The Comprehensive Guide to Freelancing
Freelancing is appealing to a lot of people and for good reasons: no boss, no traditional workspace, ultimate flexibility, working in your pajamas … the perks are endless. However, getting started in the freelance market can be intimidating. If you’re wondering how to start freelancing, we’ll answer all your most common questions. Ready for a new career adventure? Here’s how to become a successful freelancer.
Learn the definition of freelance jobs versus regular work
Essentially, freelancers are self-employed, while employees work under a company that is not their own. Whether full-time or part-time, employees typically have set work hours and a manager overseeing their work. The employer will manage tax reporting and tax withholding, which will be automatically taken out of your paycheck. Employees may receive paid sick time, health insurance, and other benefits.
In contrast, freelancers:
- Work where they want
- Set their own hours, and take on as many clients or projects as they choose
- Are hired for their expertise, and are expected to already know how to complete their tasks and projects
- Do not receive benefits paid for by an outside company
- Report their own taxes
In addition, while there can be various meanings of “freelance” for tax purposes, this is how we describe a freelancer’s work structure:
- Work independently of any other company, including third-party agencies
- Accept projects on a case-by-case basis, or have an extended contract for a specified period of time
- Operate as an individual/sole proprietor or a single-member LLC (that is, you are not in a partnership or a multiple-member business)
Set up your freelance business
Work-from-home jobs are in high demand — and why wouldn’t they be? Flexible hours and being your own boss sounds great. So how can you work from home as a freelancer? The first step is building your client base. If you don’t have a LinkedIn profile, it’s time to create one. Go through your contacts and look for people in related industries. Reach out to them with a note and your resume. Let them know what you do and that you’re open to more work. They may be interested in hiring you or know someone who needs your services.
There are many websites where you can get started looking for work. Some freelance websites to consider include Media Bistro, Guru, UpWork, and Freelancer.com. You can also simply search for related businesses online, look for contact information, and send a resume and cover letter. For example, if you’re a web designer, check out marketing agencies who need such services; if you’re an editor, you look into publishing services companies. It might surprise you who needs freelancers, so if you find a company that interests you, contact them!
If your client presents you with a contract, be sure you agree with all of the terms prior to signing. Also, note that non-disclosure agreements (NDAs) are common when freelancing for larger brands or more volatile products. Don’t be afraid to take a project just because you’ve been asked to sign an NDA.
Organize and promote your business
Organization is an important part of freelancing. Online project management tools such as Asana and Trello offer free versions that will suit most freelancers very well. You’ll also want to learn any tips and tricks that are specific to your trade.
When you’re working freelance jobs from home, it’s easy to overlook an important part of your business: marketing! You may have amazing photography, design, or writing skills, but you’ll still need to market yourself, especially in the online space. Sign up for a course like Using Social Media in Business to learn about skills like social media management and check out Achieving Top Search Engine Positions for search engine optimization.
Read up on licenses and taxes for freelancers
We know — this isn’t the most exciting part of freelancing. But it is important. As a freelancer, you’ll need to report and withhold your own taxes, as well as itemize deductions. Here are some common questions you may have.
Do I need a freelance license or permit?
Typically, if you’re conducting business using your full legal name, you won’t need to obtain a license or permit or register your business. However, you can register a business name and conduct business under that name. This name will not be considered a separate legal entity. You will file state and federal taxes in the same way as freelancer/independent contractor — but you’ll need to pay a business tax each year as well.
How do I file taxes as a freelancer?
First things first: Do you need to pay taxes as a freelancer? The short answer is yes. Here’s how you do it. Every time you take on a new client, you will need to complete a W-9. This will allow you to be “on file” with the client, so that they can send you 1099-MISC forms each year. This form is required by the IRS and will help keep you in good standing with your taxes.
When tax time rolls around, each client you’ve completed work for during the year will send you a 1099-MISC form so that you can report your income. Be sure to double-check their entries, so you aren’t taxed on more than you’ve agreed upon in your contract, or more than you were paid. If you see an error, let them know right away so your client can make the necessary changes.
Remember, we’re assuming you’re operating as an individual/sole proprietor or a single-member LLC. This means you can report your extra income on your Form 1040, “U.S. Individual Income Tax Return.” You’ll just need to fill out a Schedule C — and yes, you must report any income, even if you didn’t receive a 1099-MISC. It’s always better to report income upfront rather than be audited later.
Finally, you can deduct business expenses from your income. They’ll be deducted pre-tax, meaning you pay fewer taxes! Some deductions you can take include office supplies, computer and home office equipment, advertising and marketing, certifications, and work-related travel expenses.
Want to learn more about growing your career?
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