When you’re starting out as a freelancer, it’s a great opportunity to get everything right from the word “go”. It’s unlikely that you’ll need to set up any sort of formal company to trade as a freelancer, but if you have other income, it’s well worth seeking advice on how best to structure your business and your finances.
There are various small business organisations in countries across the world that will give basic advice and guidance free of charge and also have trusted contacts where advice can be sought on a paid basis. It’s well worth checking these resources out and using them for advice as well as seeing if they have any offers of start up loans or grants.
Beyond that, here’s some of the things you need to think about when it comes to getting your ‘house’ in order:
- Open a bank account for your business activities. Even though your income from freelancing at the start may be relatively small, it’s both motivating and efficient to separate out your financial affairs.
- Download some free accounting software or invest in a low cost option.A huge part of getting your house in order from day 1 is making sure that you record all of your business transactions. There are plenty of free accounting software options available on the internet as well as paid systems that won’t break the bank. Shop around and find a system that you find easy to use and do your accounts regularly. It’s important to know how your business is performing on at least a monthly basis and the best way to do this is to keep your accounting up to date.
- Identify when you will bill your clients and work out your payment terms.It’s important to have a billing system in place for your freelance work. Whether you bill immediately when your work with a client is complete or you bill on a monthly basis, is up to you and the client. In fact, it’s likely that you’ll have slightly different invoicing schedules for different clients, but the important thing is to have a system in place. Creating your invoices is only the first part of making sure your till is ringing though, you need to make sure those invoices get paid within a timescale that works for you and for your clients. It’s highly likely that some clients will take longer to pay than others, but it’s important that you know when your payment is likely to arrive and that you chase it up if it doesn’t turn up on time.
- Create a letterhead, invoices and a business card. Like your website, your letterhead, invoices and business cards are a way to promote your business. Although letters aren’t all that often sent these days, you’ll need a letterhead for your client proposals and your pitches, so getting a logo and a style for your business stationery is an important part of your business set up.
- Establish a system of storing your clients’ work and make sure you have a back up.At the start of your freelancing activities, you probably won’t have all that much client activity, but you’ll be surprised at how quickly it builds up and having the right storage system in place is really important, right from the start. Personally, if I do more than a handful of jobs for a client, I create a file for them on my desktop, but if not, then they go in a general file.
- While you’re doing this, make sure you have a reliable and easy back up system in place. The likes of Dropbox or Google Docs are free to start with and work well, but after a while, it’s probably worth investing in an external hard drive where you get into the habit of doing an automatic back up at least daily. I have an Apple Time Machine that backs up on its own without me doing anything, which is perfect for me because otherwise I’d forget !
Ultimately there’ll be other admin tasks to think about depending on which sector of freelancing you’re going into, but if you start with this checklist, you won’t go far wrong.