Nick Cooper, resident blog author at NCC covers a wide range of useful information in this fulsome guide to successful freelancing. Includes: how to set up, get work, tax, insurance and other legal aspects, invoicing, staying motivated.
A general guide for all types of freelancers across all sectors.
If you value flexibility, freedom, and regular challenges, freelancing could be the perfect career path for you.
Digital freelancing allows you to develop relationships with clients, set your own hours, and work as much (or as little) as you want. You get to set your own rates and can likely work from almost any location on the planet. Who wouldn’t want the flexibility and freedom of a freelance lifestyle?
However, freelancing does have its downsides. Unless you are on a retainer with a client, you only get paid when you work, and your earnings are never guaranteed. You need to plan for slow periods and droughts so that you are never caught out without an income. You may also end up dealing with demanding clients who can make or break your bank account and your reviews. Are you thinking about freelancing? Do you want to know more about how freelancing could be your next career move? Check out our guide to how to become a successful freelancer, no matter what the industry.
What is freelancing?
Simply put, freelancers are people who work on a self-employed basis.[i] They do not work for one employer on a long-term basis, but they might have clients that they work with for long periods, sometimes even exclusively. The term freelancer is usually used to refer to people who work in the creative industries and cultural sector, as well as accountancy and bookkeeping.
Those who work in the trades and other manual labour are usually referred to as independent contractors. Freelancers can be commonly found in the following industries:
- Web Design
- Computer programming
- Graphic design
- SEO consultation
- Film and video production
How to begin freelancing
Now that you have made the decision to embark upon the freelancer journey, you need to consider some important points.[ii]
- Get real with yourself – Before you leave your existing job to start a new business or turn down a promotion, you need to prepare for the realities of freelancing. Are you up for the responsibilities and financial uncertainty, particularly when starting out, of the freelancing life?
- Can you handle life without a regular paycheque? Can you handle life without the security of a regular payday? Are you willing to hustle to ensure that your bills are always paid? You also need to put money aside for your pension, savings, and insurance.
- Work on your discipline – As a freelancer, you’ll be your own boss. There is no one above you (other than your clients) who will be monitoring your progress and checking up on you to make sure you’re doing a good job. With no rules and restrictions, you’ll need to set firm goals for yourself, in terms of your work ethic and finances.
- Think about what you’re worth – Some freelancers can and do charge a lot of money for their services and make a very handsome living as a result. However, when you’re starting out, you’ll need to figure out what you can charge, and then scale it up as you gain more clients and more experience. Do some research to find out what others in your industry with your experience level charge for their service, and use this as a starting point.
- How will you charge your clients and get paid?
Will you charge your clients by the hour, or with a flat project-based fee? Do you want them to pay you via an invoicing platform, or will you generate invoices that they then pay directly into your bank account? Taking a business management course can help you iron out all of these details and plan your course of action.
- Think about your reputation – In the freelancing game, referrals and reputation are everything. Build up a stable of reliable clients and keep them happy by delivering high-quality work, on time and executed to brief.
How can I get freelance work?
When you are just starting out as a freelancer, you need to find clients that will come back to you again and again, providing you with a regular income. You can grow your revenue by taking on new clients. Here are some of the most effective ways to find new clients as a freelancer.[iii]
- Freelance job sites – You might find that freelance job sites are a good starting place as a new freelancer. Platforms like People Per Hour, Upwork, and Fiverr are popular and have a worldwide user base. You start by bidding on posted projects, but remember – the competition is fierce! However, as you earn more glowing reviews, clients will start coming to you. These sites take care of invoicing and escrow, but they do charge a hefty commission. More specialised platforms include ProCopywriters (copywriters), 99Designs (designers), and Behance (creatives of all kinds). Working on these platforms can be a good way to build your portfolio.
- Blog and post regularly on your own website – You may not rank very highly on search engines at first, but as more people begin accessing your page, you’ll start to get some traction on Google. Regularly post valuable and informative content that will get shared, and link to your social media accounts (and vice versa). Be on the look-out for guest blogging opportunities, podcast guest spots, and other ways to get your site mentioned online.
- Have a look at regular job sites – Employers often utilise recruitment agencies and job sites to find talent, including freelancers. Check out some of the different options, such as Indeed, Worksome, and even Facebook for job listings aimed at freelancers.
- Cold call or cold email clients and agencies you want to work with – You might dread cold calling or cold emailing, and you certainly aren’t alone – loads of people put off or avoid this valuable method of making contact with new clients. If you tackle cold calling in a dynamic and enthusiastic way, you can make new contacts and find new work. You should contact companies that you admire and want to work with and think would be a good match for your style. In particular, agencies are often looking for freelance help, so it’s a good idea to get in touch with them directly. Call local companies first, followed by the larger national firms. Look into their specifics so that you can tailor each of your emails to the agency. You could even dig a little further to find the name of the person in charge of hiring freelancers.
When you reach out to a potential client or an agency, you should include your CV, a few samples of your work, and a link to your website. You might even consider offering a special rate or discount for new clients. Of course, you also need to make sure that your contact method doesn’t violate GDPR – check that out here.[iv]
- Ask for referrals and recommendations – How many times have you been tempted to try a new product, restaurant, or service based on a glowing review from a friend or colleague? Word of mouth is very powerful indeed. Get in touch with your industry contacts and let them know that you are freelancing and ready to work. Ideally, they’ll pass your details on to their own networks! Don’t neglect your own personal networks – you’ll be amazed by how many friends, family members, and former colleagues are excited to support you in your new venture. Make sure you post on Facebook and you other social media profiles so that you can reach your acquaintances, and be sure to make the posts shareable.
Once you are working with clients regularly, add a line to your email signature about how much you would value referrals. Even a simple sentence, like: ‘Please pass on my contact information to any contacts who would benefit from my services’ will generate new business.
Never underestimate the power of an incentive! Consider offering a referral bonus to both your existing clients who refer you and the new clients that they generate. A discount or offer of free work will entice people to recommend you whenever possible and is an attractive bonus for new clients.
- Join specific Facebook groups for your niche – It is worth separating this point out from the more generic ‘social media’ point below. There are plenty of freelancer job boards on Facebook, and these can be great places to build rapport with new clients, network with other freelancers, and bid on work.
- Use the power of social media – While you might think of social media solely as a place to connect with friends and family, it can also be a useful place to liaise with potential clients and find work. Many companies turn to Facebook and other social media platforms to find talent and recruit freelancers. While Facebook, Twitter and Instagram (or even TikTok) might come in handy in your search for work, you should spend most of your time and effort on LinkedIn. As a trusted professional network, loads of companies turn to LI to find freelance help. Regularly post updates, blog posts, and links, and make sure that you interact and network with other people in your field.
You can also use social media to learn more about your own freelance career, and pick up tips and suggestions to bolster your own success. Social media is only worth as much as you put into it, so take some time each day to play around with your different profiles and think about how they can best help your career.
Types of freelancers
There are five common types of freelancers:[v]
- Independent Contractors – Independent contractors (in this instance the term refers to freelancers in all industries) work on a project by project basis, and rely on their freelance work for their entire income. Approximately 40% of freelancers are independent contractors. In some cases, they work on long-term projects for large clients.
- Moonlighters – Moonlighters use freelancing as a side hustle to supplement their regular income, working on small projects in the evenings and on weekends.
- Diversified Workers – Diversified workers, approximately 18% of the freelance workforce, do many different jobs, balancing part-time work, one-off gigs, and freelance work to earn their living.
- Temporary Workers – Some freelancers like to take on temporary employment when it becomes available and is lucrative enough.
- Freelance Business Owners – Usually starting out as an independent contractor themselves, freelance business owners find that they have enough work to take on employees and grow into a small business.Which sounds most like the type of freelancing you plan to do?
The legal aspects of freelancing
You need to ensure that you have a firm grasp on the legal aspects of freelancing so that you never fall afoul of the law.
Do I have to pay taxes as a freelancer?
As a freelancer, you are responsible for tracking and paying your relevant income taxes each year. All of your profits (not your gross income) are subject to applicable income tax and Class 1 National Insurance. Some freelancers pay themselves a wage, and then pay personal income taxes on this amount.[vi]
To determine the amount of tax you need to pay to HMRC at the end of the tax year, you need to complete a self-assessment form. This allows HMRC to determine how much tax you owe. Depending on how much you earn in the year, you’ll pay 20% to 40% tax on all income above the personal allowance basic rate. Make sure that you always set aside money from your freelancing work to pay your taxes at the end of the year! There is nothing worse than a massive tax bill that you didn’t prepare for in advance.
You’ll need to pay income taxes even on ‘casual income’ that you earn from freelance work. If all of this sounds like a headache, you’re not alone. Most freelancers choose to hire an accountant who can help them navigate the complexities of tax time. Remember to save all of your receipts so that they can calculate all of your deductions.
Do I need to contribute to National Insurance?
Yes, as a freelancer you still need to pay Class 2 or 4 NI. If you have another job, this will be in addition to the Class 1 contributions that your employer automatically takes from your salary. You need to pay Class 2 NI at a rate of £2.80 per week if your profits are £5,965 or more – this is usually paid monthly and can be deferred to the end of the tax year. You will need to pay Class 4 NI of 9% if you make profits between £8,060 and £43,000.
Do I need insurance?
For most freelance work conducted online, such as graphic design, writing, or IT support, you do not need insurance (though many freelancers do choose to take out a policy). However, if you are working as a freelance builder, cleaner, or artist that goes into someone’s home or business and carries out work, it is always a good idea to protect yourself and your clients.
Here are the most common types of insurance for freelancers in the UK.[vii]
- Professional Indemnity
Professional indemnity insurance will cover you for common mistakes and scenarios that digital freelancers encounter. If you accidentally recommend the wrong product, implement a faulty design, or infringe on copyright, you’ll be protected. If you handle any sort of essential data, you should consider professional indemnity insurance, which is usually around £170 per year.
- Public Liability
Public liability insurance is important for anyone who works directly with clients, such as freelance photographers, cleaners, artists, painters, and builders. If you only work with clients over the internet and on the phone, you likely don’t need public liability insurance. The only exception is if you work in a co-working space – many of these require that you carry insurance.
Do you have to register a freelance business?
In order to know how and when to register your freelance business, you need to decide which of the three main ways you will set up your business. Each has their own pros and cons. They will suit different needs and will affect how you do your accounting and pay your taxes.[viii]
- Sole trader: As a sole trader, you are self-employed and work as an individual. You can keep all of your profits, but you are liable for your business’s losses.
- Partnership: Similar to a sole trader, in a partnership you work with another person or company and share all of the business’s profits and losses.
- Limited company: Setting up a limited company will keep your business’s finances and liabilities distinct from your personal finances. A limited company has at least one shareholder and one director and is subject to more rules than a sole trader. However, you can claim more business expenses on your year-end taxes, and you will not be held liable for any losses.
How to write an invoice for freelance work
Every freelancer handles their invoices differently. You can generate a simple template on Google Drive and request payment directly into your bank account or PayPal account, or use an online invoice generator. Some invoice generators, like Freshbooks, are integrated with bookkeeping software so you can keep track of your receipts and accounts.
Your invoice should include the following information:[ix]
- Your company’s name (or your name) and address
- The invoice number
- The date
- How you’d like to be paid (e.g. via bank transfer or Paypal)
- Your banking details
- The total cost of services to be paid
- Payment terms (for example, ‘50% to be paid now, and 50% upon completion of project’)
- Your business VAT number, if applicable
Every freelancer is different and is therefore motivated by a variety of different factors. Some people feel like they need to get up, get dressed, and head out to an office space in order to really get started for the day. Others are perfectly happy to work from the comfort of their sofa, tapping away on their laptop while wearing a cosy robe. For countless others, their ‘sweet spot’ can be found somewhere in the middle.
Is freelancing the right path for you?
Freelancing is a brilliant option for people who want freedom and flexibility in their working life. Earning a living from the four corners of the globe, setting your own rates, and keeping your own hours – all with no boss to answer to or obey. Does this sound like the right career path for you?
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Ashley Baxter (2020). What Type Of Insurance Do I Need As A Freelancer? – With Jack. [online] withjack.co.uk. Available at: https://withjack.co.uk/insurance/2017/01/06/what-type-of-insurance-do-i-need-as-a-freelancer/ [Accessed 20 Jul. 2020].
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Ramsay, R. (2018). Here’s what you need to do when you go freelance. [online] The UK Domain. Available at: https://www.theukdomain.uk/heres-what-you-need-to-do-when-you-go-freelance/ [Accessed 20 Jul. 2020].
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