What to know before you freelance

You’ve decided to strike out on your own as a freelancer. But not so fast.

There’s quite a bit of groundwork that needs to happen before you ever see so much as a dime roll in from your first client. And it’s better to get that foundation laid sooner rather than later.

Here are four basic things to consider as you plan your freelancing career: 1

Figure out your accounting system

Ideally, you’ll have your accounting system set up before you accept a single paid project. Starting right from the get-go makes it that much easier to track your income and expenses, which will be important data to have when it comes time to pay your taxes each quarter.

It’s also worth taking some time to think through other financial basics of your newfound freelance life. What does your payment structure look like — will you bill per project, per hour or by some other factor? What sorts of payments do you accept? How often do you invoice and in what timeframe do you accept payment?

2

Enlist a team

This doesn’t deal with a team in a traditional sense. Instead, think of it as a roster of professionals who can help you with the aspects of your freelance business that you might not be so skilled with.

Perhaps you plan to work with an accountant who can take the stress out of tax time. Or, maybe it’s a lawyer to help you draw up your initial contracts, or a web developer to get your website up and running. You may also need to show that you have the requisite insurance in place depending on what type of services you provide and/or whether you employ other people.

You may only work with those people once every year. But, they’re still an essential part of keeping your freelance business up and running.

3

Establish your workspace

It’s worth analyzing where you think you’ll be more productive.

Will you struggle to focus on your work at home? Would you get more done in an area located away from your house? How safe is that option during a pandemic?

There’s also the financial aspect to consider.

Office or co-working spaces involve a fee (which is tax deductible in most cases), whereas working in a home office is free — and provides an opportunity to write off a portion of your living costs for business.

If you’re feeling uncertain, it’s worth having a conversation with your accountant.

4

Handle the fundamentals

Becoming a freelancer isn’t quite as simple as slapping a new title on your Linkedin profile and getting started. From establishing a business entity (such as an LLC) to ordering business cards and opening up a business checking account, there are plenty of fundamentals that go into getting your business off the ground.

The bad news? None of them involve billable time — meaning you’ll be sinking hours into tasks that don’t directly earn you a paycheck.

This is why it’s smarter to do these things early on, before you have a schedule packed with client work.