You’ve decided that you want to stray away from the traditional nine-to-five route and strike out on your own so you can work from home as a freelancer. You’re eager to hit the ground running and begin scrounging up work and raking in some cash—all while in your pajamas, no less.
But, not so fast.
Everybody looks forward to those billable hours, but 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.
So, what should you think about before working freelance? The answer is that it depends on a variety of factors but to get you started.
Here are five basic things to consider as you plan your freelancing career:
1. Figure Out Your Accounting System
I know—unless you’re a freelance accountant, numbers, spreadsheets, and invoices aren’t the stuff that your freelance dreams are made of. But, love it or hate it, it’s a necessary part of the job.
Ideally, you’ll have your accounting system setup 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 some 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 entirely? What sorts of payments do you accept? How often do you invoice and in what timeframe do you accept payment?
Every freelancer groans at the mention of those sorts of questions. But, having these things thought through before you ever enter into a client engagement will save you tons of headaches and time in the long run.
2. Enlist a Team
“What?” you’re thinking now, “I plan to work totally solo. I don’t need a team!”
That might be true. But, 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 (believe me, taxes as a freelancer get complicated—so, you’ll want an experienced accountant in your corner!). Or, maybe it’s a lawyer to help you draw up your initial contracts, or a web developer to get your freelance 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; this could include, without limitation, General Liability insurance, Workers Compensation Errors & Omissions, Director’s and Officer’s Liability and Employer’s Practice Liability insurance.
Nobody gets everything done totally alone—you’re bound to need a little help every now and then. And, it’s far better to establish those relationships right at the beginning, so you have them when you need them.
You may only work with those people once every year (or, maybe even less). But, they’re still an essential part of keeping your freelance business up and running.
3. Establish Your Workspace
Getting to work from home is one perk that many freelancers look forward to. However, that doesn’t mean it’s the smartest move by default.
Instead, it’s worth analyzing where you think you’ll be more productive. Will you struggle to focus on your work at home—when distractions like the television or those piles of laundry are calling to you? Or, would you get more done in an area located away from your house?
There’s also the financial aspects to consider. Office or co-working spaces involve a fee (which is, fortunately, tax deductible in most cases), whereas working in a home office is free—and also provides an opportunity to write off a portion of your living costs for business.
If you’re feeling really uncertain, it’s worth having a conversation with your accountant to see what might make the most sense for your own business and situation.
4. Handle the Fundamentals
Becoming a freelancer isn’t quite as simple as slapping a new title on your LinkedIn profile and getting started. If you want to do it right, there are a lot of nuts and bolts things to take care of.
From establishing a business entity (such as an LLC, for example) and setting up a website to ordering business cards and opening up a business checking out, there are plenty of essential 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. In fact, the most intelligent strategy is to take care of these things before you take the leap into freelancing (and are still employed full-time!) at all so that you can get them handled while you still have the benefit of a regular paycheck coming in.
5. Set Up a Schedule
The flexibility that comes along with the freelance lifestyle is great. But, it’s important to remember that it’s still a job—you’ll still need to get work done in order to make a living.
Before you nosedive into the tempting siren song of freelance freedom, it’s smart to sit down and set out a schedule for yourself. How many hours do you aim to work each week? Is there a specific time when you want to get started and shut down? Will you work on weekends?
It seems like an unnecessary step—not to mention a bit of a buzzkill when you’re so looking forward to increased flexibility. However, being proactive with your work schedule will help to keep you accountable and ensure that you treat your new career with the level of dedication it deserves.
When you’re excited to dive headfirst into life as a freelancer, it can be tough to take a step back and think of the important logistical elements you should take care of first.
This article is intended to provide some general guidance about freelancing, but it may not cover all the items that fall within your particular situation. Use it as a starting point or checklist for the things to think about to get your newfound career started on the right foot.
Written by Kat Boogaard.
*IMPORTANT: The content of this article is not intended to be a substitute for legal, tax, accounting, or other professional advice. The information provided is intended as general guidance and not an exhaustive list of all the things to consider when planning to become a freelancer, and accordingly, the content may or may not be correct, complete or current at the time of reading, and may not address all the particulars of your situation.