Freelancers form a major sector in Britain’s self-employed workforce and it’s worth considering becoming a freelancer if you want to be your own boss.
This blog will outline the things you have to do if you are setting up as a freelancer.
First of all, why go freelance?
Businesses like using freelancers because they tend to be flexible and provide access to expertise without the complications and commitments of long-term employment.
Freelancers generally work on short-term projects for clients on a contract-by-contract basis.They too enjoy flexibility and freedom, deciding when they work and fitting assignments around other demands they have.
You can freelance your services in many jobs, but the most common are:
- The arts, media and literary roles
- Managers and admin
- Sports and fitness
- Hairdressing and beauty
- Courier van drivers
Plan your first steps as a freelance contractor
Whether you’re experienced in your field or taking your first steps, going freelance could be the most rewarding thing you’ll ever do.
If you are passionate about what you do, you’ll be getting paid for doing something you love. The difficult thing, though, is taking the first step into freelance work and getting your venture off the ground.
Consider your lifestyle, income and expenditure
You could be considering leaving a job to start your own business as a freelancer, or you might be considering your career after leaving college or university.
Whatever your experience, you will need to think about your responsibilities, commitments, and the personal demands on your life. You will have family commitments and financial responsibilities. If you have been paid a regular salary you will probably have regular demands on your money too, such as rent or a mortgage, car loan repayments, utility bills and other direct debits.
While some of your expenditure can be cut back, you probably won’t be able to pay less on your rent, mortgage or utility bills, so you must ensure you earn enough as a freelancer to keep them covered.
Be disciplined: Becoming a successful freelancer demands discipline
Without the usual rules and protocols of being employed by someone else, as a freelancer you will have to come up with your own formula for generating business, delivering what is expected of you, and getting paid regularly.
It will help if you write a business plan using the templates provided on the government website.
Give yourself a firm but realistic goal for the hours you want to work and how much you will need to earn. You can fine-tune this once your freelance business is up and running.
If you will mainly be working from home, you may want to consider renting a desk in a shared workspace once a week where the atmosphere may be conducive for a more productive working day.
This may also provide networking opportunities that open new doors and lead to new business.
Work out what you will charge as a freelancer
Your earnings could come in either as short or long-term project-based fees, or as weekly, daily, or even hourly rates.
Find out what others are charging for providing a similar service to that which you will offer. Don’t undercut the competition and find yourself out of pocket and unable to pay your bills at the end of the month. Similarly don’t overcharge and price yourself out of the market. Set your fees in the mid-range of charges made by your competitors.
You will develop a good reputation if you deliver services to a high standard, on time and to budget. And with a good reputation, you will win more repeat business and referrals to new clients.
Consider the structure of your freelance business
You’ll need to work out how your freelance business will be structured before registering with HMRC. Unless you’re setting up with someone else in a partnership, you’ll probably operate as a sole trader.
A sole trader is the sole owner of the business. It’s a simple and very popular business structure. Read this government advice on setting up as a sole trader.
You may also be considering setting up as a limited company. The two main advantages of setting up as a limited company are:
- A limited company is legally separate from its business owner, who has limited liability. This means personal assets aren’t at risk – if your business fails you only stand to lose what you put into the company. As a sole trader, your personal assets are at risk.
- Once you register your company name nobody else can use it. You don’t get this protection as a sole trader.
Whichever structure you opt for, register with HMRC as soon as your business is launched. You must register by October 5th after the end of your first tax year.
Create an invoice template for your freelance business
You will need to invoice clients on completion of your tasks or at the end of your agreed period of work. You should indicate your payment terms on your invoice — most companies demand payment within 28 days, but the length of time you are prepared to wait may depend on the expenses you have accrued delivering your services, or your individual circumstances.
Make sure you get the right insurance for your business and home
If your freelance business means you will be working from home a lot, most home and contents insurance will not cover you for your business activities.
Adrian Flux offers bespoke home business insurance to match your personal needs. Benefits include:
- Full cover for home-based business owners, employees, and home offices
- Cover for business computers, laptops and mobile phones
Call 0800 069 6686 for a swift no obligation quote — 79.5% of all customers receiving an online quote in July 2020 could have obtained a cheaper quote over the phone, based on the information they provided.