Want to make some side income?
Perhaps you have a passion that you want to turn into a business, but you’re not quite sure if it’ll be successful full-time...and you can’t afford to go 3 or 4 months without a steady source of income.
Many prospective small business owners start their new endeavor on the side while maintaining their day job or part-time job. It’s a safe (though not necessarily easy) way to ensure that you have enough work to support yourself before you become a full-time entrepreneur.
How do you get started freelancing? What are the concrete steps you need to take? Here are some common FAQs of new freelancers:
1. Do I have to “officially” start a business?
You do not need to start an LLC or corporation in order to start freelancing and get paid in most states. However, starting an official legal entity has some major benefits:
- It protects your personal assets if you get sued
- It protects your personal assets if you default on loans
- It allows you to set up a business bank account, which makes invoicing, keeping track of deductible expenses, and taxes simpler
We review the major types of entities freelancers can set up here.
2. Will I make my current boss mad if I freelance?
Probably not. Most jobs don’t care what you do in your spare time (and even if they do, they can’t control what you do off-hours).
The trick is making sure that your freelance life doesn’t interfere with your day job. As someone who’s juggled freelance & full-time before, I can say that this is tricky. The temptation to check your private email account at work can be rough; this is why it’s so important to set expectations with your clients so they know that you’re not available at certain times.
3. How is being a freelancer different from being an employee?
Most newbies go into freelancing expecting that clients are just like mini-bosses. In fact, the relationship between a client and you is very different than the relationship between your boss and you at your day job.
Freelancers have a certain definition that is protected by the Department of Labor:
- Freelancers can work where they want
- Freelancers can work when they want (obviously deadlines are good, but the client can’t tell you that you have to work 11am-2pm)
- Freelancers have the right not to be micromanaged. If the client is hiring you as a freelancer, they shouldn’t be training you extensively or giving you exact instructions about how to complete your work. A freelancer should be treated as a valuable outsider, not as a low-level intern.
- Freelancers have the right to take on any additional clients they choose.
Learn more about your rights as a freelancer and the difference between an employee and an independent contractor here.
4. How do I fix up my resume to make it freelance-friendly? What about a portfolio?
Most job postings or referred clients will ask to see your resume and either a few samples or your full portfolio (online). This largely depends on the type of work that you do.
We’ve broken down how to list freelance gigs on your resume here.
We talk about how to create a portfolio or set of “case studies” (and a client onboarding process) that brings you the types of clients you really want here.
5. Where do I find clients/customers?
Most freelancers find their best clients through word-of-mouth. Your first client tells their friend, who hires you, their friend tells someone they met at a networking event, etc.
Word-of-mouth is the cheapest and most effective way to get clients. All that you need to get word-of-mouth referrals is to do great work!
But what if you’re looking for your first client? Here are 5 things you can do right now:
- Send an email out to your family, friends, and past co-workers that you’re open for business and encouraging them to forward the email to whomever they feel might know someone.
- Send out personalized emails to each of your old bosses. They hired you once, maybe they’ll hire you again. Also, these are the types of people with a lot of contacts in your industry.
- Optimize your LinkedIn page and then search for gigs through LinkedIn and other online job boards.
- Go into local businesses and offer your services.
- Do research and come up with a list of 5 good clients you’d like to work for. (Even companies that haven’t posted a job.) Send a quick email introducing yourself and explaining what you do, and one way you could improve their business. Send one email a day for a week.
See more ways to find clients with a low budget and little time here.
6. Isn’t there a more strategic way to find clients?
There is: it’s called online marketing.
However, online marketing is the kind of thing that takes time. If you’re smart about the time you spend on social media, blogging, and on your website, you will see a good return on that investment.
Here are some resources to help you get started:
- How to land clients with social media
- Some online classes to help you learn internet marketing
- How to develop an email newsletter list
- How to create a personal brand
- How to set up your freelance website
Since you’re working full-time while you’re establishing your freelance business, it will make sense to take this slow. Start out by letting your existing social media followers know about your business. Then make a simple typeface logo for yourself (most new freelancers just do a creative treatment of their own name). Then set up a simple website with just two or three pages (home, about, portfolio). Set small goals for yourself.
If you really want to get your business off the ground, word-of-mouth is not enough. Online marketing will be key when you really want to bring your business out of the corners of your life.
7. Where can I find a ready-made contract?
You don’t know enough to make a custom contract yet. You don’t have the money to hire a lawyer. You want one that does its job and doesn’t screw you over.
If the client asks you to send over a contract, try creating one with our simple (and free) contract creator tool.
You can also learn more about important provisions on your contract here.
What happens if the client is the one sending you the contract? Then keep in mind that the client has probably had their lawyer put in their “want to haves” and not their “must haves,” and you may be able to negotiate better terms, a more reasonable timetable, or the ability to hang onto some of your Intellectual Property rights.
8. People keep asking me to give them stuff for free. What’s that about?
This is tricky.
I would rely on Seth Godin’s advice about whether or not to work for free. What does free mean? Are you getting anything valuable out of it? Or are they just trying to use you because they’re cheap?
New freelancers sometimes fall into the trap of, “If you give me one or two blog posts, I may eventually pay you for them.” This could turn out to be a very sad use of your time.
9. What do I charge?
If you’re about to charge what you get hourly at your 9-5 gig, you’re doing it wrong. If you’re thinking about the “teeming masses of freelancers online who do what I do for $4/hour,” you’re competing with the wrong crowd.
Freelancing is a business that competes on value. Because each freelancer provides such a different level of services, you can only compare yourself with other freelancers providing the degree of expertise you are.
Of course, most freelancers are not very forthcoming about what they get paid, so knowing what the “going rate” is in your industry can be very tough.
10. What do I do about taxes?
Not thinking about taxes in advance is the biggest mistake new freelancers can make. I know many a freelancer who got stuck at the end of the year with a much bigger tax bill then they could handle.
As a freelancer, you will get taxed more than you are being taxed as an employee. Self-employed workers get taxed for both the employer and the employee portion of Social Security and Medicare, you’re essentially paying around 15% where you pay just 7% for your W2 job.
Instead of receiving a W2 from your employer at the end of the year, you will either have to self-report income (if you made less than $600 on each gig) or you will receive a 1099 from each client who paid you more than $600.
The only benefit of freelance work for your taxes? You can deduct business expenses from your income. We give a full breakdown of what deductions you can take here.
You can see our full, very thorough guide with all our information about taxes for freelancers here.
11. What do other freelancers wish they had known early on?
Glad you asked! We asked our members this question, here’s what they told us. It’s full of great information!
*Join Freelancers Union to gain access to more information, networking opportunities and resources tailored to the needs of independent workers. Membership is free. *