Starting a Freelance Business: An Overview

Feb 26, 2024 | Career Advice, Professional Development, Student and Alumni Resources

A freelance business is an opportunity to take control of your own career path, set your own schedule, and pursue projects that align with your passions and skills, all while enjoying the flexibility and autonomy that traditional employment may lack. For those interested in freelance work or are looking for a ‘how to’ on creating a freelance career from the bottom up, look no further.

Below, we’ve compiled a generalized list of priorities for those wanting to set up their own freelance business!

Getting Started

In order to kickstart a freelancing career, it is crucial to set up the foundation of your business. To do this, it is essential to establish a business entity, such as creating an LLC that provides legal protection and business legitimacy. Learn more about LLC’s: Should I Form an LLC for My Freelancing Work? – Rocket Lawyer. Another foundational step is opening up a dedicated business bank account with a credit card. This will help streamline financial transactions from the start and maintain a clear separation between personal and business finances. It is also highly recommended that you find and secure a support network such as an accountant, lawyer, and key vendors. Having a support system will be crucial when you are needing guidance, business advice, or support as your freelance business grows. 

Finding work as a freelancer requires proactive marketing efforts and building industry connections. Market yourself effectively through online platforms, social media, and networking events to showcase your skills and attract potential clients. Cultivate relationships within your industry to uncover new opportunities and collaborations. We have a guide that might help in this area: Networking in the Digital Age.

Working with Clients

freelancer talking to client

When working with clients interested in your freelancing skills and expertise, starting off on the right foot is just as important as it is giving them a final product. In the first meeting, make sure to prioritize a discussion around project details, goals, and expectations. Understanding the scope of work that is entailed in a client’s project will show that you are establishing a plan early and prioritizing the needs and wants of your client. Avoid scope creep, which will always leave you with a disappointed and dissatisfied client. Wrike, a leading work management software offers a video resource on How to Manage Scope Creep (in 6 Steps) 

Having productive initial meetings isn’t the only part about working with clients; you need to make sure you get paid for your time and services. Utilize contracts to formalize agreements and outline terms of service, including payment schedules and project milestones. Documents like these serve as legally binding agreements, protecting both parties’ interests. They also prevent misunderstandings or disputes down the line. Shantanu Kumar, a Design, Tech and Pop Culture writer, has a helpful guide on which documents are essential: 6 Bare-minimum documents you need as a freelancer. As a freelancer, it is also essential to provide transparency to clients by creating comprehensive estimates of project costs and timelines. This helps clients understand the scope of the work involved and sets realistic expectations from the outset. Clearly detailing the breakdown of costs, such as labor, materials, and any additional expenses, helps build trust with your clients.

The Business End

As a freelancer, your completed projects are your business. Managing the business side of a freelancing involves navigating tax obligations, estimating time and labor accurately, and establishing a sustainable income stream. From the first client to the 100th, it is important to stay organized with finances by keeping track of expenses, invoices, and receipts for income and tax purposes.

  • Develop a system for estimating project timelines and costs to ensure profitability and fair compensation. Check out this resource: A Freelancer’s Guide to Tracking Business Expenses.
  • Allocate a budget for any expenses that will be necessary in supporting your business.
  • Consider working with subcontractors when necessary; scale your business and take on larger projects by collaborating with other freelancers.
  • Stay informed about relevant tax laws and regulations around freelance work. Tax obligations can be complex for freelancers and requires careful attention to detail and adherence to deadlines.

A freelance business offers unparalleled opportunities for individuals to take control of their careers, pursue passions, and achieve financial independence. However, success as a freelancer requires more than just delivering exceptional work; it demands effective and organized management of the business. From navigating tax obligations to accurately estimating project timelines and establishing sustainable income streams, freelancers must prioritize financial organization and strategic planning. By staying organized, proactive, and informed, freelancers can overcome challenges, build thriving businesses, and enjoy the freedom and fulfillment that freelancing affords.

freelance tax work