How to Start a Freelance Business

Freelancing is big business. In 2019, as many as 2.1 million freelancers were working in the UK alone .

There are many reasons why you might want to go freelance. It might be that you're tired of working for someone else and you'd love to be your own boss. You might be dreaming about working from home after years of commuting. Or you may not have a choice after recently losing your job.

You'll find very few creative freelancers who regret their decision to go it alone; in fact, it's usually the exact opposite. That said, becoming a freelancer can be a scary prospect for anyone used to having an employer take care of you. Wondering how to start a freelance business? Keep reading to find out what skills you need, important considerations to keep in mind, and how to legally establish your business.

What Is a Freelance Business?

A freelance business is one that’s started and run by an individual who works for themselves — generally through independent contract work. Freelancers are responsible for handling aspects of their businesses that typical employees would not, including setting their hours, determining pricing, pursuing contract work and paying business taxes.

Starting a freelance business is an exciting prospect — perks like setting your own hours and pursuing your passion are certainly attractive — but a lot of effort, strategy and planning goes into earning those benefits.

What to Consider before Starting a Freelance Business

Though freelancing might sound like an easy way to become your own boss, as with setting up most other types of businesses, there are risks involved. Work is not guaranteed and you could go months without any income. Before you give up your day job — if you have that luxury — you need to ask not only if a freelancing career is right for you but also if you are right for freelancing. Here are some areas you should consider before taking the plunge and starting your freelance business:

Do you have the right skills?

Industries are evolving all the time, so it is worth checking that your current skill set matches the skills needed by companies looking to hire freelancers. You should also check out your future competitors and make sure you can match the services they are offering.

Do you have the personality?

Freelancing in a competitive world means clients are judging you alone now, so you need to develop a tough skin and be confident at selling yourself. A freelance career demands that you be organised, resilient, flexible and good with money.

What are your financial commitments?

While lots of people choose to go freelance for a better work-life balance, you have to look at how your current situation will be affected. Perhaps you have a big mortgage to pay or are looking to buy a house. Mortgage lenders like stability, and you could struggle to get a loan with a fluctuating freelancer income. As a freelancer, you are also likely to experience dips in work, where there are periods of less work and less money. Do you have a savings safety net to help you get through these times?

How to Create Your Business Plan

If you are still certain that setting up your own freelance business is the right move for you, you next need to come up with a business plan. This will help you prepare your business for branding, getting clients and mapping out your expected costs and income. Your business plan should cover the following areas:

• What is the situation of the market and are there freelance jobs out there for you?
• What is your personal brand, who are your competitors and what sets you apart?
• What is your target market and how do you plan to reach them?
• What will be your running and growth costs?
• How much will you charge? Will it be an hourly rate, a day rate or per project?
• How will you measure success and set targets?

How to Start a Freelance Business?

When you have your business plan and are ready to start your freelance business, it’s not just your boss you need to inform but the taxman too. But first, you need to choose what type of business you plan on becoming.

There are a number of options, but for individuals wanting to start on their own, the most popular choices are a sole trader or forming a limited company . A sole trader is personally responsible for all their business dealings, including debts, bills and lawsuits. This is the biggest downside because it means that if your business gets in financial trouble, your personal possessions will be up for grabs. The plus side is that there’s a relatively small administrative burden compared with the alternative, registering a limited company in the UK.

By creating a limited company, you create a separate legal entity and can, therefore, shift the legal and financial burden from yourself to your company. The downside of this is that there’s a lot more paperwork involved. You have to meticulously carry out your responsibilities as a director, and there are hefty penalties if you neglect your duties.

At Mint Formations , we know that deciding and completing your company formation is crucial to your business success. We can help you get your business set up and registered so that you can concentrate on all the other aspects of your freelance business. It is important that you take your time over this decision as it has to be right for you and the service you are offering, but bear in mind that some larger organisations may only be able to work with limited companies.

Are you ready to start a freelance business? We help you form your limited company or self-employed business and take away all the stress that comes with starting a business . All Mint Formations customers receive 30% off our logo and website design services so that you can get started on the right foot.

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