A beginner’s guide to freelancing

This was first written in October 2006 and was revised and expanded in May 2011. (The original version is here.)

I’ve been freelancing since 2003, first as a sole trader and more recently with a limited company. The title still has a double meaning — this is both for beginners and by a beginner, because I know I still have a lot to learn. This post is a summary of things I’ve learned so far, and suggestions from other people.

Some of this might only be relevant to coders or web designers, and some of the financial stuff will only be relevant to UK readers, but I hope there’s plenty interesting for anyone thinking of going freelance in any field.

If I’ve missed something, either post in the comments or email me (phil [at] gyford [dot] com) and I’ll update the page.

Contents

  1. When to start freelancing
  2. You are your own marketing department
  3. You are your own boss
  4. You are your own HR department
  5. You are your own accounts department
  6. You are your own project manager
  7. You are your own account handler
  8. You are your own legal department
  9. You are your own IT department
  10. You are your own career adviser
  11. Conclusion
  12. Further reading

1. When to start freelancing

I was fortunate in that I was made redundant, stumbled into freelancing because I couldn’t think where to apply for a job, and it all worked out.

If, like many potential freelancers, you’re in a job and unsure about whether to take the plunge, here’s what you should do first:

  • Decide why you want to freelance. What’s your aim? Maybe you want to do a specific kind of work, or work with a certain kind of person or company? Maybe you simply want to avoid commuting. Maybe you want to earn as much money as possible or work as little time as possible. Whatever the reason, it would help now and in the future to be clear on your ambition, even if it’s only so you can check back occasionally if you’re feeling dispirited.

  • Work out how much money you spend each month, and how much you need to scrape by. It’s useful to know what your break even point will be.

  • Save some money. Even if you begin a paid project the day after you leave employment, you might not see any income from it for a couple of months or more.

  • Think about how you’re going to get work (see You are your marketing department for more). Ask friends and contacts if they employ freelancers in your field and whether your skills would be suitable. If someone says “Yes, I’ll give you loads of work!” don’t quit your job just because of that; there’s a big difference between a suggestion or promise of future work and a signed contract.

2. You are your own marketing department

I hate the idea of marketing but as a freelancer you can’t avoid the fact that you must sell yourself to get work. The first thing to do is to tell everyone you know that you’re available for work. Also tell them exactly what it is you can do and want to do. Even people you know well might not know exactly where your skills and ambitions lie. You can’t be too clear. Email, phone, IM or just talk to people and let them know. Don’t assume everyone will hear about it if you don’t tell them directly (not everyone follows you on Twitter).

You should have a website, or at least a page, even if your line of work is nothing to do with the internet. Your Facebook or Twitter page doesn’t count. A website serves two purposes.

First, you should have a page that describes what you can do, with examples of your work. Make it as clear and simple as possible (here’s mine although I’m not saying it’s a perfect example). This isn’t necessarily so people can stumble across it and decide to hire you, although they might; it’s more so that your friend can email the link to their boss and say “we should hire this guy”. It’s a page to point at that describes what you can do to people who don’t know you. Without this, you’re just a name.

The second point of a website is to keep you visible. Blog. Tweet about anything new you’ve done. Write about your field so people can see where your interests and talents lie. Post things about work you’ve just completed so that people can see what you’re working on, and that you’re still freelancing. If you’ve got no work don’t feel too ashamed about saying so. It’s easy for people to assume you’re fully booked, or have stopped freelancing, unless you remind them occasionally.

Of course, putting yourself about in the real world is just as important (and something I’m particularly bad at). If you’re working from home this is especially important. Meet friends and colleagues for lunch, coffee, drinks, whatever. Go to any industry social gatherings you can face. Go to conferences.

If you really want to get yourself known, and your field has conferences, and you have things worth saying, speak at the conferences. I used to think it was a lot of effort just to make contact with a relatively small number of people, compared to all those people on the Internet. But it’s a chance to talk uninterrupted to dozens or hundreds of people for twenty solid minutes (or whatever). You don’t often get to do that. It’s a good way to think through your ideas and set out your stall. It may generate other publicity via Twitter and the web, and you’ll get to meet interesting people.

I haven’t done a lot of this myself, but Suw Charman-Anderson wrote a handy guide on how to become a conference speaker.

3. You are your own boss

Home distractions vs office distractions

For the first few years of my freelancing life I worked from home. Occasionally, particularly if working for an agency, I’d go to their office (in which case having your own laptop to take is essential).

I’d heard that working from home could be difficult, that it’s hard to keep work and home life separate. I didn’t think it would be a problem as I’m fairly disciplined and organised. But no, it really can be difficult, particularly if you like to spend some of your free time doing something similar to work (eg, making websites) — the two can inconveniently overlap however hard you try.

Other downsides to working from home:

  • You need to be organised and conscientious — there’s no boss to look over your shoulder.
  • There’s no one to talk to. Twitter, IM and email don’t make up for real life chat.
  • Home has its own variety of distractions: popping to the shops, doing the washing, watching TV, raiding the fridge, and anything else that seems more appealing than work.

But there are plenty of good things about being at home:

  • No commuting.
  • No office politics.
  • No pointless meetings.
  • Peace and quiet (or your own music).
  • The comfort of your own working set-up (desk, chair, screen, etc.).

I’m not sure whether working from home provides greater or fewer distractions than being in an office. A lot of time in some offices seems to be spent chatting, laughing at YouTube videos, having meetings, playing pool, making tea, having more meetings, etc. On the other hand, when there’s no one around to notice what’s on your screen the distractions (or addictions) of Facebook, Twitter and email seem so much greater. Working from home can require more discipline to avoid distractions.

For the past year or so I’ve been renting a desk in an office shared with friends. If you can find some people you’d like to spend working days with I can recommend this as a good balance. Even as someone who likes spending time alone, working at home for weeks on end doesn’t feel entirely healthy. A shared office can have the downsides of commuting, increased expense, more distractions… but it seems a good balance. And you can always work at home sometimes too. If you’re in the UK Office Genie has listings of desks to rent, although I’ve never used it.

Working hours

One of the supposed great benefits about freelancing is “you make your own hours”. Well, kind of.

If you want to work fewer hours per day, or days per week, you need to be very definite about it and be strict with yourself.

I generally try to keep Fridays free to work on my own things, but if I haven’t had much work and someone comes along with a good and/or well-paid five-days-a-week contract, it can be hard to say no. Ryan Carson has some good advice from when he decided to work a four day week.

I mentally mark weekends as completely off-limits and in several years of freelancing I’ve only worked at a weekend a couple of times. This is easier if you’re being paid by the day, rather than a lump sum to complete a project and the deadline is looming and you haven’t got enough done…

What hours each day do you want to work? Again, be strict with yourself or else it’s easy for distractions to eat into your work time. I’ve found it simplest to stick to fairly normal office hours. If I’m not working at a client’s office I might pop to the gym mid-morning and finish an hour later in the evening, but otherwise keeping regular hours is a good way to keep work separate from play — it’s easier for everyone to make the distinction. Having fairly standard hours also means you’ll be available when the client is at work (assuming they’re in the same timezone). Also, while you might work better from 6pm until the early hours, many clients will think it unprofessional and may find it hard to picture how much time they’re getting for their money.

On the flip side, some clients might think you should be available to answer their questions, or do bits and pieces of work, at odd hours. If you’re quite clear about your working hours it’s easier to say “That’s fine, but I’ll have to do it first thing tomorrow.” More on this kind of thing in You are your own account manager.

Paul Graham has an interesting post about the types of schedules different kinds of workers favour, and how disruptive meetings can be to the days of some people. Worth thinking about if you need to arrange meetings.

Another aspect of how much time you spend working is what holidays you take. Although you can, in theory, have holidays whenever you like it is harder when you’re freelancing. I always feel wary of booking holiday far in advance in case my dream project turns up at the same time. I’m getting better at ignoring this and just booking holidays and haven’t regretted it so far.

Holidays also feel more expensive than they would if you had a “proper job” because every week off is a week when you’re earning no money. I’ve got round this feeling a bit by paying myself a regular amount each month, but this does take planning and a financial cushion (see Bank accounts).

This year, for the first time, I’m keeping track of how many days of holiday I’ve taken, just as if I was at a real company with a real holiday allowance. I figure that if I get close to the end of the year and haven’t taken my 25 days of holiday (or whatever number you choose) then I’m owed some time off. It can be hard to work out what counts as “holiday” when you have no client work on. For me, even if I’m not doing paying work, if I go to the office and do useful internetty stuff, it’s a working day, not holiday.

4. You are your own HR department

Whether you’re working at home or at your desk in a shared office, make sure you have a good working environment. Working on a laptop on the sofa might be comfy but it won’t do your body any favours after 40+ hours every week.

  • Buy a decent desk and chair and position your monitor at a suitable height.
  • Look away from the screen every few minutes (if you play music, look out the window, stretch your arms and move your shoulders whenever the song changes).
  • Get up and walk around and stretch at least once an hour.
  • Have your eyes tested at least once a year.
  • Get some exercise. If you’re working at home and not even walking to the train station you need to find a way to get some exercise a few times a week, Tubby.

This is all dull but important nonetheless. If you’re young and about to ignore the above, please just do it and come and thank me in ten or twenty years when all your friends are hunched over, half-blind and only able to earn a living by consuming prescription pain-killers. Really.

5. You are your own accounts department

Keeping track of income, expenses, tax, etc can be a nightmare for some people. You do have to be organised but it shouldn’t be too complicated. Some of what I say in this section is very specific to the UK, but hopefully there’s some good general advice for others too.

Your main choice, from a legal and financial standpoint, is whether to be purely a sole trader (you invoice people directly) or whether to form a limited company (a legal entity from which you invoice clients and which pays you money). The latter involves a bit more paperwork (both to set up and at the end of each financial year) but can save you money if you income is above a certain amount.

I’ll first discuss finances for sole traders, as it’s simplest and most peoples’ first step, and then discuss the differences for limited companies.

When you start freelancing, if you’re in the UK, call Revenue & Customs and tell them you’re going freelance. They keep a record of this and you’ll have to do Self Assessment tax returns each year (which some people, mostly higher earners, do even if they have normal jobs). They also have a page all about Self Assessment for the Self Employed and there’s a page about becoming self employed generally.

Bank accounts

You should open a separate bank account for your work-related money (just a regular current account; it doesn’t have to be a “business” account). I’m not sure it’s strictly/legally necessary for sole traders but it makes things much less confusing. I didn’t do this at first but would now recommend keeping “business” and “personal” finances as separate as possible — treat your work like a “business” even if it’s not technically a “company”.

Have clients pay money directly into your work bank account and pay for work-related expenses from it. When you want money for you, personally, transfer money from the work account to your personal one.

Just as it’s a good idea to have some savings before you start freelancing it’s worth trying to keep some savings in case of cash flow problems. It only takes a quiet month and a late payment or two and you may not have income for 2-3 months. If you manage to build up a pot of savings in your work account I can recommend transferring a regular monthly amount to your personal account, rather than ad-hoc amounts whenever cash comes in. It’s a good way to smooth out any ups and downs in your work income and gives you a better feeling for how much you’re earning, on average.

You might also want to set up a second account, probably a savings account, for the money you owe the taxman, as suggested at greater length by Doug Bowman. Whenever some money is paid into your work current account, immediately pay a percentage into your work savings account so that when tax time arrives you have the money to hand. How much to put aside? You can estimate your annual gross income and work out how much of it will need to go in tax (and National Insurance if you’re in the UK). Doug suggests 30%. I’ve been putting 25% aside which has done me alright so far, but the more you earn, the larger percentage you’ll need to put aside (more of your income may be within a higher tax bracket).

In summary, you’ll have:

  1. Your existing personal bank account(s).
  2. A current account for all your work-related income and expenditure.
  3. A savings account for putting money aside to pay tax with.

Invoicing

When you finish some work for a client you send them an invoice which, in theory, puts into motion their processes for ensuring you get paid.

When to send invoices depends on the job, and if it’s not clear it’s worth asking the client what they expect before you start work. If the work is going to take a month or less I usually invoice once the project’s complete and the client’s happy. If it goes on for longer I usually invoice at the end of each month (either calendar month or after a month of work), but check with the client.

The government’s Business Link site has a good page about what information an invoice should contain. In addition to that, a few other things that I do:

  • I put the word ‘INVOICE’ at the very top of the page. It can’t hurt to make it clear exactly what this piece of paper is.

  • I make up a unique reference number for each invoice by combining the current date with a counter. So invoice 20110506/01 is the first invoice sent on 6th May 2011.

  • If the client has a reference number, purchase order number, etc, include that on your invoice.

  • When it comes to the “clear description of what you are charging for” I tend to break this up a bit. I usually charge per day, so I’ll tend to list each week on a separate line with the number of days worked that week.

  • If you’d like the client to pay direct into your bank account, provide the necessary details. So that’s the bank name and address, account name, account number and sort code. If you’re doing work for foreign clients you’ll need to include both the “SWIFT/BIC” code for your bank and the “IBAN” number for your account. Ask your bank.

  • Terms — by when do you expect payment? At the bottom of the invoice I include the phrase “Payment by transfer within 30 days” unless something else has been agreed with the client previously.

  • I also include the phrase “We understand and will exercise our statutory right to claim interest and compensation for debt recovery costs under the late payment legislation if we are not paid according to agreed credit terms” which I think I found on the Better Payment Practice Campaign site, although I’ve never had to worry about that kind of thing thankfully.

I usually send a PDF of the invoice via email, and haven’t had any complaints, although a few larger organisations have a separate postal address to which I mail a paper version instead.

What records to keep

Whether you hire an accountant (see below) or not you must keep records of your incomings and outgoings. I still use a fairly low-tech method involving a spreadsheet for each financial year. Many people I know use an online service for keeping track of these things, plus sending invoices, reconciling things with their bank accounts etc. I’ve heard each of these services being recommended:

  • Xero. This is probably overkill if you’re a sole trader, but people I know with limited companies of varying sizes are very enthusiastic about it. American, but works well in the UK.
  • FreeAgent. This is aimed at “freelancers and small businesses” and I’ve heard many good things about how easy it is to use. Bsed in the UK.
  • Crunch. A couple of people said good things about this UK-based service. Looks like it involves more contact and advice from humans.

Income

In my low-tech spreadsheet, every year I have one page for income, one for expenses. The income list has the following columns:

  • Date invoice was sent
  • Date invoice was paid
  • My reference number
  • Client name
  • Project
  • Amount charged
  • Amount to put aside for tax

If you’re in the EU and registered for VAT (see below) you might replace the last two columns with:

  • Net amount charged
  • VAT charged
  • Total amount charged
  • VAT owed to HMRC (which, if you register for the Flat Rate Scheme, will be less than the amount you charged, see below).
  • Amount to put aside for tax

At the end of the tax year I copy any unpaid invoices over to the next year’s spreadsheet. You should still list any unpaid invoices in the original spreadsheet however, as they represent money owed to you in that year.

Expenses

The other page of the spreadsheet lists my expenses. There are columns for:

  • Date
  • My reference number (again, make up your own system)
  • Company/shop name
  • Item name
  • Cost

Every time you spend money get a receipt (or, with online purchases, print out your email confirmation), write your reference number on it, and put it with all your other receipts for the current tax year (in an envelope, shoe box, or just paperclip them together). The more organised you are through the year, the less of a nightmare you or your accountant will have (and an easier job for an accountant means paying them less).

You could separate the expenses into different categories. My old accountant suggested these, but I’ve no idea if they’re ideal:

  • Direct costs
  • Labour costs
  • Repairs & Renewals
  • Printing, Postage & Stationary
  • Subscriptions
  • Protective Clothing
  • Computer Consumables
  • Research, Books & Journals
  • Mobile phone
  • Landline
  • Car expenses
  • Travel & subsistence UK
  • Travel & subsistence abroad
  • Advertising & promotion
  • Professional Indemnity Insurance
  • Bank Charges and Interest
  • Other Finance Charges
  • Capital Computer
  • Capital Car
  • Capital Equipment
  • Services
  • Misc

Basically you can include anything you buy solely for work and a percentage of things you buy partly for work. If you work from home a proportion of your bills could count as expenses. There are many grey areas and I probably err on the side of caution as to what counts as a legitmate expense.

When the end of the tax year comes around you subtract your total expenses from your total income to work out your net income, the amount on which you’re taxed. (Yes, this is a very simple explanation.) Which means that if, say, you’re paying 22% income tax you’re effectively buying anything expensable at a 22% discount.

Is an accountant necessary?

It depends on how prepared you are to do your own tax returns etc, and how much income and expenses you have. I expect that the more complicated and substantial your finances, the more the cost of paying an accountant will be worthwhile in the money they save you. My finances are pretty simple and I pay about £400 for a set of very simple accounts and a completed tax return. Of course, an accountant can also provide advice on other things you could be doing to save money. Even many of the friends who recommended services like Xero, FreeAgent, etc. still pay for accountants.

Unless you enjoy doing all this stuff yourself, and taking time off paying work to do it, ask friends if they can recommend accountants. It may be a good idea to talk to the accountant first about your business to get a feel for whether you like them. Don’t be afraid to say “no thanks” there and then, or at any point during your working relationship, if you feel they’re not right for you in some way. You’re putting a lot of trust in them — you’re still ultimately responsible for signing off your tax returns — so you should be happy with the accountant and their work. This is the voice of experience.

If you don’t know anything about accounts it may be useful to get a basic understanding, so your eyes don’t glaze over too much when talking to your accountant. I’m currently reading Anthony Rice’s Accounts Demystified which a friend recommended, and which seems nice and clear (and UK-oriented).

VAT

If you’re in the UK (and, I assume, the rest of the EU) you can become VAT registered. In the UK you must register for VAT if your “taxable supplies” (what you charge clients) are over £73,000 per year (as of 2011/12). If you bring in less than that you can voluntarily register. Read more on registering for VAT in the UK.

When you’re registered you must add VAT on top of your charges to clients (that’s 20% at time of writing). If you only deal with other VAT-registered entities (ie, businesses) this isn’t a problem as they will claim the VAT back from the government eventually. I’ve rarely had a problem with this. If you deal with individuals who aren’t VAT registered you’ll be effectively raising the price of your services by 20% which is less good.

On the plus side, you get to claim back all the VAT you spend on purchasing goods and services.

Once you’ve registered you’ll have to complete a VAT return every quarter outlining the VAT you’ve charged and paid.

Rather than registering for VAT normally another option is the Flat Rate Scheme, which is much simpler. You add VAT when you invoice as normal, but you no longer have to keep track of VAT on individual purchases. Instead you pay a flat percentage of your income, a percentage that’s lower than the VAT rate. This means you gain a small amount on the difference. It’s not a huge amount of money but it can be worth the minimal quarterly hassle of filling out a simple VAT return.

For example, you invoice a company for £1,000 and add 20% VAT, making a total charge of £1,200. At the end of the quarter you fill out your VAT return and send HMRC a percentage of your income (the percentage assigned to you depends on your trade; mine is currently 14.5%). In this case we pay 14.5% of £1,200: £174. This leaves us £26 better off than if we hadn’t registered for VAT, before paying income tax. Not a lot, but it all adds up.

As with income tax there is, of course, much more to it than I’ve mentioned here. And don’t blindly take my advice without checking with someone who knows what they’re talking about!

Forming a limited company

Should you form a limited company or stay as a sole trader? There are some financial advantages in forming a company and it can also make you seem more professional and capable.

Forming a limited company creates a legal entity of which you are probably the director (and probably only employee). When you do work for clients you do so under the company name (which should go on contracts) and your invoices are sent under the company’s name instead of your own. You will need a proper “business” bank account (which tend to have more charges) and it’s more important to keep the finances of your company and you as an individual separate.

There may be varying ways to receive money yourself, but one way is to have a salary of a small amount (enough to keep paying National Insurance contributions) and receive the rest of your income as dividends (either way, it’s just transferring amounts from your business bank account to your personal one). This is where I currently start to get a bit hand-wavy and vague, which means it’s best to consult an accountant before doing any of this.

Is it worth doing? The main reason is usually to pay less tax overall (mainly due to the slightly lower level of corporate tax compared to personal tax levels). This page on an accountants’ website offers some suggested savings at different levels of income. I’ve also read an earlier version of Using a Comany to Save Tax which was pretty good.

Another benefit is that you, personally, are shielded from liabilities. If someone breaks their leg because of your shoddy work, then sues your company, the worst that can happen is your company being bankrupted, rather than you losing your home, car and life savings. (But I am not a lawyer.)

It also, I think, helps you feel “bigger” somehow. If you’ve got a company you could now do all the things real companies do. You could hire people! It feels like a step towards expanding your business to greater things, if that’s something you’re interested in.

But it does mean more admin overhead. There are forms to fill in when setting up and then every year you need a set of accounts for your company, filed with Companies House, and a tax return. If you use an accountant, which is more likely if you’re going this route, you’ll incur extra accountancy fees.

If you’re registered for VAT as a sole trader and later form a limited company, you can transfer the VAT registration to the new company and keep the same VAT number.

Personally, I avoided forming a limited company for a few years because I like to keep things simple and I didn’t think I’d save much money. I’ve now had a limited company for a few years and it’s probably been worth it financially and, aside from higher accountants’ fees it hasn’t been any hassle. Other people I know who have gone freelance recently have set up limited companies from day one.

How much to charge

Working out how much to charge clients is very difficult. There are many variables at play (your experience, your speed, tightness of deadlines, type of client, etc) and it’s not something for which people freely give solid examples. I wrestled with this early on and had some useful comments posted.

Most of my work has been at a standard day rate — the client will hire me for a set amount of time and pay me accordingly. The alternative is to be asked how much a particular project will cost to build. Either way, you need to work out how much you charge per day.

When pricing an entire project you’ll need as many details about it as possible. Break it down into small parts and work out how long each will take. This can take a long time and can be difficult — certainly, it’s not something I’m good at. I tend to be over-optimistic so I usually add a bit of extra time on to allow for the inevitable and unexpected problems, and all those final little details that take a surprisingly large amount of time when you’ve “nearly finished”. Also, be clear what is and isn’t included so you can charge extra for any additional work. Once you’ve worked out how long the project will take, and you know your day rate, you know the cost of the project.

How to set your day rate? Anil Dash suggests that clients should be shocked when you tell them. Steve Friedl’s consulting guide says “If you’re booked up solid, your rates are too low.” Here’s an “Hourly Rate Calculator”.

Not only do you have to allow for your own skills in your price but the price changes depending on the client. Simply, some clients will have more money than others and are used to paying larger amounts. You need to factor this in with how much you want to do the work:

  • Will it be fun or a chore?
  • Will you learn new skills and meet interesting new people?
  • Will it be something you can show future potential clients to generate new business? I’ve done quite a few internal-use-only, prototype websites which are fun to work on but don’t get seen outside the client’s company.
  • Will you own any of the intellectual property or will your client own everything you’ve done? (Usually it’s the latter.)
  • Will it be a long project of constant work that might earn them a discount? One long project is less hassle than lots of short ones. If you’re going to do this, make it clear you’re offering your client a discount off your standard price.

Matt Webb has some interesting thoughts on this kind of weighing up.

Stowe Boyd uses the Ten Day Rule: he plans to do client work ten days per month, and charges accordingly.

As for my own experience… Most of my clients have been businesses rather than charities — I’m doing this for money so I can afford to do other fun and interesting things in my non-work time. But there’s a big difference in what different businesses will pay for the same work. For example, you’re doing work for a new media agency on a project for their client EndlessMegacorp. The agency might be prepared to pay you amount x for a day’s work, but they’ll be charging EndlessMegacorp amount x+y (quite possibly a multiple of x) for the same day’s work (which, to be fair, includes the agency’s greater overheads).

On the other hand, if you do some work directly for EndlessMegacorp, or some other large company that often employs new media agencies, they’re less likely to blink when you suggest a day rate that’s larger than x. On the downside, you then have to handle the client, do some project management, etc.

It’s very hard to give specific advice about what to charge because there are so many factors involved. For my kind of work (which itself varies a lot), with my kind of client, with my sort of experience, I’ve charged between £400 and £800 per day over recent years.

Pension

No, not exciting, but worth mentioning. If you’re freelancing you’ve got no company pension scheme so you should sort one out. Now, rather than later. Who knows, it might even be worth something one day.

6. You are your own project manager

You need to keep track of how long you spend working on each project. If you’re getting paid by the day you need to know how much to charge. If it’s a flat-fee for a project it’s still useful for you to know how long the project took (and how long each part of it took) so you have a better guide next time you’re asked for a similar quote.

I don’t have a sophisticated system for this. I mark full or half days worked for a client in my calendar and sometimes keep track at a more detailed level elsewhere, particularly for a flat-fee project. There are various tools to help with this kind of thing such as Billable for the Mac and the web-based Side Job Track and Harvest (which a few friends have recommended).

You should also keep notes of meetings and phone calls. Even if your memory is better than mine these may come in very useful when trying to recall if a particular feature is in or out after a weekend of not thinking about work.

Not long after starting to freelance I wanted one place to keep track of all my work notes. Seeing as I already had a weblog system in place I settled on creating a private weblog. I have categories for each client and project, and every day I post an entry outlining what I’ve done that day (maybe simply pasting in an email I’ve sent the client). Notes of meetings and phone calls go in there along with snippets of code and anything else that might be useful. I’ve never had a client ask me to account for my time, but I’d like to be able to provide them with a good answer if they ever do.

Because every project has a slight overhead in terms of setting it up (meetings etc), running it (client contact, space in your brain, etc), and winding it down (invoicing, archiving, etc), the fewer projects you have running at once, the simpler life will be. If you have five projects on the go and you’re working one day a week on each you’ll have a harder job than if you’re spending all week on a single job. Of course, often one takes what one gets, but it’s worth bearing in mind.

Scheduling projects in advance can be tricky. Some clients will be eager for you to start right away but then have to delay you because of some internal bureaucracy. Some clients will say they definitely need you, but not for a couple of weeks, only for the project not to happen after all, or to only start two months later.

Given that I often don’t have written contracts there’s an added element of vagueness about scheduling. My rule of thumb is to assume the project won’t happen until the client gives a definite start date, deadline (or number of days the job will last) and agrees the fee. It could still fall through but not as frequently as all the projects that are “going to happen next month probably”. I’ve probably had nearly as many “possible” projects not materialise as I’ve had definite projects that I actually worked on, so I’ve learned not to get my hopes up.

While a lot of jobs can be quite last minute it is possible to get booked up — there have been a few times when I’ve been booked up for three months ahead and have turned other clients away because I didn’t want to be tied down for any longer (I might as well have had a proper job if I wanted that!).

7. You are your own account handler

Communicating with your client is important, particularly if you’re working off-site where the client can’t see you. Once you’ve started a project I’d suggest a minimum of emailing the client at the end of each day with an outline of what you’ve done. There are no hard and fast rules, and each client is different, but don’t assume that they think everything is going smoothly if they don’t hear from you. You might be able to ease off a bit once the project gets going.

If you email, post or FTP work to the client (designs, HTML templates, etc), be sure to keep a copy. If you do work on-site at a client’s office, keep a copy of what you’ve done. (Obviously, this is harder if, say, you’re working on an existing codebase, but then it’s hopefully all version controlled so you won’t need to keep copies of anything.) On a couple of occasions I’ve had clients come back to me weeks after a project ended as they’ve lost the work I did for them and they were extremely grateful when I was able to immediately send them another copy.

Also, if the client sends you designs, code or documents to work from, keep them safe somewhere and work from copies — it can be very handy to have untouched versions in case something goes wrong.

Earlier I discussed working hours and these can have an effect on your relationship with a client. Unless you confirm things beforehand the client probably assumes you’re going to be working fairly regular office hours. If they call mid-morning and don’t hear back until the evening because you’ve decided you’re working into the night, it won’t go down well. And to be honest, for most clients, it’s going to be harder for them to feel confident about you if you work irregular or unusual hours.

Of course, some clients will work irregular hours and in return, unless you’ve agreed otherwise, you should stick to your regular hours. Just because the client emails you at 11pm with some notes don’t feel you have to respond until the next day. If the client gets used to you responding late at night then they may come to expect it.

Generally, make it as obvious as possible when you’re working and when you’re not. If you’re working in a client’s office they know, otherwise they don’t know unless you help them.

You should also be prepared for clients wanting to talk about their project while you’re working on a different one. This is inevitable, particularly if you often have a few projects current at once, and it’s a balancing act — obviously, if a client is paying for you to work for them today, they have priority, but you don’t want to be completely unavailable to other clients (unless you’ve warned them first).

Finally, a new client will involve more overhead in terms of communication, bureaucracy, getting to know each other, peculiar invoicing and payment methods, etc. Clients with whom you already get on, and may have future work, are worth keeping hold of.

Should you expect a contract when you begin a project? I can only say that I’ve done a lot of work for clients with nothing more than a verbal agreement and I’ve never had a dispute over payment from either side. I may have been extraordinarily lucky, and a large number of my clients have been people I already know or are friends of friends. If I was working for an individual I had no connection to I’d probably be more keen on getting something in writing, but I’d be less worried with a reputable company I didn’t know (they’re less likely to disappear overnight).

Larger companies will often provide a contract, although they vary in their efficiency at getting it ready, which can be a problem if you’re both otherwise ready to start work. One large company I’ve worked for sometimes ends up providing lengthy contracts for me to sign after all the work has been completed, such is the bureaucracy.

Depending on your work you may need more involved legal documents. Something like ContractStore might be useful: fairly low-cost standard format contracts for different purposes. (I’ve never used them myself.)

Occasionally I’ve worked for a large public service media organisation that has stipulated I should have £1 million of indemnity insurance. It might be a useful thing to have anyway I guess. If you need something like that Hiscox are one provider (I used them but never had to claim anything) and you can sign up immediately online.

9. You are your own IT department

When you’re working for yourself there are a few techy things to remember.

If your computer dies — dodgy disk, overheating, OS upgrade that goes wrong, etc — any time you spend fixing it is time you’re not earning. If you’re on a tight deadline and your computer’s unusable, you’re in trouble. I’ve kept my old laptop around in case my new(er) one dies and I need a rapid, if slow, replacement.

If you get a new computer — because the other one died or just because they’re shiny and irresistable — the time it takes you to install and configure all your favourite applications and extra doodads is also time out from doing paying work.

The same issues affect any part of your personal IT infrastructure — if your wifi goes down, your router mysteriously stops working, or your ADSL suddenly cuts out, it’s bound to be at the moment you really, really need it. Think about where you’ll work if your home or office is cut off.

Finally, backups. Losing your own data is bad enough, but if you lose something you’ve spent a couple of weeks working on for someone else it’s possibly even worse. They’re not going to pay you to do it again, so you’ve got a lot of unpaid and very dull catching up to do. And if it happens just before a deadline you’ve also got some explaining to do.

You should be backing up your work, email, and anything else vital, at least once a day. If you’ve got a Mac you’ve got no excuse not to buy an external drive and painlessly back your computer up using Apple’s Time Machine. Ideally you should back things up off-site too. The cost of something like Backblaze or Mozy, both popular with people I know, will more than pay for itself when something goes wrong.

10. You are your own careers adviser

If you have a proper job then career progression is often more obvious. Your role might change if it’s a quickly expanding company, you might become responsible for new hires below you, you might get promoted, you might move to a different post in the company, or you may leave for a better job elsewhere.

If you’re freelancing, on your own, it’s very easy to effectively stay in the same job for a long time. You can become known for doing a certain type of work, so that might be all you’re offered. There’s also a limit to the scale of work you can accomplish on your own, whereas in a company you can be one part of a team working on something bigger.

It’s easy to stagnate, particularly if you’re lucky enough to have lots of work — there’s no time to stop and think about what you want to do, to develop new skills, or to create examples of other things you can do to attract different work. So, particularly if you’ve been freelancing for a while, it’s good to set aside time to read, play, meet new people, and make sure you’re heading in the right direction.

On the other hand, if you work with a variety of clients you do get to see how many companies operate — both in terms of processes and code (if you’re a programmer). This can give you wider horizons than if you work for the same company for years. But, back on the first hand, particularly if you’re usually producing work from scratch without input from others, it’s easy to get stuck in a rut of how you design, code, etc, as you see too much of your own work and too few examples of how else to do things. If you’re on your own it’s also harder to ask others for advice about how to tackle something.

There is also the issue of feedback, or the lack of it. Hopefully, in any decent company, you get a sense of whether colleagues like your work or not — it’s easier to give feedback when you’re face to face, even if it’s just a few words. You also get formal appraisals and while (in my experience) they’re rushed through as quickly as possible they can be useful.

If you’re working remotely however, you often don’t get much feedback. I suspect this is simply because everyone is too busy and unless you’re face-to-face decent feedback is the kind of thing that gets forgotten. It’s useful to know if you’ve exceeded or failed to meet expectations, and in what way, or you feel like you’re working in a void.

As your own careers adviser you should be asking if you’re heading in the right direction. Are you aims still the same? If you feel stuck, or you’re not sure, talking to friends or colleagues can be useful for some ideas and inspiration. I haven’t used a proper mentor myself, but friends have done and are glad they did. Martin Vogel has some good posts on finding and working with a coach.

11. Conclusion

Although I fell into freelancing for a negative reason — I couldn’t think of a company I wanted to work for or a role I wanted to fill — it’s been a good few years. In that time I’ve done a larger amount of more varied work than in any three years of having a “proper job”. I’ve also had much more time to work on my own projects while still, overall, making alright money. I’ve worked with interesting and lovely people on some great projects and have had enough work.

However, I have found it tough at times. Working at home alone for a few years became a bit much. And, it feels like I only ever get to work on projects, or parts of projects, of a repetitively similar scale — there’s a danger of not being stretched after a while. Also, as a solo worker I’m only ever around for short periods and it’s tough to feel fully invested in a project, product or company in the way permanent employees can.

On balance it’s still a great way to work, full of variety, freedom, interesting people and opportunities. And the more organised you are about it, and the clearer you are about what you want to achieve, the better you’ll be.

12. Further reading

Comments

  • Thanks for this Phil, this is an excellent guide and I’ll link to it on my blog.

    About the loneliness aspect, it really got too much for me after 4 years and for me the answer was to hire a desk in a shared office space. I’m much happier now (although not necessarily more productive with all those lovely chatty people around).

  • A fantastic article, and superbly timed! My reduncancy at the end of the month means I’m going to try it out as a freelancer again for the first time in a good while. I’ll be sharing studio space with some guys I’ve worked with before to avoid the evils of working from home. So… wish me luck.

    Oh, and if you have any spare interacton design work… ;)

  • Thanks Phil, nicely written and logical. I do some of these things, and others I should do (!!)

    Depending on where you live and $$ getting an office space would be a good way of getting out of the house.

  • This was quite the article. I like some of the software references for invoicing. Of course, I glazed over during the UK specific parts since I don’t reside in, nor do business there. If anyone has similar tax/business info to add that applies to US citizens, that would be appreciated.
    Thanks nonetheless.
    Cheers

  • I was forwarded this by a friend in New York and found it very helpful. I’ve been freelancing for a few months now and don’t miss the office at all.
    Great stuff, thanks.

  • You should definitely be proactive with your expenses :) I mean, you’re claiming the right percentage of your rent and household bills, right? All your books (even if vaguely related to your work), hosting costs, etc.. there’s a lot once you start digging. If you ever travel in your car to a client, you have a percentage of car costs, insurance, maintenance, etc, right there :)

  • I don’t claim a percentage of my mortgage because then I’d open myself up to some other taxes/costs related to my home (I forget the details now). I do charge a percentage of household bills. I rarely buy any books related to my work (everything I need is online). If I do travel to a client (which is rare) I can walk, take the tube (travel tickets don’t add up to much) or use my bike (which doesn’t create many expenses).

  • Yeah, mortgages are tougher. That’s why I rent, because it works out cheaper in the long run for me (assuming I invest what I would have otherwise spent on the mortgage). Well if your expenses really are low, and you can’t find any to squeeze through, then you don’t have much to worry about and are doing pretty well! Good work :) (Oh and don’t forget any software you buy! Those Adobe packages, etc, all add up quick.)

  • Good work!

    This seems like a lot to know or “worry about”, but it’s not. Baby steps. Working for yourself is great. Even if your not making much money at first. Stayin’ at the salary job will get you no where. Working for yourself keeps you on your toes.

  • Phil - saw your article in Populicious - congrats!

  • You have to be careful about blogging. I agree you should have a Web site with clips, but blgging could become a conflict of interest with some magazines. And who has time? It just means another deadline (with no pay).

  • Sure, if you’re a writer by trade then writing lengthy pieces for no money could be a bit foolish. Although I still think that in some cases it could still be useful to help raise, or just maintain, your profile. And if it’s seen as a form of personal marketing then saying

    And who has time? It just means another deadline (with no pay).

    kind of misses the point — it’s investing time in something that will hopefully get you more work on what you’re interested in.

  • Thanks for the great article!
    I think that the most difficult part in freelancing is being your own boss. It’s so much easier to get distracted while working for yourself!
    I find that the best thing to do to fight procrastination is simply setting clear goals and planning every step towards them. This way you do not have to worry about that gigantic project you have to complete but you just take the small steps necessary to complete it, one by one. I even went as far as writing my own planning software!

  • This is a great guide! There are several options for lightweight freelancing software to handle invoicing, etc. While some of these are limited to the US, others work across the globe. Check out my post on “Who needs a bookkeeper?”: http://www.simplifythis.com/blog/2006/10/who-needs-bookkeeper.html

  • This is a great article you have here. If I dont stop reading it and get back to work I will have no other option than to freelance lol. Great work and very detailed explanations cheers.

  • Amazing article, very full of information and an excellent resource.. I have written a few articles on the subject, primarily focused on the graphic-designer’s perspective, but a huge amount of the information you have given here can be used directly.

    I will refer to this post on my homepage, since it gives such great info for budding freelancers.

  • Great article! I’ve been “freelancing” for over 2 years now and there is nothing better than being your own boss. All the success and failure is on your shoulders - a big responsibility - but a very gratifying reward!

    I was pleased to see “backups” mentioned in here. EVERYONE should have FREQUENT backup now-days. It’s even more important when you are a freelancer. Imagine losing your mp3s or digital pics. Now imagine losing a weeks worth of billable work for a client. Don’t hesitate - get an external drive (or two) and add it to your daily and weekly calendar. It’s a requirement.

    I would also suggest getting a scanner. Scan everything. Checks that come in, bills, monthly bank statements. Everything. Create a process and stick to it. It’s a bit tedious at first but it will save you and your accountant a lot of frustrations quarterly/yearly.

    Finally, set aside a lot for taxes and expenses. Its a lot nicer when your CPA tells you it’s only half what you have stashed in a money market account instead of double!

    All the best folks!

  • Excellent article, and very timely for me, I recently started freelancing and am trying to get everything line up just right. I use FreshBooks to take care of the timetracking and accounting side of things and highly recommend it. Check out my recent post on the subject: http://www.sqljazz.com/blog/?p=64

    Again, thanks for the excellent post.

  • Excellent post. I would add one slight variation on the bookkeeping issue, learned through hard experience. Now, I freelance in the U.S., where we need to pay our taxes every 3 months (and we lost track of this one quarter in my first year, which is why we made the change).

    Everytime I receive a check now I have a spreadsheet where I enter the check amount, then calculate the tax rate for federal taxes (this year about 24%, although every year we tweak it) and one for state taxes (2% this year). And I call this Accounting Running Counts and every week make sure it’s calculated and printed out and handed to my wife, who handles our household finances, so we always know how much money we need to keep aside for the taxman.

    This is, I suppose, a variation on your putting money directly into a separate bank account. This is something I suggested to my wife, but she prefers it the way we do it now because it allows her to juggle funds.

    Best,
    Mark Terry
    www.markterrybooks.com

  • Thank you, Phyl. This is very useful not only in the UK, but in my home Latvia too.

  • Enlightening as I’m about to take the plunge into freelancing. Thanks again

  • Excellent! I am a freelance translator for many years. I have learned so much from this article. Thank you very much. I will post a link in my blog:
    Tips For Translators http://getdirectclient.blogspot.com/

  • Excellent post. After 2+ years of freelancing as a programmer, I failed to approach your detailed outline of the whole process. Guess it was too long for me.

    The main problem for me now … is how to expand, being a failed manager of more than *me* … I don’t see what the next step should be, guess what! I will wait the thing to just popup as usual.

    Thanks Again for the reference post.

  • Thank you very much very useful. I do think you should have included chronic masturabtion as a hazard of working from home.

    thanks
    -anonywanker

  • Thanks, best read ever about this subject! I about to start something too, although not the make big heaps of money (hopefully i will though..) but more to gain some experience (I’m studying a webdesign related education atm).

  • What a wonderful article! I am adding a link to this on my Freelance Writing Blog.

  • Thanks Phil,

    This is a really useful article. Having employed freelancers for years, it’s very useful to know how things work from the freelancer’s perspective - particularly now that I am planning to set up as a freelancer myself. I will definitely be recommending your site to others.

  • > If I do travel to a client (which is rare) I can walk,
    > take the tube (travel tickets don’t add up to much) or
    > use my bike (which doesn’t create many expenses).

    I worked on-site for a chunk of last year and was able to claim about £150 for business-related cycle mileage.

    Better-still, you can buy a bike, and bike safety kit (inc lights etc.) in a very tax-friendly way:

    http://www.leedscyclists.org.uk/Tax%20breaks.htm

    Most accountants don’t know about this stuff, so if cycling is a chunk of your freelancing travel (including cycle-commuting to rented office space for some of the allowances) - then let yours know!

  • Hi Phil,

    I am working as a software engineer in a good renowned firm but my family circumstances will not permit me to work after a year. So i wish to start to work from home on weekends from now itself. I want to start it from a site that offers free membership. But the problem is that i am not able to trust and decide how to start with it.
    can you suggest me a trustworthy site so that i can go about it

    regards
    Richa Kinra

  • Richa,

    I don’t understand what you mean. What kind of site do you need and what do you need it for?

  • Hi Phil,

    I did enjoy your article and the info it contained. As a professional ghostwriter I understand fully the impact staying at home to write can have on your social life. I don’t mind though as I get to stay at home and raise my two children. I run a website where I provide information for those wishing to take up a career as a ghostwriter. Just to make the separation here: Ghostwriting is where you write for clients who then take the credit for what you have written. You also sign over copyright to all the material. Freelance writing on the other hand although commonly known as ghostwriting can refer to writing for magazines, newspapers, websites etc, but retaining copyright and having your name published with your work.

    I wonder Phil as you haven’t clarified, what work do you actually do? Are you a ghostwriter, or a freelance writer, or indeed both?

  • Hi Amanda,

    The clue to my freelance profession is in the second paragraph: “Some of this might only be relevant to coders or web designers…”! So I’m not a writer at all, at least, not one that aims to earn money by writing.

  • Hi Phil

    Definitely a good resource. Being a freelancer has all the parts of a big business. There is in reality little difference between the functions of a 30000 corporation and a freelancer. The major difference is the scale.

    Note, what do you think of the role of online freelancing job sites such as for instance:
    http://www.rentacoder.com
    https://www.it-globalized.com
    and http://www.guru.com ?

  • Hi Phil,

    Thanks. Quite informative and clear article.

    Good that you mentioned the “house-hold chores” too, that can be a major distraction! :-)

  • Thanks Phil..I’ll be coming back to blog about your points. My favorite of course,is the one about invoicing.

  • hi,
    maybe have a look at Sourcebench for a list of freelancing ob portals and listings.

  • What a great article.
    Thank you very much :)
    Really i learned from it too much.
    Sara
    Egypt

  • For marketing, you really have two choices: market yourself or market your services. I prefer the latter, because it takes the personal feelings out of being rejected and it makes my company sound more professional than if I talk about it just being me (which it no longer is).

    Other marketing ideas: pay-per-click ads when done right can yield a 10x return (but they’re expensive to start with if you don’t have a lot of capital to start); post your freelance services to FREE online directories like FreelanceLocalTech.com or FreelanceDesigners (for technical freelancers) or — if your clients will look for you there — yellowpages.com or kudzu.com.

    Don’t just pick one way to market yourself, pick the way that the majority of your desired clients will find you! If you’re not sure how clients will find you, that’s your first task for the morning.

  • many thanks,am happy to find your sit and i love every thing i read.am a young nigerian who have been writing for a year now and i dont know what to do and how to go about freelencing.pls i need your feed back.

  • Just wanted to say thank you. I’m just starting in freelance translating Japanese to English and you brought up many things I hadn’t thought of. Really glad you put this out for us all to read!

  • I needs some tutorials help.
    Can you guide me?

  • A very thorough article, thanks for sharing it with everyone, Phil.

  • Great article! The paragraph dedicated to marketing yourself can’t be more true. It is something that every professional should practice every now and then, since you are your best advertiser.

    Another way not mentioned here to help build your reputation is to have your few initial clients testify about their good experiences with your work. There are many ways to do it, let them write comments on your website, prepare “success stories” telling the story and accomplishments or have them vote for you in Trust-index to get a plain 5.

  • Hello Phil,

    This is a fantastic article! I feel like reading this has helped me alot in making a decision whether or not to go freelance myself.

    Thanks so much

    Christianne

  • hii phil

    Thanks a lot for giving valuable information.I am interested to do freelancing in bioinformatics and biotechnology, so please could you let me know any sites belong to these areas?? Again thanks a lot for your post

  • I’m glad you liked the page. I’m afraid I know nothing about bioinformatics and biotechnology, sorry.

  • Thanks Phil for the information regarding your thoughts and experience.The information will be greatly helpful for me.

  • t a great article.
    Thank you very much :)

  • Hi Phil, this piece of information of yours is really helpful, i am kick starting my career in IT and know very little about freelance so where do you thing is a good place to start freelancing in IT?
    Thank you so much!

  • Hi Phil, I would like to translate this article into Russian and post it on my website (please see the URL above). I give seminars for would-be entrepreneurs and post articles and interviews on starting a business on the website. I read your article three years ago and I liked it so much that I still keep a hard copy of it. So may I have your permission to translate and post it? Thank you.

  • Hi Elena,

    Sure. Please link back to this page and explain it’s the original source and that the translation is yours. Other than that, go for it!