Freelancing 101: Your Complete Guide to Starting Successful Freelance Work

Woman sitting in a kitchen using a laptop

The traditional workforce is changing. Instead of permanent 9-to-5 jobs, many workers are opting for jobs that afford them more flexibility, greater independence, and significant financial potential. A study from ManpowerGroup, Gig Responsibly — The Rise of NextGen Work, showed that 87% of workers are open to the idea of NextGen Work. In other words, more workers are looking for job opportunities offering telecommuting, remote work, or freelancing.This is apparent in the rise of the gig economy, a time when people look to supplement their income by participating in side gigs, or work with passive income. Businesses like Uber and Airbnb lead the charge by allowing people to work on their own terms. These types of businesses have fueled independent workers, including women, seniors, and disabled individuals, who may find themselves in an unequal workforce environment. Working from home can drive better results. A study by Stanford University found that people who work remotely are more productive than those in a more traditional setting. It also found that those who work remotely are less likely to leave a company, resulting in a 50% decrease in attrition. According to the Freelancer’s Union, 57 million Americans freelanced in 2016, representing 35% of the workforce. However, to maintain the freedoms that a freelance job offers, you’ll need to know the scope of the work thoroughly: how to find jobs, clients, projects, and ultimately, how to start a business if you want to set yourself up for success.

What Is a Freelancer?

Also known as an “independent contractor,” a freelancer is someone who is self-employed and is not necessarily tied with a single company. Some freelancers might use an agency to connect them with work opportunities, however, most freelancers use networking and their contacts to generate jobs. These types of workers are often working on several projects at once, and take care of the accounting, taxes, and other aspects of their business. Generally, freelance work is short-term and is paid by the job or by the hour (though some may use a retainer if the client frequently uses their services). Though freelancers are similar to sole traders, there are major differences between the two. A sole trader, also known as a sole proprietorship, refers to a specific legal business structure while a freelancer does not inherently refer to any legal status. A sole proprietorship is the most common business structure for freelancers, however, many freelancers choose to register as a limited liability company (LLC) or a partnership instead.

What Is Freelance Work?

The digital economy has made freelancing a more viable choice for workers. Video chat and collaboration applications, like Slack, allow workers to be present without being physically in the office. Common freelance jobs include:

Writing/blogging;
Web development;
Social media management;
Graphic design;
Virtual assistant;
Accounting/bookkeeping;
And computer programming.

Pros and Cons of Freelancing

Freelancing is not a cut and dry job. There are many variables that make it a considerable choice for some people while being deal breakers for others. Below are the common pros and cons of a freelancing career. Pros:

Flexible work schedule;
Acquisition of new skills;
Quality of work;
The ability to work anywhere;
Tax deductions;
Ability to be your own boss;
Selectivity with clients;
No commuting;
No office politics.

Cons:

Inconsistent income;
No job security;
No benefits;
Increased financial workload;
Difficulty distinguishing work and personal time;
No paid time off;
And juggling multiple client issues at once.

How to Become a Freelancer

Choosing a freelancing career may sound idyllic, but there are some steps to take before the money starts rolling in. People have many questions before they start their freelancing career:

How do you make money?
Where do you find jobs?
What about insurance and benefits?

These are common questions that can be easily answered if you have the right tools and resources. While it may seem overwhelming, choosing a freelance career is very achievable, acknowledging that this career comes with many responsibilities.

Define Your Goals and Niche

Like any venture, it’s important to have goals. Without goals, you can easily lose track of your business plan or become derailed. Gaining a clear understanding of your long-term goals will help you set smaller short-term goals to help you along the way. Some questions to ask are:

Are you looking to freelance full-time?
Are you freelancing to earn extra income?
Is freelancing just a stepping stone to a bigger goal?

After determining your goals, you’ll want to find a niche that you can be profitable and happy in. A niche is a narrow area of expertise. For example, instead of competing in a crowded market of writers, you could narrow the field to technical writing. This reduces the amount of competition while identifying specific skills to improve on. Instead of being a good writer in a general field, you can be a highly-sought-after technical writer.

Identify Your Clients

Your clients can make or break your business. While it can be tough to turn away business in the early days of your freelancing, it’s important to narrow down the type of clients you work well with. This allows for better quality of work and greater results. When you are looking for new clients, ask yourself these questions:

Which businesses will find my services useful?
Which businesses can afford my rates?
Can I learn anything about their demographics to attract similar clients?

Answering these questions will help you set up a client profile, which will make looking for new clients easy. By narrowing your focus on target clients, you can easily build your reputation in your niche. These clients can start to advocate for your business, which will go a long way in the business world.

Determine Your Pay Rate

Identifying your clients will help determine your pay rate. Some freelancers may try to compete with other businesses by cutting their prices. While this could be a good short-term strategy to gain clients, it is not sustainable. Instead, your pay rate should be determined by the value of your work and your client’s budget. For example, if you are a writer that specializes in long-form blog posts, you can set your pay rate above someone who writes short articles. If you have a bigger client, such as a marketing agency, they would be able to pay a higher rate than a small business startup.

Market Yourself

Marketing yourself can be one of the biggest obstacles a freelancer faces. No matter how skilled you are, a freelancer must be able to communicate with potential clients in a convincing way. When you start creating your proposal, make sure to:

Open with an elevator pitch. This will show clients who you are, what you do, and your value within the first few seconds, which will help save both their time and your time.
Sell your strengths. These could be a percentage of your successes, or reviews from previous clients.
Answer all of the client’s questions. It is likely they will have some follow-up questions, so be ready with answers.
Use case studies. If you are going to show how you’ve helped previous clients, create a case study that shows where they started, what problem they needed fixed, and how you helped them. Case studies are easily digestible for clients.
Use an appealing layout. It takes less than a second to make a first impression about a person, and the same goes for a presentation. Make sure the layout is not too busy, easy to read, and aesthetically pleasing.

Build a Portfolio

Speaking of first impressions, your portfolio may be the first contact a client has with you. It’s important to ensure that it is up to date, shows your strengths, and gives the client a complete understanding of your business. Many people rely on website portfolios, since they are easy to share and update. To be truly effective, your portfolio should:

Communicate and display samples of your work;
List your contact information;
Show off your personality;
Highlight skills, education, and accomplishments;
Display testimonials from past clients;
Be updated regularly.

If you need inspiration, there are many sites that show different portfolios for different businesses.

Starting a Business as a Freelancer

If you are operating as a freelancer, sole trader, or are self-employed, you will most likely need to start your own business. You are considered self-employed if:

You take responsibility for the business’s success or failure;
You have several customers at the same time;
You decide how, when, and where to work;
You control the business’s finances;
You provide all the main equipment;
You are responsible for finishing any work on your own time;
You charge a fixed price for your product or services.

After determining if you are self-employed, you must then choose a business structure, register your business, and prepare for tax season.

Choose a Business Structure

Once you have determined whether you are self-employed, you’ll want to look at which business structure is right for you. Self-employed workers typically register as an LLC or a sole proprietorship. A sole proprietorship is the simplest business to form. It is run by one individual with no distinction between the business and the owner. This means as the owner, you are entitled to all profits and responsibilities for all losses. You won’t need to take any formal action to form a sole proprietorship, however, you will need the proper licenses and permits. LLCs, on the other hand, take a little more time. The average time to form an LLC is three to five weeks, though some states may have different laws which could extend the process. Start-up costs also differ. The average starting cost of an LLC is anywhere from $50-$500 — it all depends on where your business is formed.

Register Your Business

Normally small businesses do not have to register with federal agencies unless they need trademark protection. LLCs must register with the state the business is conducted in. You are technically conducting business in a state if:

Your business is physically in the state;
You have in-person meetings in the state;
Your company’s revenue comes from the state;
Any employees work in the state.

If you are registering an LLC, make sure to register it under the business name. Naming your LLC can be tricky — it’s important to make it unique and descriptive. Most states require small businesses to register with the Secretary of State, a Business Bureau, or a Business Agency. LLC owners must hire a registered agent who receives all the paperwork and legal documents on behalf of your company. Generally, an LLC owner will need:

The name and address of the business;
How long the business plans to exist;
The name and address of the registered agent;
And the purpose of your business.

Since this process can seem overwhelming to many business owners, some opt to hire a business formation service that supports new business owners and helps them start their business.

Understand Freelance Tax Implications

Tax season can be a tough time for freelancers. Since you are considered self-employed by the Internal Revenue Service (IRS), you must file your taxes as a business owner. That’s why it’s important to save every invoice and receipt to track expenses and income. Typically, freelancers should save 25-30% of every freelance check they receive. This amount will cover the self-employment tax and the income tax you’ll have to pay. Self-employment tax is about 15% of your income, and helps supplement the benefits and Social Security ordinary employees pay. It also includes the employer’s share of the taxes. Luckily, as a freelancer, you’re entitled to more business expenses than an ordinary employee. Common deductions for a freelancer include:

Business-related food;
Travel;
Education and certifications;
Lodging;
Office expenses;
Home office;
Utilities;
And the required equipment or materials.

Finding Freelance Work

Finding work can be the hardest part of freelancing. During the beginning of your freelance career, you may not have many clients to financially support yourself. When these situations occur, you can turn to the internet. You’ll be able to find work while continuing to build your portfolio.

Job Boards and Websites

The internet has made finding job posts very easy. However, it’s important to check in frequently to see if they have been updated. Nowadays there are many online job sources, such as: Name: UpWork Pay: Choose between hourly or fixed price Freelance Jobs: Mobile, web, and software development, design, writing, sales and marketing, engineering and architecture, customer service, admin support, and data science and analytics Name: Guru Pay: Choose between fixed price, hourly, task-based, and recurring payment Freelance Jobs: Programming and development, writing and translation, design and art, administrative and secretarial, sales and marketing, business and finance, engineering and architecture, and legal Name: Freelancer Pay: Choose between fixed price or hourly Freelance Jobs: Website development, graphic design, logo design, marketing, writing, mobile app development, internet marketing, search engine optimization, 3D modeling, writing, software development, accounting, finance, legal, manufacturing Name: FlexJobs Pay: Depends on employer Freelance Jobs: Account management, accounting, finance, administrative, marketing, art, communications, data entry, education, project management, insurance, news, real estate Name: Fiverr Pay: Fixed prices Freelance Jobs: Graphic design, digital marketing, writing, video, animation, music, audio, programming and tech, business, lifestyle Name: Toptal Pay: Hourly or fixed price Freelance Jobs: Development, design, finance, project management, product managers Name: Simply Hired Pay: Salary Freelance Jobs: Warehouse worker, retail, sales, medical assistant, call center representative, receptionist, accounting, nursing, human resources, administrative, marketing Name: PeoplePerHour Pay: Hourly Freelance Jobs: Technology, programming, writing and translation, design, digital marketing, video, photography, business, music, marketing, sales, social media Name: Aquent Pay: Depends on the job Freelance Jobs: Marketing, creative services, project management, user interface/experience design, content and writing, development Name: TaskRabbit Pay: Depends on the job Freelance Jobs: Mounting, installation, moving and packing, furniture assembly, cleaning, general handyman, heavy lifting

Consider Non-Profit Organizations

Many freelancers lean towards non-profit organizations when beginning their careers. These types of companies are more willing to accept work from an entry-level freelancer because their budgets are usually smaller than other companies. This way, the nonprofit will get the resources they need while you can use the work to expand your portfolio to show future clients.

Gathering Clients

Attracting clients to work with will be the backbone of a freelancers business and source of money. You will need to market yourself and network to find these clients. Basic networking tactics include:

Prioritizing your contacts;
Sharing content that is valuable to your network;
Nurturing professional relationships;
Updating your network on your job opportunities.

Social media is a quick way to connect with people while easily sharing your product or services. You can also meet with people at networking events or get recommendations from your previous clients. Tools like Eventbrite and Meetup can provide local networking event details using your location.

Working With Clients as a Freelancer

Being a freelance worker means dealing with clients on a daily basis. You may come across great clients that you’ll want to work with every day, but you’ll also have to work with clients you don’t see eye-to-eye with. To keep a steady flow of work, it’s important to know how to work with all kinds of clients so you can manage workflow and get paid on time.

Client and Project Management

Once the various client projects start coming in, you’ll need to keep track of the different deadlines to deliver the work and keep the clients happy. Luckily, there’s a lot of project management software available, such as:

Communication

Constant communication with clients will help both parties determine the nature and the scope of work that needs to be done. You’ll be able to set up expectations, learn their objectives, and avoid misunderstandings. There are many free communication tools including:

You can also look at customer relationship management (CRM) tools that will help you keep in contact with your clients. CRMs provide all the client’s details, like email, employer, company position, and more. Common options include:

Getting Paid

Every freelancer has toiled with how much they should charge. There are many variables to consider: where you live, what services you provide, and the quality of your work. Negotiating prices is a skill every freelancer should have because odds are they are going to encounter a client that doesn’t want to pay full price for their product or services. When that happens, keep these tactics in mind:

Choose between hourly pay or pay by project. Both have their advantages, but you’ll want to take into account the extent of the project, the timeline, and the client. Always remember to set expectations with whatever you choose.
Don’t settle or give in too easily. It’s ok to refuse the first number the client offers. Though it may seem uncomfortable, stand your ground and try to come up with a compromise.
Get your rate in writing. Creating an invoice is crucial to getting paid. Sadly, there are people out there who like to take advantage of inexperienced workers. Create an invoice template so all you have to do is write in the company name.
Ask for advice. Your network and the freelance communities are more than willing to help you figure out your pay and other negotiating tactics.

Freelancing Resources

Many freelancers use various resources when starting their own business. Obtaining new clients can be one of the hardest aspects of a freelance career. In fact, a third of freelancers surveyed stated securing enough work is a freelancer’s biggest struggle. These resources have helped many self-employed workers prepare for issues and obstacles that might arise when starting a business.