How Do I Become a Freelancer?

Most people nowadays have thought about either starting a side hustle or turning their creative hobby into a business. It’s perfect if you want flexibility and financial freedom, or to earn some extra cash in uncertain times.

One of the routes you might choose to go down is freelancing. This is where self-employed individuals work independently for set clients and earn money on a per-job basis. You can freelance full time, part time or alongside regular employment – there are no rules! But where do you even begin?

Becoming a freelancer and earning money outside of employment for the first time can be daunting. We’ll discuss your first steps, and other things to consider.

What’s the difference between a freelancer, sole trader and being self-employed?

What kind of freelancer can I be?

What are the first steps to becoming a freelancer?

What taxes will I pay as a freelancer?

Bookkeeping as a freelancer

You’ll often hear the terms freelancer, sole trader and self-employed used interchangeably, but this can become confusing because they don’t always means the same thing! For example, a sole trader is a type of business structure, whereas being self-employed simply means you work for yourself (which you can do as a sole trader, a limited company, or something else entirely).

The term ‘freelancer’ describes the way someone works with their clients, but it’s still not a legal structure so you can freelance using whichever structure suits you best. There are differences, however slight they may be!

Being a freelancer simply means you work for yourself (so you’re self-employed) with multiple clients. It usually involves short-term projects, or working on an ad-hoc basis, rather than having contracts for a set period of time.

Typically, freelancers take on more creative roles – but anyone who deals with a set of clients on an ad hoc basis (and sets their own rates for every project or job) can call themselves a freelancer. Common examples often include:

  • Social media manager
  • Videographer or video editor
  • Content writer
  • Software developer
  • PR Manager
  • Graphic designer
  • Accountant or bookkeeper
  • Content creator
  • Proofreader

There’s lots to consider when starting a freelance business, and while some people make it look easy, it may take a while to earn a regular stream of income. Proper planning and preparation usually means your business has a better chance of taking off – especially if you set clear achievable goals.


Find your niche

Choosing a niche which aligns with your skills is crucial. Your freelancing niche doesn’t have to be super specific, but having one can help you discover your target market and help you become an authoritative figure in that field – attracting future clients who are able to put their trust in you.

For example, you could be a freelance writer, or you could be an SEO content writer working with small businesses which need content to help improve their ranking position in Google search.


Make a business plan

While some people can wing it successfully, it’s not something we’d recommend if you plan on running your business long-term. Writing a robust business plan can help you:

  • Solidify your business ideas
  • Set out clear goals
  • Spot problems
  • Measure your progress



While it would be nice to pluck clients out of thin air, it isn’t possible. This means you need to think about how you’ll market your business, such as by creating a website, using social media, or attending networking events.

Every business is different, so whilst a freelance dog walker may find it useful to advertise their business on Facebook, a freelance digital marketer might prefer to invest in their SEO and create a good portfolio website. Once you know what type of freelancer you’re going to be, you can research your customer persona and target your primary audience (which is marketing-speak for turning up in the right place at the right time).


Think about your costs

Every business needs to spend money at some point, even before they launch. For example, will you need to purchase equipment like laptops or printers? Will you need to rent out office space for meetings? Everything adds up, so it’s also important to keep track of any allowable expenses used “wholly and exclusively” by the business so you can claim tax relief for them!


Decide on your rate

Deciding a rate can be daunting, and you may feel obliged to make your prices super cheap to get more clients – although being too cheap can be just as off-putting!

Think about the skills you have, the time it takes you to provide work, and any materials or supplies you’ll need to complete the job. Don’t be afraid to set a higher rate if necessary!

The type and amount of tax you’ll pay on your freelance profits depends on how you structure your business. For most freelancers this involves registering as a sole trader because it’s free and simple to do.

As a sole trader there isn’t any legal differentiation between the business and you as an individual, so you can simply keep any profits that you make. You’ll need to report these profits and pay tax on them by submitting Self Assessment tax returns.

Some freelancers prefer to operate as a limited company because this type of business is a separate legal entity in its own right. It means that any debts belong to the business, rather than to you as the owner, which can be useful if you plan to work in a particularly high-risk industry, but this also means the company owns any profits too – so you’ll need to think about how you pay yourself from the business.

Your reporting responsibilities can be more complicated in a limited company too, for example:

Bookkeeping is the process of recording the transactions in your business in a consistent way. It may seem like a lot of effort, but bookkeeping is essential in any business. Your accounting records form the basis of every tax return you need to submit, so it’s important that they’re accurate and up to date!

They can be useful in other ways too. For example, if you an invoice a client and record this in your bookkeeping, you’ll be able to keep track of whether or not they’ve paid (and you’ll know when it’s time to follow up if they haven’t). Good record keeping also means you have a better chance of staying on top of all your expenses – so you can claim tax relief on them when the time comes!
Are you a freelancer looking for free bookkeeping software? We have you covered. Learn more about Pandle’s bookkeeping tools, and create your free account today. Yes, it really is free, and no, we won’t ask for your bank details!

Rachael Anderson

A creative content writer specialising across business, finance and software topics. I have a love for all things writing, and creating engaging, easy to understand content that helps everyday people!

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