12. Aug 2019 |

Quick guide: How to Start Your Freelancing Business

If you would like to start a freelancing business this guide could help you. Keep reading!

How to Start your Freelancing Business
Freelance bookkeeping is essential. You need to make sure that all of your accounts are in good order. (© AdobeStock)

What is a Freelancer?

A freelancer is someone who is self-employed or a sole trader, and they do not have one particular employer and they have no commitments to an employer on a long-term basis.

How to set up your freelance business

When you want to become a freelancer, you’ll need to think about the following issues:

1. Taxes

When it comes to setting up your freelance business you will need to register with HMRC. You will need to do this as soon as your business is running. It doesn’t matter what type of business you run or how it’s set up you need to notify HMRC. The good news is you can do this online here.

2. Insurance

What is freelancer insurance? it’s usually public liability insurance and it makes sense to have it. If you offer a client a professional service, you will undoubtedly be taking some risks. The risks you’re taking on depends on the type of business that you’re running. For example, a gardener will have a much riskier job than a writer.

If you make a mistake that ultimately costs one of your clients some money, they may seek compensation. If you do not meet the standards that the client has you may face negligence charges. For example, you may have to deal with trademarks or copyrights or even slander if you’re a creative freelancer.

Lawsuits can be very expensive even if you are not at fault. If you have liability insurance the policy could help to cover some of the court costs.

Insurance may also be necessary if you have expensive equipment. Insurance could cover the cost of theft of damage. If you wish to rent office space. You may have a lease that requires you to have insurance and covers theft, damage or injury to property or clients.

3. Set your pricing

You will need to determine how much you wish to charge. Start by outlining some of the services that you intend to provide. Work out the cost for each of those services. Will you have to change the prices at any point so you can work on more detailed projects? Will a client have to approve each stage of the project?

Make a list of every service you plan to provide and work out how much you think they are worth. Try not to charge too much so that potential clients are put off but try to avoid charging too little, so you’re left out of pocket.

A good way to determine how much you should charge is by finding out how much those with a similar skill set and experience charge.

4. Contracts

A freelance contract can be quite basic. You will need to ensure you work out the time frame and the work involved.

Start off with some of the basics and ensure your contract outlines what you need to do and the time frame. Be as specific as you can so you know exactly what you need to do.  Ensure you have set hours and set days written down. You may also want to make a note of how often you will be in touch with a client.

If you’re a copywriter, for example, you may state in your contract that you will do no more than 3 edits.

You will also need to set out the project’s requirements and that you have all the information and resources you need to complete the project. Adding this section to your contract means that if the client does not blame you if the work is not what they expected.

5. Pay

Determine how much you’re likely to be paid based on an hourly or a day rate. Mention how much you think the whole project may cost. Don’t forget to mention that if the client delays anything or hinders the project somehow that it could cause the cost to rise.

6. When you get paid

Ensure that both you and the client are aware when you expect to be paid. Some freelancers ask to be paid within 7 days of the invoice being sent. Other freelancers will give their clients up to 30 days to make a payment.

If it looks like a project is going to last a long time, then you may want to negotiate an upfront fee. 50% of the job is a good figure to work with, however, you may want to spread the cost instead. The client could pay 20% of the amount each month for the length of the project.

You need to make sure that you have some money to hand. It would be a shame if you had no money because you did not specify when you would like to be paid.

Don’t forget to include any late payment fees as it can encourage the client to pay much quicker. Another trick is to specify early payment discounts on your invoices to improve your cash flow.

7. Finding clients

Finding clients may not always be easy but you need to search for them. Clients will not just turn up, unfortunately, you will have to look for them. Research some organisations that fit your criteria. Begin by sending emails and pitches and create a relationship with potential clients.

Let the potential client know how your product or service will make their life easier. Don’t be afraid to approach those companies that you would love to work for. They may not hire you, but you will never know until you try.

There are a few freelancing websites out there that can help you to find work. Just make sure you read the job description thoroughly and you know how much you’re likely to be paid.

8. Bookkeeping

Freelance bookkeeping is essential. You need to make sure that all of your accounts are in good order. Not only will bookkeeping help you run a more successful business, but you also need to make sure you adhere to tax compliance.

There are penalties for non-compliance, and you could face having to pay more tax or you may even face prison for tax avoidance. Make sure that you pay for your taxes no matter how much you despise them. You need to stay on the right side of the law.

Your books will need to have an accurate record of the money coming in and out of your business. Everything needs to be traceable and correct each time you fill in your books. Not only will it ensure you stay on the right side of the law but it can also show you how well your freelance business is doing. Using an accounting software for freelancers can help you on this task.

9. Invoicing

You need to make sure that you get paid for your work. Freelance invoice softwares exist and they can be a useful tool to help you get paid. It doesn’t matter what software or tool you decide to use you need the invoice to look professional and easy to read.

Make it as easy as possible for a client to pay you. Some softwares let you pay from within the invoice so think about opting for those.

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