Switching from a 9-to-5 job to running your own independent business can be rewarding—and word is spreading. The 2019 Freelancing in America survey found that, for the first time since its launch in 2014, as many freelancers view self-employment as a long-term career choice as those who view it as a temporary way to make money.
But it has its challenges. Read on to help decide whether it’s time to work for yourself, then download this handy checklist to help track your progress (PDF attached at the bottom of this post).
The reality is that not everyone is up for the task of being a solopreneur. And that’s okay! Take a moment to evaluate your work habits and organizational skills:
If the answer to these questions is yes, self-employment may be a good option. Being your own boss means you need to be able to prioritize, organize, be comfortable with independence, and be open to a certain degree of risk.
However, if you do best when working on projects that are managed by someone else, or if you find working on your own very lonely, you might find running your own business stressful or isolating.
How market-ready is your skillset? Take a look at your experience and skills—both hard and soft. How in-demand are they? And how can you package your skills and services to best attract the type of projects you’re interested in?
Here are a few areas to look at:
You’ll also need to hone your business strategy skills. “How you organize your business is every bit as critical to your success as the quality of the product or service you offer,” said full-time contract writer Christopher Clemence.
The uncertainty you started thinking about earlier in this post? Much of that applies to your finances. From balancing your rates with your expenses and making sure you capture everything, there are a lot of financial elements to consider. For example:
Create a budget: List your monthly and annual personal expenses (i.e., rent/mortgage, groceries, transportation) and business expenses (i.e., coworking space, computer) to figure out how much money you need to make. Other expenses are optional but still important, such as travel, holiday gifts, and charitable contributions. And don’t forget your emergency fund. Check out these tips to help automate your financial management.
Set your rate: Set an hourly or project-based rate that is commensurate with your level of experience and the quality of work you deliver. Market trends, potential risks, and your desired profit are key things to consider—charge what you’re worth and always deliver quality. Avoid common mistakes, such as undercharging or using your previous salary as a benchmark. And when you’re ready for the next step, try these six methods for raising your rates without losing any clients.
Get insurance: Unexpected things happen and getting insurance for your business can help keep you covered. But getting the right coverage can be confusing; if you’re looking for a place to start when it comes to insurance, we suggest these resources on incorporation insurance and health insurance and disability. You can also learn more by reading “Liability Insurance 101” and “Important Insurance Information for Freelancers.”
Consider your business type: Do you know if you should be a sole proprietorship, an LLC, or an S-Corp? Here’s a look at the five business entities you should know about.
Setting up a legal entity can also save you money at tax time. The best person to talk to about your options is an accountant or tax attorney in your area. They can help make sure you’re compliant with any applicable regulations. And speaking of taxes…
It’s of the utmost importance to research, understand, and plan for your tax obligations. While every location is different, the U.S. tax code offers a number of benefits and deductions for self-employed workers—from a home office deduction to a larger retirement plan contribution limit.
Proper planning can help prevent you from getting stuck with a big payment or penalty at the end of the year, so we recommend contacting a qualified professional to make sure you’re covered. You can also check in with the Tax Withholding Estimator from the IRS.
And don’t forget about retirement funds! Your future self will thank you for considering a gift that keeps on giving. To learn more about how you can plan ahead and manage your small business finances, check out our Upwork Business Resources.
(This article provides general information only. This article does not address all issues for freelancers, may not contain current or complete information, and cannot and should not be relied upon as legal or tax advice. Readers are strongly encouraged to seek tax advice based on their particular circumstances from an independent tax advisor.)
You don’t have to have a fancy co-working space or specific office building to go to, but it’s essential to have a dedicated spot where you can stay organized, focus, and create a professional setup.
Not sure where to get started? Check out these workspace resources.
Next, make sure you have the proper equipment to do the work—and backups to keep that work protected. This might include:
If you’re in a specialized field and need additional equipment, ensure you budget accordingly.
Promoting your business is critical to success—marketing yourself and searching for the projects that align with your capabilities. Remember, you are your own chief marketing officer!
Here are some important marketing tasks to put on your to-do list:
Investing your attention to communicate about your story, product, and service clearly can help your client-base grow.
If business is booming, it might be time to make your move from Top Rated Freelancer to Agency Owner. An agency on Upwork is an account used by businesses with multiple team members who collaborate on client projects. By partnering with independent professionals who have complementary skills, you can pursue larger and more complex projects.
While starting an agency is not for everyone, with patience, persistence—and yes, a lot of hard work—you can grow your solo enterprise into a thriving agency. Here are five things to consider first as well as a guide to grow your agency’s business once you get started.
Running your own business can be challenging, but it can also be very rewarding. Remember, it’s all up to you to shape your business, your reputation, and your own success. Share your journey with us on Facebook and Twitter!