Starting a Freelance Business: A Step-by-Step Guide - Login Lockdown

Starting a Freelance Business: A Step-by-Step Guide

Dmytro Sokhach
January 4, 2023

Business partners shaking hands
(Image by pch.vector  on Freepik)

According to Forbes, freelancers represent 36% of the workforce in the US. And with job insecurity hanging over everyone’s heads, it’s now more important than ever to engage in income-generating activities.

Starting a freelance business is liberating, especially if you’ve spent years trapped in your day job. And with all the hype about becoming your own boss and working on your own time, becoming a freelancer is an increasingly appealing business idea.

But it isn’t as easy as you might think. There are a lot of barriers to the industry, and you’ll need to prepare yourself in the best ways possible. But while the road may be long and challenging, there are some things you can do to ease the burden. 

Here’s a step-by-step guide on starting your freelance business and making it work. 

Asking the ‘Why’

People go into freelancing for various reasons. Maybe you want to transition out of your day job. You want to earn more money or do something else in your downtime. Whatever it is, you’ll need to assess the real reason you want to become a freelancer in the first place. 

It might surprise you to think that the first step to building your freelance business isn’t securing a domain name or building a portfolio. But knowing the ‘why’ is integral to becoming a freelancer. 

Knowing the goal of opening your own freelance business is vital to succeeding because, without a good reason, you’ll end up feeling stuck at one point or another. For instance, if you want to start a small business for a better income, here are some things you’ll need to consider:

  • Your cost of living. The amount you make from freelancing should be enough to cover your expenses for the month, along with some extra for savings and investments; 
  • The upfront costs of freelancing. Although these costs become minimal in the long run, there are still expenses connected to becoming a freelancer. If your goal is to make more money, you have to consider how subscriptions, apps, and other tools play into your budget; Additionally, if you form an LLC for your freelance business to protect your personal assets, there are some LLC filing fees to be paid upfront.
  • Competition and stability. Freelancing involves fierce competition. Although it may seem attractive initially, freelancing lacks security and stability. 

Knowing the pros and cons

Person sitting with a computer
(Image by jcomp  on Freepik)

Freelancing isn’t a perfect gig — the sooner you realize this, the better off you’ll be.

Many successful freelancers post their stories online. How much they make, the success of their small businesses, or how relaxed their life is now that they make their own schedule might dazzle you.  And if your job is stressful enough, working for yourself may be an incredibly appealing option. 

But the truth is, nothing is ever as simple as freelancing gurus say. Going freelance involves a lot of work and many considerations, such as the following:

Flexible work arrangementsHigh barriers to entry
Personal autonomyHigh competition
Scaled payNot all skills are in-demand

The bottom line is that freelancing isn’t risk-free. You’ll need to fight for clients — which can be difficult if you compete against overseas freelancers who charge lower rates. Additionally, if you don’t have the right skills and aren’t working in the right niche, you may find yourself trying to freelance in an industry where there isn’t that much demand for your services.

If you’re starting your own business, you might find it helpful to register as a sole proprietorship rather than a sole proprietor. While they sound similar, some crucial differences can affect your business’ tax status, liability, and income tax self-assessment.

Sole proprietorships are the simplest type of business structure to create and run, and often sole proprietorship status is the best choice for new businesses. First, however, suppose you need to figure out what structure your business should have or could use help deciding between a sole proprietorship and sole proprietor status. In that case, you can contact professional registration or business consulting services.  A good place to start is by comparing different business formation services. Read several reviews, such as this one by SmallBusinessHQ, pitting Inc Authority against ZenBusiness. Then, decide which option best serves your needs. Additionally, if you’re seeking specialized guidance on technology-related matters, reputable IT consulting firms can provide valuable insights into aligning your business goals with technological strategies for long-term success.

Identifying your marketable skills

Tangent to what we spoke about in the previous section, you must know what services you can sell, bridging those knowledge gaps. Some specific roles will be easier to land freelance positions for than others. These include copywriting, webflow development services, web development, and social media management

If you don’t yet have the skills to land a freelancing position or start a small business, you can begin upskilling while still in your day job. Additionally, you can start building skills from there if you have a job remotely related to a freelancing role. 

Setting a rate

Investor standing on scales doing research in innovation worth, target price, financial profit
(Image by pch.vector  on Freepik)

Setting a rate is one of the most critical aspects of your freelancing journey — and is a step many new freelancers struggle with. There are two main dilemmas you can encounter here. Either you charge too low or too high — for most people, it’ll be the former.

The problem is that if you charge too low, you risk not being able to support yourself while jumpstarting your freelancing journey. But on the other hand, if you charge too high, clients may forgo your pitch for someone charging lower rates. 

There isn’t one set way to go about pricing. How you do it largely depends on your skills and how well you think you can provide services to your potential client. Just make sure you aren’t lowballing yourself and can provide enough for your needs as you start. Here’s a plan we can recommend:

  1. Start charging a reasonable rate for your services. The keyword here is reasonable: it needs to be low enough to land you clients and high enough to make a livable wage. In the beginning, it might not be easy to land clients, but as you start building your portfolio, it’ll get easier.
  1. Increase your rate once you’ve gathered a sizable portfolio. At this point, you probably have enough experience as a digital nomad to know how much to charge your clients and can adjust accordingly for the difficulty or complexity of the work.
  1. Set a rate you’re comfortable with and adjust gradually for upskilling or inflation. Growth isn’t linear. There will be times when your skill development from experience will plateau. If so, try to upskill and learn new things to make your services more valuable. Don’t forget to adjust your rates according to inflation, as many freelancers neglect to consider the increasing costs of living.

Also, it’s worth carefully assessing the market and the cost of such services. The “roughly estimating prices” strategy won’t do the trick in this situation. 

For example, if you are a developer and create apps, you can resort to another approach. Find an android app development agency and pretend to be a customer. Then, as a “mystery shopper,” you can find out the prices of hiring developers. Also, browse through the profiles of other developers and evaluate their rates. 

This way, you’ll be able to set the rate properly, considering market dynamics. 

What is a ‘reasonable’ rate?

Now, a question many new freelancers find themselves asking is what makes up a reasonable wage. Again, it’s different for everyone, but a good starting point is computing how much you need to make in an hour to pay for all your expenses. Make sure to cross-reference this with market rates in the industry you plan on entering. 

Also, consider the speed of your work. For example, it’ll be more profitable for a potential client to pay you $50 an hour if you do a project in one business day than to pay your competitor $25 an hour but wait three times as long. 

For example, Evisa Express processes visas in 72 hours or even faster. That’s a much shorter amount of time than most competitors can offer. So, they may well have priced slightly higher than some of the other services on the market. 

From here, feel free to adjust according to the value of your skills.

Building a portfolio

Person organizing files in a folder
(Image by storyset  on Freepik)

Next up comes your portfolio. Most clients will want to look at your previous freelance work, often in the form of a portfolio or website. Use a simple website template that appeals to the users.

When you’re just starting out, you won’t have the stacked experience to showcase in a portfolio. But your portfolio doesn’t necessarily have to consist of work done for previous clients! For example, if you’re an aspiring writer, you can probably attach some essay samples or any writing you’ve done in the past — get creative with it! Clients will appreciate your initiative even if you don’t have a lot of experience. 

Especially if you are involved, for example, in stock trading consulting. It’ll be tricky for you to create a portfolio in such industries. So, you’ll have to put in the maximum effort and creativity to demonstrate your professionalism to your clients. 

Setting up a payment system

As a freelancer, you’ll have to learn how to receive payments. Thanks to technological advancements, it’s now effortless to receive transfers from anywhere in the world — whether sitting at home or vacationing somewhere in Spain. 

Setting up a payment and invoice system before you land your first client might seem counterintuitive. But this step is the kind of behavior that’ll make you look more professional, so don’t skip it. 

When you’re an independent contractor, it’s common for clients to ask for an invoice. If you don’t have any experience with invoices, don’t worry. Making one is pretty simple and will only take a couple of minutes, or you can use a ready-made accounting template for Excel, etc. 

Follow these steps to help you get started:

  1. Find a good template. We recommend using one that you can edit in Google Sheets or Docs for a more straightforward process;
  2. Attach your logo (if you have one) and other pertinent billing information;
  3. Add your preferred payment method, and make sure you give the client a couple of options. 

Regarding payment channels, there are a couple of ways you could approach the situation. First, you can attach your bank information to the invoice and make sure the client has all the required information to make the transfer. You could also opt for cash payment systems like PayPal, but these sometimes come with ridiculous fees, so they may not be the best option for you. 

For this step, you need to do additional research and balance what’s convenient for your client and what works best for your location. Finally, you should go one step further and open an account for your online small business banking step, so you can easily track your income and expenses, transfer funds between accounts, and even receive payments from clients directly.

Getting your first client

Now that you’ve crossed all the previous items on your checklist, it’s time to get your first client, which could take longer than you expect.

Being patient is something many new freelancers struggle with, so don’t feel too down if it takes you a long time when you start. Some people take weeks before they land their first client — in some rare instances, it could even be longer. 

Try to spend this time upskilling, so your services become more attractive to potential clients — staying idle will do you no favors. 

There are plenty of ways you can get your first client. Of course, the easiest route is hopping on a freelancing platform like Upwork or Fiverr and starting there. However, these platforms do charge a premium for payments that occur through their site, so it’s an additional expense you’ll have to consider. 

If you are motivated and have a substantial budget, you’ll undoubtedly take up the challenge of creating and promoting your own website. Yes, this will require an investment, but in the end, you won’t have to pay commissions for third-party services. 

When you attract the first potential clients to your portfolio site, make sure that they can reach you easily and quickly:

  • Create a convenient feedback form. It shouldn’t take more than a minute to fill it out;
  • Create a contact details section. Let it take a second and one click to find your contact information;
  • Consider using a chatbot. Bots are too popular and convenient not to take advantage of their benefits. Even traders resort to using a crypto bot, and teachers implement chatbots to work with students. 

Selling yourself

Once you’ve gotten your first client, worked with them, and delivered, it’s time to expand your selling and networking skills. Regardless if you send out cold emails or apply for freelance jobs on Upwork, learning how to sell yourself is at the core of freelancing as an industry. 

There are thousands of other people like you scrambling for similar roles, and knowing how to differentiate yourself from that crowd will make or break your freelancing career. 

When you’re a freelancer, you need to know how to package your technical abilities and soft skills in a way that’ll make the most sense to your freelance client. For example, use short, engaging words in your proposals to maintain your client’s attention and take advantage of the opportunity to work with them. 

To grow in some spheres, you’ll have to resort to third-party solutions for improving the user experience. If you plan to educate people, it’s easier to be successful with modern technology. You have to offer gamification, chatbots, and other features to compete. In short, you can’t do without top edtech companies and their offers! 


Person in a computer sitting on top of a pile of books
(Image by macrovector  on Freepik)

You won’t always find self-improvement in beginner guides like this one, but it’s one of the most important things you must understand as a freelancer.

Unlike an employee, you won’t have job security, and your income will vary from month to month. As a freelancer, there’s no way to protect yourself from this. By its nature, freelancing is risky and comes with plenty of challenges you naturally have to overcome. 

While you can’t practically erase all the risks in freelancing, there’s one thing you can do to make it easier over time: upskill. Making sure your services are value-adding is an excellent way to consistently secure new clients throughout your career. And while you won’t be able to guard against the natural ebb and flow of demand cycles, you can definitely gain some stability by offering top-notch services. 

Upskilling is additionally vital because no job lasts forever. There are few roles in freelancing that are resistant to the curse of time. Some freelance jobs naturally become less in demand through the years due to technological advancements, trends, and other factors. You can mitigate the risks by

  • Working in a recession-proof niche (niches that operate regardless of the economic situation);
  • Becoming a top player in your field (difficult but still possible);
  • Securing reliable clients;
  • Diversifying your abilities.

Also, it pays to constantly improve your portfolio and update the profiles on the resources you use and your website. For example, you can implement innovative features such as data security or convenient search solutions.

Is starting a freelancing business easy?

People have different reasons for starting a freelance business — some may be interested in flexible freelance work, while others may not enjoy their day jobs anymore. But regardless of your reasons, starting a freelance business isn’t easy. 

You have to consider

  • Costs,
  • Skills,
  • Time,
  • Clients,
  • Portfolios.

And so much more, including branding aspects like your business name. Using a business name generator can be helpful in creating a unique and memorable name for your freelance business. Additionally, you’ll need to develop a solid business plan and register your business.

To start freelancing, you must focus on achieving your goals one step at a time. You won’t be a freelancer overnight. Respect the process, commit to providing the best services you can, and the rest will follow. 

What if I have a full-time job?

Many freelancers who are just starting do so while holding down full-time jobs. These days, jobs are often the main reason they have yet to fully commit to freelancing in the first place.

But while full-time jobs do take up a lot of time, you’ll still have a few extra hours each day to work on upskilling and developing your freelance business. It’s best to create a schedule and timeline by which you can quickly determine which tasks are possible in a certain period. 

It’ll take adjustment and sacrifice, but starting your freelance journey while you still have a full-time job is absolutely possible. To speed up this process, look for alternative ways to earn money, like passive income apps where you will receive additional money for your development just by browsing the Internet.


Representation of business innovation with multiple elements: financial services, currency,  financial technology
(Image by pch.vector  on Freepik)

Going freelance is a lot of work — often more than expected. But when it does work out, it’s one of the best things that could happen to your career. 

Remember, success isn’t linear, and you might stumble here and there. But with perseverance and determination, you can create a freelance business idea in a niche you genuinely enjoy and love.  

But all this awaits you in the future. You need to reflect on certain aspects and make the most critical decisions in your life. Set a price for your services, choose your promotion methods, build a portfolio, and gain your first experience. 
Sounds harsh, huh? But the first steps are always the hardest. From there, you’ll get into a flow and acquire an indispensable background that’ll help you cope with adversity on your freelance path.

A freelancer can also go for creating their own company. As per the Corporate Transparency Act, companies formed or registered to do business in the U.S. have to file a beneficial ownership report with FinCEN. You can read more here: FinCEN Report Campany.