Starting a freelance business could be attractive for those with creative talent, consultancy, or project management expertise. Freelancing allows you to work when you like and only take on the work you want. It can also provide a flexible income that fits your lifestyle.
In this guide, we will cover some key steps you will need to take when learning how to go freelance, including what niche you will work in, how to make a profit, and, more importantly, how to set your business up for success.
According to Statista, there were 4.39 million self-employed workers in the United Kingdom in 2023, and they predict this number will rise significantly.
However, there are various risks and benefits to consider when deciding if freelancing is for you. These include:
Hopefully, after considering the risks and benefits of starting a freelance business, you will decide to give it a go. If so, there are specific ways to help yourself by starting your business on a solid legal footing.
Depending on your qualifications and skill set, various options are open to you. Examples of careers that can lead to you starting a freelance business include:
The first step in going freelance is to make a business plan for success. After all, a solid business plan gives you something to refer back to and allows you to structure your business in a way primed for success. Your business plan should include:
Before marketing yourself as a freelancer, consider starting your freelance business properly.
Choose Your Legal Structure - One decision you may have to make right away is related to the legal structure of your business. Most freelancers start as sole traders. However, some prefer partnerships or register as limited companies. This is the main difference between the two legal structures:
The best option for you depends on your specific circumstances. A sole trader structure is suitable for new businesses with low turnover, where you want simple operations and keep most of the profits. Forming a limited company is ideal for businesses with higher risks, aiming for growth, or seeking external investment. It offers greater protection for your personal assets.
Let the professionals at Your Company Formations guide you through the intricacies of this decision, ensuring a smooth and compliant business setup. Our expertise will help you navigate the legal requirements and establish a solid foundation for your freelance business.
As a freelancer, it is mandatory to register with HM Revenue and Customs (HMRC) for Self Assessment. This crucial step ensures you meet your tax obligations and avoid penalties. During registration, you will provide details about your freelance income and business expenses, enabling HMRC to calculate your taxes accurately.
To navigate tax calculations, record-keeping, and ongoing financial management, consider one of the following approaches:
Our team at Your Company Formations is often asked about registering for VAT. You can register for VAT even if your turnover is below the current VAT threshold. You can find out more in our post: Do I Need to Register My Company for VAT?
Your expertise is your livelihood when you are a freelancer providing services or advice. However, mistakes, accidents, and unforeseen events happen. Insurance provides a safety net for these scenarios:
It will help to consult with an insurance broker who understands the risks specific to your freelance field and can recommend tailored insurance packages to meet your needs. You can also learn more about essential insurance for business in our post, Employer Liability Insurance - A Legal Requirement Protecting Your Employees and Yourself.
Data protection and client confidentiality are essential pillars of professionalism and respect for your clients:
Investing in appropriate insurance and understanding your legal responsibilities demonstrates your professionalism to clients, builds trust, and protects you and your growing freelance business.
Once you have everything set up and planned, it is time to start your freelancing business. There may, however, be some other considerations along the way that may be worth making, such as:
Considering these questions when planning your business will give you the best route to success. If you need assistance registering your company name or have questions about starting a freelancing business on the right foot, our team at Your Company Formations can help.
They have an excellent array of services and business tools as a Company, they are perfect for the up and coming Entrepreneurs and the Swashbucklers, established businesses too.
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