Guest Post by Christopher Haymon of Adulting Digest
So you want to start your own freelance business? Great decision! You get to set your own hours, work on projects you’re passionate about, and be your own boss. The Bureau of Labor Statistics reports that over 53 million Americans have chosen to take up freelancing for this very reason.
But if you want to grow the occasional assignment into a successful freelance business, it’s going to take a lot more than just passion. In this post, Owl and Pen is ready to share the little details you need to take care of to create your empire.
Build Your Foundation
Once you’ve got a few clients on your roster, you’ll need to start looking at the operations end of things. Here are some basics to cover:
A business structure offers legal protection against liability and can help protect both your personal and business assets. Sole proprietorship and an LLC are two of the most common options freelancers use. Let’s break it down a bit to compare.
A sole proprietorship means you are the person in charge and your business is solely yours. No arguing in the board room with this setup. It’s also affordable to get going, and your taxes are streamlined with business earnings counted as personal income.
However, there is a big drawback to this structure, and that’s liability. All roads lead back to you, and while being solely in charge of the biz has benefits, it can also be a big problem when there’s a problem.
To limit that possibility, some people opt to for an LLC or Limited Liability Corporation when they launch their freelance business. It helps give you added legal protection. A pro is that taxes can be streamlined again if you choose, but one drawback is that the initial costs of formation are typically a few hundred dollars.
Lastly, depending on the structure you go with, you may also need a DBA, which stands for “doing business as.” This is the case for sole proprietorships if you are not using your full, legal name. DBAs can be necessary in other circumstances or if you want to branch out and function under a different entity name for some access of your business.
Whichever route you choose, the structure will be the foundation of your business, so be sure to do your research and even call on the expertise of your local small business network or association for guidance.
Taxes and Finances
Tax season can be particularly tricky for freelancers. To ensure a painless process, be sure you’re recording all your business expenses through receipts and tracking cash inflow and outflow. As a freelancer, your taxes aren’t withheld as they are with a typical job, so you’ll want to make sure you set aside an appropriate amount to pay estimated taxes.
Saving is critical for freelancers, as you’re not assured of steady income each month. Be sure to divert parts of your income to an emergency fund and retirement account. Hiring an accountant to help with finances and taxes may be prudent so you can focus on the bigger picture of the business itself. Plus, you can get help with which expenses to write off, which can result in significant savings for your business.
As a self-employed individual, there are several options for insurance coverage. One option many fortunate freelancers rely on is being able to add themselves to their spouse’s coverage. The Freelancer’s Union also offers health insurance plans in several states.
If you have registered as a business with employees, you can check out the federal Small Business Health Options Program. And there is also the federal marketplace, which can help you find the best plan for your needs. Before committing to a provider, be sure to shop around and research all your options.
After you’ve got yourself set up with the basics, it’s time to focus on avenues that will invite growth and success. To do this, you’ll need two key things:
A business plan is a working document that acts as a blueprint for success, Inc.com writes. In your project, you should be mapping out where you want to see yourself in a year, two years, and five years from now.
Identify problems you may face and strategies you can use to overcome them. Include your short and long-term goals. This will give you a clear direction to work towards, and if you stick to the plan, you’ll know what to do every step of the way.
The importance of having networking opportunities is unparalleled. With a solid network, you’ll be able to find new clients, get valuable advice, and learn from others who have been along for the same journey. Reach out to people in online spaces like LinkedIn or attend networking events in your area.
An Owl & Pen favorite, which started out locally and has grown to a humming online group is Evolution Business Development. This and other groups like it are the kind of active places you want to be showing up to build community and get referrals.
Getting your name out there is key. Creating unique business cards through online templates is a great way to go. Carry and share them wherever you go and share the online version during virtual opportunities, too. Free business card design sites offer cheap and efficient services that will help you get this to-do ticked off in no time.
Starting a freelance business is an attractive proposition. But there is a lot of effort, strategy, and planning that goes on behind the scenes. Having a roadmap to success will be vital in navigating this journey successfully. So do all the groundwork well in advance to set yourself up for a future that feels both exciting and fulfilling.
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