Freelancing is on the uptick. Although freelancers have been around in some form since at least the middle ages (the term comes from “free lance,” which was used to describe mercenary soldiers), the past few years have seen a rise in its popularity.
Nowadays, it seems like almost everyone is getting involved with the gig economy in one way or another, whether their aspirations are to leave the day job behind and become their own boss as a full-time freelancer or whether they just want to do some freelance work part time as a side gig.
If you’re one of the millions of people who have started considering moving into the freelance world, we’ve got you covered. In this guide, we’re going to lay out four steps that you can follow to kick off your freelance career.
But first, let’s make sure we have a good understanding of what freelancing is.
What Is Freelancing?
The simplest explanation of freelancing is that it’s a type of work arrangement in which the freelancer provides services for a client or customer without forming an employer-employee relationship with them. That means that the freelancer doesn’t have a boss, they make their own schedule, they choose who they work for, and they decide how they get the work done.
If you want to learn more about what it means to be a freelancer, check out our in-depth article covering the topic here.
Step 1: Set Your Goals and Pick Your Skills
Freelancing is a broad term. What it means to one person can end up being very different from what it means to someone else.
For example, if your friend tells you that they’re freelancing, they could mean anything from working as a full-time freelancer to doing a few jobs as a side gig to being insecure about their unemployment status and using the term as a convenient coverup.
Here, we’re going to focus on the first two (there’s not much to learn about the third, anyway). Whether you want to make freelancing your primary source of income or you just want to do some freelance writing in the evenings or on the weekends, these tips will apply to both.
In fact, you don’t necessarily even need to decide how big a part of your life you want freelancing to become when you first start. There’s no problem with starting out doing freelance work alongside your current job and deciding later on that you want to go full-time. For many people, this is the best solution as it allows you to slowly transition instead of jumping into the deep end right off the bat.
That said, if you do want to dive head first into working as a full-time freelancer, that’s fine too — some people work best under pressure. Just make sure that you’ll have a way to cover your upcoming bills so that you don’t get yourself into a really tricky financial position. Sometimes freelance income can start coming in quickly, but usually it takes a while to build up, so plan for at least 6 months of little to no income to stay on the safe side.
Scheduling decisions aside, what you do need to decide is what type of freelancing you want to do. Saying you want to be a freelancer full stop is about as vague as saying you want to have a full-time job. What exactly do you want to do as a freelancer?
If you’re not quite sure yet, here are the top 10 highest paying freelance areas and their average national annual incomes, according to Indeed:
- Software consultant: $92,219
- Financial consultant: $83,487
- Web developer: $78,367
- Videographer: $77,008
- Human resources advisor: $75,576
- Business consultant: $71,578
- Copywriter: $62,080
- Social media specialist: $60,259
- Writer: $60,068
- Editor: $57,704
Here’s a word of advice: do not base your decision on which field pays more on average. Instead, evaluate what your skills are. If you’re a great writer but struggle with coding, you will likely make a lot more as a freelance writer than you will as a web developer, even though the average freelance web developer income is significantly higher.
Compared to salaried positions, successful freelancing is a lot more skills based. In a lot of these fields, particularly the creative ones, no one cares what your past experience is or where you went to college — or if you went at all. All they care about is that you are reliable and do good work.
Essentially, what people care about is your skill. If you aren’t a skilled web developer, you will struggle to compete with the freelancers out there who are truly talented, and you’d be better off financially pursuing something you have some degree of natural aptitude for. Follow that, and the money will come.
Step 2: Get Something to Show For Yourself
So, you decided what field you want to freelance in, but what’s next? In most cases, before you get a client, you’ll need to have something to show for yourself when you approach leads.
Think about it like this: as a freelancer, you’re trying to find customers, not a job. That requires a shift in perspective. Put yourself in your customers’ shoes — when you buy a product or service, what do you look for? If you’re buying a product, chances are you’ll want to see a sample first and foremost. If you’re buying a service, you’ll place a greater importance on good reviews.
Now, imagine a business tries to sell you their product by telling you that they have years of experience and are very passionate, but they don’t have any sample to show you. Chances are, you wouldn’t buy it. That’s essentially what it’s like trying to sell yourself as a freelancer if you don’t have anything to show for yourself — it just doesn’t work.
But how do you get past that if you haven’t worked for anyone yet? Simple: get a website or a profile, do some work for yourself, and put it on there.
What this means more precisely will depend on what field you’re going into. In the creative fields, like writing, videography, or graphic design, that typically means making samples similar to the types of jobs you’ll be applying for that demonstrate your skills. For example, if you want to be a freelance writer, start a blog and make some posts. If you want to be a graphic designer, put together a portfolio of your designs that showcases your skills.
In advertising, this is called a spec ad, which is short for speculative ad — an ad you make for a famous company that isn’t actually your client. The ad will never be published, it’s just to show off your abilities. Whatever field you’re going into, follow this same concept. Just make sure that if you do use a real company in your samples that you make it very clear they aren’t actually your client.
If you’re hoping to freelance in a field that isn’t conducive to portfolio work, you’re going to have to treat it a bit differently. The best thing you can do is create a website that really sells you and your experience. Try to get some reviews from your professional network, even if they aren’t for exactly the service you’re offering. For example, if you worked as an investment banker but want to move into financial consulting, see if you can have some of your colleagues leave testimonials that speak to your skills and competence.
No matter what field you’re going into or what your goals are, you’re going to need to make it clear to your potential clients what exactly it is you do. You don’t need to be incredibly specific when you’re just starting out, but you want to make sure your prospects will understand what you can offer them.
One way to do this is to use a pain point-solution model. That means that you present yourself as the solution to a specific problem (pain point) that your prospect might have. For a financial consultant that could be something like, “I help individuals struggling with debt to pay off their credit cards.” For a writer, you might say something along the lines of, “I write engaging blog posts that drive organic traffic for startups.”
You don’t need to get too bogged down by this right away, but it’s a good thing to think about as you move ahead with your career.
Step 2: Look For Your First Client
If you look through guides to freelancing, you’ll often see a recommendation to define your target clients or choose a niche right away.
We’re going to take the opposite approach. Unless you have a really solid idea of where you fit into the market landscape, don’t box yourself in right out of the gates. If you can sit down right this moment and carve out a precise niche for yourself, for example, “I’m a graphic designer who works with vegan and eco-friendly companies,” then that’s great. Roll with that.
But if you’re like most freelancers just starting out, you’re not sure exactly where you fit into things just yet. And that’s perfectly fine — it takes time, experience, and a process of trial and error to figure out what type of clients you want to work with. Over time, you’ll develop a keen sense for which clients will be a great fit, and which clients should be avoided.
For now, just focus on testing the waters. You can niche down as you grow in your career. All you need to have set in stone right now is what service you want to offer — do you want to be a data entrist, a freelance writer, a videographer? Once you have that down, there are a few avenues you can pursue.
To start off, you should try to leverage your personal and professional networks — you might even be able to make a smooth transition from your current or previous job into freelancing for them. Besides reaching out to your networks, start looking into job boards or freelance marketplaces, like Upwork, to see what’s available.
Note: While some freelancers swear by platforms like Upwork and Fiverr and have built entire careers off them, relying on one site for all your work generally isn’t a great idea, especially considering that these marketplaces charge fees. It can be useful to start on one of these marketplaces, but you’ll likely want to move away from it over time.
At this stage, no job is too small. That doesn’t mean you should work for free, but it does mean that you need to be open to working for a bit less than you’d normally hope for (within reason) to build up a portfolio. For example, maybe your sister needs a website for her new ecommerce business, and you can build it for her and then use that as your first portfolio piece. She might not be willing to pay very much, and it could feel weird working for your family member, but if you do a good job, you can use it to get other work.
If you’re lucky, your first client will end up working with you long-term and paying you a great rate. However, it can be hard to find a client like that, especially so early on in your career. Luckily, your real goal here is just to start building up a portfolio and get a review or testimonial, so even if your first client does end up being less than ideal, you can drop them pretty soon and use the work you did for them to get better clients.
Once you have a completed job for a real, paying client, it changes things: there’s an element of social proof. Clients will be more likely to hire you knowing that someone else hired you, too. It’s a big improvement over portfolio pieces that you made for yourself.
So, here’s your goal: get a client. They don’t have to be perfect, and they don’t need to be in your ideal niche. They just need to be a paying client that will help you build a portfolio and build up a reputation — the latter part is particularly important if you plan to use freelance marketplaces, like Upwork.
Landing the Client
Now, when it comes to actually sealing the deal and getting your first gig, you’re going to need to go through a bit of a process of trial and error again (you should be seeing a trend here).
Unless they fall right into your lap, finding your first client will usually involve reaching out to people in one way or another. That could mean contacting people you’re connected to on LinkedIn, sending out cold emails, or applying for jobs on job boards.
At this stage, you’ll likely want to try out a few different strategies and see which works best for you. So, send emails, reach out to your network, and apply for gigs. Your communications don’t need to be anything special: just state the services you offer and provide links to your portfolio and website.
Ideally, you’ll want to personalize your communications a bit to build a connection. You can do this by commenting on something you particularly like about your lead’s business or by sharing a relatable tidbit from your life. For example, if you’re reaching out to a company that sells fitness equipment, and you’re a gym junkie yourself, be sure to mention that.
Over time, you’ll get a sense of what’s working, and what isn’t. As you send out emails and communications, keep tabs on which ones are getting responses, and which ones aren’t. Then, evaluate them to see if there’s something different about them. Further down the line, you can get into deeper analytics and split-testing, but for now, just try to get a general sense of what’s leading to the best results.
Step 3: Decide How You Want to Structure Your Freelancing Business
If you keep at it long enough, you’ll eventually land your first freelance job. Congrats, you’re officially a freelancer!
But there’s still work to be done. Although people don’t often think about freelancing this way, when you’re a freelancer, you’re essentially running a small business — just a very small one with only one employee. Because of that, you need to decide how you want to legally structure your business. Usually, that means deciding between an LLC, a sole proprietorship, and an S-Corp.
As a beginner freelancer, you don’t necessarily need to put too much thought into this at the start. You can begin doing freelance gigs and building up a client roster without incorporating as a legal entity. If you don’t, you’ll be considered a sole proprietorship automatically — a structure in which there is no distinction between the owner and the business. It’s perfectly fine to continue on freelancing just like this, but formally registering your business can provide liability protections and tax advantages.
The Benefits of an LLC
For the vast majority of freelancers, an LLC is the best option. The main benefit of an LLC is that you aren’t personally liable for any debts that your business incurs. For example, if your business incurs $40,000 worth of debt, which it can’t afford to pay, that debt liability won’t roll over into your personal finances — they’re kept separate. In other words, even if your business has significant debts, you’re not going to lose your house. The worst case scenario is that your business would need to file for bankruptcy, liquidate your business assets, and close up.
When it comes to taxes, LLCs are considered a pass-through entity. That means that all the income your business generates will be taxed as your own personal income. In this way, an LLC keeps your personal and business finances separate where it’s most advantageous (protecting against liabilities), but it combines them when it’s most beneficial as well (making taxes simple with pass-through taxation).
The Benefits of an S-Corp
If you’re making a high income as a freelancer, it may be worth considering creating an S-Corp. Like LLCs, S-Corps use a pass-through taxation model, but the benefit is that when you have an S-Corp, you don’t pay self-employment tax on the profits. But don’t get too excited just yet — it isn’t quite as good as it sounds.
When you run an S-Corp, you need to pay yourself a “reasonable salary,” and you need to pay FICA payroll taxes on that amount, which come out to 15.3% — the same as self-employment taxes. The key word here is reasonable — the salary you pay yourself must be considered reasonable for your geographic area and type of work or else you could get in trouble. Within those guidelines, you can choose what salary you want to pay yourself and then release the rest of your profits as distributions, which are not taxed at the 15.3% payroll or self-employment rate.
Note: S-Corps also need to pay FUTA taxes, which come out to 0.62% of each employee’s first $7,000, but we’re going to skip over them to keep things simple.
This is a bit easier to understand with an example. Let’s say you’re making $200,000 as a freelancer. If you have an LLC, the entirety of that amount is subject to a 15.3% self-employment tax, which comes out to $30,600.
If you have an S-Corp, that’s not the case. First, you would need to determine what a reasonable salary is in your area and for your line of work. For the purpose of this example, let’s assume that’s $60,000.
So, you pay yourself $60,000 via a payroll software, and then you pay 15.3% only on that amount. That comes out to $9,180. The rest of your profits you can take as distributions, which are not liable to the 15.3% rate.
In the end, you can save a significant amount of money as an S-Corp, but you need to be earning enough for it to work out in your favor. If you’re only earning $30,000, for example, then you wouldn’t be able to pay yourself a reasonable salary and take distributions — doing so could be illegal.
The Bottom Line
For the most part, you don’t need to worry about getting your business set up right away, especially if you’re just dipping your toes in the water. However, if you’re sure that you want to make freelancing a long-term commitment, then it can be beneficial to get yourself set up on the right foot from the start. Plus, having an incorporated business can improve your credibility and make you appear more professional.
Step 4: Leverage Your First Client to Find Your Second, Rinse, and Repeat
Once you’ve completed your first freelance gig, send out your invoice with a software like Blinksale, add your work to your portfolio, get a testimonial, and use that to get your next client. Each time you complete a job, it will become easier and easier to find the next one. The hardest part is breaking that initial inertia, but once you get some momentum going, everything will start to flow much more easily.
Generally, you’ll want to increase your rate little by little with each client until you get to your ideal rate. This gets easier over time as your portfolio grows and you get more reviews and testimonials, which will make you more appealing to new clients and make them more willing to pay you a higher rate.
And that’s pretty much all there is to it — just rinse and repeat to keep your business growing.
Key Takeaways: How to Start Freelancing
In most cases, becoming a freelancer isn’t something you can plan out in advance. Instead, it’s an organic process that will evolve over time, and you’ll learn as you go.
If you want to become a freelancer, the best advice is this: just start freelancing. Get your website up, build a portfolio, and start reaching out to potential clients. The details and finer points will work themselves out naturally over time.