Getting started as a freelancer? Whether you're freelancing nights and weekends or as your full-time gig, use this short list to fast track your business set up. We promise it’ll save you the headache in the long run.
As a freelancer, you’re selling your expertise. It helps to have a website or portfolio you can share. You can go as elaborate or as a basic as you want. You might feel like your portfolio isn't good enough. You may even feel a little embarrassed about it, but it's better to start your portfolio and have a first draft of it done. As any full-time freelancer will tell you, your portfolio will never feel perfect or "done".
Remember, any good portfolio contains a list of your services, of your clients, and your contact information.
The sustainability of your business depends on finding work. Once you feel like your portfolio website is good enough to share with others, let your network know that you’re freelancing. All it takes is a quick email or social post. Trust us, your community will want to support you.
There are many (free) rate calculators out there that we recommend using. A quick google will give you the basics. For those who want to DIY, the basic algebra is below. Tweak as you need.
Estimate your total annual expenses
(ex. this can include insurance, office space, tax, software, hardware, etc.)
Multiply your annual expenses by desired profit margin
(ex. desired profit margin is 25%, so multiply by 1.25)
Divide by the number of days per year you estimate working
(There are generally around 240 workable days in the year)
Divide by the number of billable hours per day you estimate working.
(billable hours can include project and client management. Non-billable time includes invoicing, bookkeeping, tax management, and general admin.
This will give you your estimated hourly rate.
For many, this is one of the hardest skills a freelancer has to learn (or remember). Scoping has repercussions on your financial stability, so don’t rush through it.
With 60% of the independent workforce experiencing delayed or unpaid invoices, having a strong contract to protect you from delinquent clients is imperative.
In order to get paid, you have to send your invoice. Do this promptly — you can make it part of your weekly routine, draft invoices or schedule them to send when projects are set to close. The sooner you invoice, the sooner you can get paid.
One of the biggest concerns for freelancers is getting insurance. The good news? Insurance is available and comes in all shapes and sizes. For those freelancers who currently have insurance, you are most likely eligible to enroll in new insurance during open enrollment. However, special circumstances (like losing your health insurance unexpectedly), can make you eligible to enroll off-cycle in a new plan or your partner’s plan (if that’s an option).
Check with your state’s marketplace, or automated guides like Healthsherpa to understand your options and eligibility.
This is a quick solve for easy accounting. By setting up a separate checking and savings account for your business, you have one place to track your income and expenses, as well as set cash aside for tax and time off.
For most, the idea of incorporation is enough to overwhelm. Here, we translate the legalese so you can make the decision that suits you best.
Option 1: Sole proprietorship
This is the simplest option to get started with because there are no formal steps required. In fact, a sole proprietorship means there is no distinction between the business and you, the owner. Instead of an EIN (tax id), you use your social security number.
Option 2: LLC
This is the most common option for freelancers. While it has the same tax implications as a sole proprietorship, it is a proper corporate entity, which protects you personally from business liability and risk.
Option 3: C- or S-Corporation
This is a less common choice for a freelancer because incorporation and the administration of managing the corporation is more labor intensive.
Best for: a career freelancer who can support the administrative costs of managing a c/s-corporation and can take advantage of tax benefits.
Key benefit: taxed on your corporate salary, not on dividends that the company can pay out
Key drawback: requires an investment of time and money to incorporate, obtain a registered agent, pay annual fees and taxes. Note: these costs can be deducted as a cost of doing business.
Whether you pick one or all of these items to knock off the to-do list, freelance on your own terms sooner than you think. Have questions about the above? Create an account to speak with one of our advocates.
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