer copyright ownership to you/your business,
- Warrant that they have the right to transfer copyright ownership of the creations to you under the agreement.
9. Market Your Freelance Business
- Promote your freelance business on social media, in your professional networks, on freelance job boards, or on your dedicated website. Slowly but surely start building your online presence!
- Spread the word to friends and family that you’ve ventured into freelancing – ask them for referrals if possible. Word-of-mouth can be a goldmine, especially while getting started!
FREE Checklist in PDF: How to Start Freelancing
To help you get started, I’ve created a comprehensive checklist on how to begin freelancing for you. Download the full PDF for free for a simplified summary that will help you set up your freelance business right from the start. You can also type in your own answers within the PDF to keep track of your thoughts. Click below to start your download!
How to Start a Freelance Business When You Work Full Time?
Remember that if you’re still employed and want to start your freelance business, always make sure you read over and review all of the agreements you’ve signed with your current and prior employers.
Keep in Mind
Doing freelance work while employed – in a way that violates the terms of your employment – can lead to serious legal issues, including contractual penalty and instant termination of your employment contract. You have to fully understand your obligations towards your employer.
Below you’ll find a comprehensive summary I prepared for you with:
- Specific types of agreements you may have signed;
- The provisions they may contain, and the potential obligations to the employer these provisions might be imposing on you;
- How to minimize the risks of violating these obligations.
FAQ – Starting Your Freelance Business
When starting your own freelance business don’t forget any of the following steps:
1. Write your freelance business plan.
2. Create a buyer persona.
3. Conduct competitor analysis.
4. Choose the right business structure for your freelance business.
5. Select the right bank and open a separate bank account.
6. Use high-quality accounting services/manage your tax responsibilities.
7. Set your rates and monitor your finances closely.
8. Create & protect your brand.
9. Market your freelance business.
Read more here on how to start freelancing and download a free PDF with our comprehensive checklist of the most important things to consider when setting up your freelance business.
Before starting your freelance business, you should know and fully understand the advantages and disadvantages of being a freelancer. Moreover, if you’re still employed, you need to be aware and fully understand when and how you can start freelancing while being employed. At the first sight, it may seem like a lot, but it’s worth it!
To start as a freelancer with no experience, you can first learn some freelance business basics with a few of the best books for freelancers, while starting to build up your portfolio to show off your skillset to clients. Be sure to check out our handy how to start freelancing checklist to get a good high-level idea of what you can expect overall!
If you’re still unsure what freelance job is best for you, check out which roles you could take on as a remote freelancer and how to skill up to them.
As a rule, freelancing isn’t always a choice made for lack of a better opportunity – as it might seem to some people outside of the freelance world. In fact, “choice” lies at the very center of freelance values: autonomy to manage your own time, freedom of choice on assignments, and choice of workplace. However, if you’re still unsure if freelancing is for you, here you’ll find out more about the pros and cons of freelancing and the benefits of working from home.
On top of that, for most individuals who have tried freelancing this choice is a “no-way-back” decision. The freedom gained from working for yourself and being able to take full control of your career and private life is something that can be hard to give up once you’ve experienced it.
