The Basics of Starting a Freelance Business

If you’ve made the decision to go freelance with your career, then you have a long, yet rewarding journey ahead of you. There is a lot of potential as a freelancer to land big clients and charge high prices for your work. But if you don’t get things set up the right way from the beginning, you risk facing some big challenges down the road. Here are some of the things you need to do before you open for business.

Have a Plan

Writing out a complete twenty page business plan may not be a requirement for the average freelancing gig, but that doesn’t mean you should go in blindly. Writing out your ideas, your money situation, the services you’ll offer, the marketing you’ll do, and more will help you set up a solid foundation to build a business from. When I first started my freelance web design business, I decided to write out a full seven page plan, but that isn’t always necessary. As long as your operation is just you, do whatever it is you need to stay on track.

File the Business Legally

This is one of the most important steps of starting a business, and yet people will often times overlook it. That mistake could end up costing you your business, so make sure you do this right away. I recommend that you set up your business as an LLC (Limited Liability Company), that way if someone sues the business for any reason they can’t come after your personal assets, only what the business owns. This process is going to be specific to your state, but it is typically as easy as printing out a form, signing it, and mailing the form and a check to your state capitol. You can have a lawyer do this for you, but they will charge you quite a bit for such a simple process. Do some poking around on the business section of your state’s website.

Also, you’re going to want to check into the requirements for a business license in your city. You may need to file for one of those as well depending on where you live. Do some research about this on your city’s website, it is well worth the time.

Once the business is legally filed, you’re going to want to get an Employer Identification Number (EIN). Even if you don’t have any employees, this is still critical to allow you to complete the next step. Obtaining an EIN is free, and can be done on this page of the IRS website.

Set Up a Separate Business Checking Account

Even though your freelancing business is likely going to be just you, your still going to want to separate your personal and business finances. One reason is that in the event of a lawsuit, as mentioned above, you will be able to more easily show what exactly is yours and what is the businesses. Also, it will allow you to more easily track your businesses finances, as well as your own personal finances.

To do this, simply go to your bank and open a business checking account for the business you legally created above. You’ll have to give them your EIN and prove that the business is a legal entity, but if you completed the above procedures, then this step will be a breeze.

Set Up a Portfolio and Resume

Your portfolio and your resume are how you are going to show potential clients the work that you are capable of doing. No matter what kind of service you want to offer, I recommend that you set this up online. Using WordPress, you can easily get themes that are built to be personal portfolios, and they’ll help make your work look great. Whether it’s writing, programming, design, or anything else, you need to have a way to show it off to potential clients, and a website is the best way to do that.

Also make sure you have a solid resume built up. It should have your educational experience and of course your work history. Make sure you have some hard copies ready, and consider putting it online with your portfolio website.

 So, do you have a freelance business? If so, how did you get started? Or, have you been thinking about starting one? If so, what is holding you back?

Guest Post Author Bio: James Petzke is a college student, freelance web designer, and the writer of This Is Common Cents, an online personal finance magazine that helps you avoid the rat race of the corporate world, beat your consumerist side, and live the dream.


Comments

The Basics of Starting a Freelance Business — 14 Comments

  1. Good points. My wife and I run our own business and do all of these I believe. While all are key, I think going into it with a plan is essential. It can be a great way of giving you direction while at the same time holding you accountable.

  2. My husband started out as a freelance graphic and web designer and now it’s his business. Owning your own business is great, but make sure it’s what you want to do for a while. It takes a few years to see some profit then build up the business. Recently, my husband has been getting tired of doing the same thing for so long (over 12 years). But thankfully since he knows how to work for himself, he’s thinking of his next freelancing career move. It’s not so scary once you’ve done it.

  3. Both my wife and I have own own companies and these are the things we have done. I have taken it a step further and for tax reasons I have an LLC but am taxed as a S-Corp.

    • Yeah being taxed as an S-Corp makes a lot of sense if you are making quite a bit of money. For smaller operations it’s not needed, but if you have high revenue it really helps.

  4. Perfect set of tips for anyone starting out in business!

    Setting up a LLC in today’s climate is essential. I’d also add finding a good accountant to the list. They become worth their weight (which is usually considerable… sorry accountants) in gold.

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