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Be a successful Freelancer

For people looking to start freelancing or improve their existing methods. Learn best practices for how to get clients, build healthy relationships, and set your business up for success.

16 contributors

Get client work

7 goals · 20 action items

Structure your portfolio to best communicate your skillsets

2 contributors · 9 action items
  • Jenny Wen

      Approach the design of your portfolio like a design problem. Your user is a hiring manager or recruiter and you need to convey who you are and what you'd bring to the team as effectively as possible. You know they're constrained by time and are trying to get high, confident signal on who you are in a sea of other portfolios.

    • Select work you're proud of

      Curate, curate, curate. It's more impactful to highlight fewer projects that you're proud of, rather than a ton of projects that aren't your best work. Bias towards sharing work that's recent, had strong results, and showcases what your strengths are as a designer.... See more

    • Highlight key decisions

      Portfolios often just showcase process for the sake of process. Don't just show that you followed a linear or typical process. Projects are rarely linear and they hardly follow a standard process. What were the unique considerations you had to make for this project? How did your process accommodate those things? What were the hardest decisions to make and how did you make them reasonably?... See more

    • Make it easy to scan

      Hiring managers don't have a ton of time to spend on each and every portfolio. If they're scrolling quickly through a case study of a project, they should be able to pick up within a few seconds, the gist of the project and what your contributions were. Choose and curate effective visuals, use effective hierarchy and titles to bring main parts of the process to the forefront.... See more

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  • Jules Forrest

      Put yourself in the shoes of a hiring manager. They're looking at portfolios all day long, so help them out and be really specific about the value you can bring to the team. Figure out what your "design superpower" is, which ideally highlights a combination of several of your best skills. Then, use that as a narrative thread throughout your portfolio. Don't give a hiring manager the time to think, "OK, so, if I were to hire this person, what would they *do*?" Answer that question for them by the time they've reached your homepage.

    • Figure out what your design superpower is

      It may be smaller than you think. Maybe it's that you're really passionate about designing for accessibility. Maybe you spend all your time thinking about what's going on for your users off-screen. Maybe you're obsessively detailed oriented or work best when the problem you're trying to solve is really ambiguous.... See more

    • Think about the skills that your superpower highlights

      If you're passionate about accessibility, you probably have a lot of empathy for your users. You might do a lot of research. You've probably learned some valuable accessibility do's and don'ts that you could bring to your new team. That's a big deal! Everyone knows their product should be accessible, but having someone in the room advocating for that effort or driving it forward might be a game changer. If you love ambiguity, you might be really good at brainstorming, creative solutions and prototyping. Maybe you take a lot of initiative and jump right into complex problems. Not a bad asset to have on the team! If you're really detail oriented, you probably care a lot about final polish, which requires a well-trained eye and lots of effective collaboration and communication. That's good, because effective collaboration and communication aren't always a given.... See more

    • Tie your skills to value for the business

      Accessibility: "By improving the accessibility of feature X, we improved the experience for Y% of our customer base." Ambiguity: "By moving quickly on some creative prototypes, we were able to agree on the feature direction one week early, adding an extra week to development time." Detail oriented: "By collaborating with the designers and front-end engineers, we were able to come up with repeatable patterns and components, reducing inefficiencies in UI development."... See more

    • Write yourself an intro

      Put it front and center on your homepage. Help the hiring manager picture you adding value at their company. "Hi, I'm A, a designer who puts accessibility first." "Hi, I'm B, and I like solving big picture problems." "Hi, I'm C, and I'm passionate about design systems."... See more

    • Thread it through your projects

      Think about how your superpower has informed your work and tell the story of each of your projects from that point of view. You should, of course, mention any other relevant skills and strengths, but leading with a superpower helps compensate for skills you don't have or need to work on.... See more

    • Go where you are rare

      Not every company is going to need your superpower. Some might already have that skillset covered, some might not be at the stage where that skillset is valuable. That's OK! It's better to work somewhere that's compatible with your passions than try to mold yourself in a random company's vision of what a designer should be.... See more

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Talk about past client work when it’s protected under NDA

2 contributors · 5 action items
  • Jordan Koschei

      It can be frustrating to work on something significant and yet be unable to show it to others due to a non-disclosure agreement. I know this frustration first-hand, having previously worked at an agency that specialized in enterprise design work for Fortune 500s. There are a few things you can do to make sure you don't have a gap in your portfolio where NDA-protected work would otherwise live:

    • Demonstrate your process.

      When writing a case study, your process often says more about you than the final product. Instead of showing the NDA'd final product, collect wireframes, mock-ups, rejected design directions, and other byproducts that demonstrate your design thinking. Just make sure they don't include any proprietary client info!... See more

    • Show off the smaller elements.

      Even if you can't include the full NDA'd design in your portfolio, you may be able to show some smaller components. Think of any elements or interaction patterns that would be interesting to show without giving away too much about the project itself; those are often the most interesting parts in a portfolio or case study anyway.... See more

    • Look for a sunset clause.

      NDAs don't always last forever — some of them include a sunset clause, which allows you to talk about the work after a certain amount of time. Check the NDA for a clause like this (or talk to the client, your employer, or an attorney). If it has it, you'll be able to backfill your portfolio with the non-disclosable work after the time has passed.... See more

    • Work on side projects.

      Side projects are the best way to ensure that your portfolio continues to fill up while you're doing work under NDA. They can also help your sanity — clients that require an NDA usually have strict design requirements, so working on a project that's just for you will give you a chance to exercise your creative muscles and continue growing in areas that aren't part of your day job.... See more

    • Anonymize the work.

      You might be able to show off a non-disclosable project by removing the client's logo and changing any brand colors and proprietary information. Of course, you should do this discretely, ensuring that you aren't giving away any of the client's information and are respecting the spirit of the NDA. If you aren't sure, talk to your employer or an attorney.... See more

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Use social media to get more freelance work

2 contributors · 5 action items
  • Dann Petty

      Instagram is a great platform to show off your work.

    • Go where the people are.

      Use Instagram to show off your work and increase your chances of getting noticed by using proper tags to help show up in search

    • Collab with others.

      A great use of social media is showing how well you collaborate with others by doing side projects with other creators on specific platforms like Instagram. It also increases your reach by sharing followers.

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  • Xander Pollock

      Use Linkedin to sell solutions, not yourself. I landed a $40,000+ contract through Linkedin this way.

    • Update your LinkedIn headline to what people are searching for

      For example, mine says "Design Sprint Facilitator & Teacher For Hire." When people come across my profile, or search for someone with a design sprint expertise, I'll come up in the search results on LinkedIn and Google.

    • Update your LinkedIn summary to outline your services

      This accountant is a great example of how to do this well. https://www.linkedin.com/in/jeffmadduxcpa/

    • Use LinkedIn's media sections like it's your portfolio

      Instead of making your client click out of LinkedIn and have to figure out how to browse your portfolio, just upload your work right to Linkedin. You can see how I did it here: https://www.linkedin.com/in/xanderpollock There's a better chance they will see your work if it's all right there.... See more

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Use meetups and conferences to get more freelance work

1 contributor · 1 action item
  • Dann Petty

    • Meet people.

      Relationships are everything and one of the best ways to get work as a freelancer. If you do good with your current client, they’ll likely recommended you to someone else that likely trust their opinions. A perfect way to make new relationships is through meetups and events. But secret tip, they don’t have to be industry related to be a worthwhile time investment.... See more

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Collaborate with your client

4 goals · 7 action items

Build a strong relationship with your client

1 contributor · 4 action items
  • Meg Lewis

    • Communicate upfront

      Be extremely open and honest from the beginning of the relationship about your work, your practices, your hours of availability, and how the process works. Take any guesswork out of their mind at the beginning of your relationship so they aren't left feeling uncertain. Being clear at the beginning keeps you from any awkwardness (scope creep, extending your hours, weird asks) and helps them to feel more comfortable working with you. If they aren't sure what to expect, they'll likely ask for unusual things along the way. Put their mind, and yours, to ease by being clear right at the beginning. Everyone wins!... See more

    • Communicate often

      Give frequent updates and make sure they're aware that you're around and working on their thing. If they don't hear from you often, they'll assume you're slacking off or aren't committed to the relationship. If you keep an open line of communication it helps to build trust. No one likes working with a freelancer who goes missing for days at a time.... See more

    • Be upbeat

      Stay positive about your relationship, their product or service, and any asks they throw your way. As long as you *seem* happy, they'll be more likely to want to work with you in the future. And, when you have to give the smackdown on scope creep or give bad news about a timeline, it'll hit them softer if you do it with a smile or friendly emails. And, you'll likely get your way more often. We've all know how painful it can be to get anything done when you're working with someone who hates their job. Trust me, you'll have a more fulfilling career if you operate out of love than fear!... See more

    • Create a positive one-on-one relationship

      Positive client relationships are built by positive relationships with your contact(s) at that company, rather than the company itself. Keeping great relationships with the individuals you're working both keeps your relationship at that company in good standing, but allows you to grow your network as those individuals move around the industry!... See more

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Scope a project with a client

1 contributor · 3 action items
  • Coleen Baik

    • Listen.

      Start with a conversation (or two). In-person is great but at this juncture phone or video chat is completely fine! Introduce yourself and frame your expertise, but let them do most of the talking. Before the meeting it often helps to think about the questions you want to ask ahead of time about schedule and expectations. If it doesn't seem like a fit at this time, kindly tell them so. For instance, you might be overqualified for the specific project. Or they might need a lot of pixel-pushing and you prefer to focus on strategy. In this case your time as well as their money would be better spent if they went with someone else. Give them a referral if you're able. Perhaps you're inclined to help out in an advisory capacity in the meantime.... See more

    • Lead.

      If there's good chemistry and alignment, don't be afraid to be proactive about how you'll spend your time together. Lead with what resonates with you: your client wants a job done well, and you want the job to be enjoyable as well as challenging. These things should not be mutually exclusive. If you get the sense that a fledgling team is overwhelmed with a disorganized system, you can offer to help review their information architecture. If they're struggling with a dull brand, perhaps you can lead a workshop to kick things off in a new direction. If you like doing these things, and they would greatly benefit from your expertise, why not prioritize them in your time together? Clients are so burdened with their own tasks that they're often relieved to have someone else take the lead in defining the collaboration. Look for open doors, and step through.... See more

    • Be explicit.

      It's easy to for the client and the consultant to have startlingly different understandings about something that can seem so basic. If you have the slightest doubt, ask. A good way to get clarification is to repeat back to them a summary of what you think you've heard so far, or your version of a complex product detail they just explained. Likewise, be very clear about what the client expects to have in hand at the end of your time together. What form will the deliverables be in? Will you also be handling production? Don't assume that "half-day" means 4 hours, that they'll pay for expenses incurred, or that there won't be travel involved. Spelling this all out will force them to be specific about, and you to be clear on, load and scope. I usually put my requirements and work proposal in a 1 to 2 page letter of agreement. The client and I revise as needed, together. The more established clients will have their attorneys incorporate it into their own legal documents which will serve as the final contract.... See more

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Get paid

3 goals · 26 action items

Calculate your freelance rate

4 contributors · 13 action items
  • Xander Pollock

      Understand how much your work is worth the client, and the charge a fraction of that.

    • Understand your clients business and how they make money

      Once you do this you can estimate how valuable your work will be to grow their business or make them a better company

    • Understand your clients needs

      Sometimes they say "logo" but they mean "identity." Sometimes they say "user interface design" but they mean "product direction." When you understand their needs better then they do, you are in a better place to truly help them grow their business. That's how I ended up joining my friend to start the company we sold to Google. He said he needed a logo, but he really needed product design and a true partner.... See more

    • Charge a fee for the entire project or a weekly rate based on how much your work can help their business

      Your rate is not about you, it's about your client. Make your rate a fraction of the value you add or a fraction of the money you are saving the client. For example, when I facilitate Design Sprints I can save clients hundreds of thousands of dollars in time and energy, so I'm able to charge a fraction of that.... See more

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  • Shalin Pei

    • "Keep raising until they wince"

      I once met a contracts lawyer turned freelance designer. At design conferences, she would casually mention her rate when she met a new designer, raising the quote each time. When a peer looked surprised or winced, she knew she was starting to overstep a boundary. Her strategy helped her realize what she's worth, and kept her in the top percentile of what she considered a fair range.... See more

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  • Josh Williams

      A simple formula for determining your freelance rate is: (Salary + Expenses) / Annual Billable Hours Salary: Treat this like the salary you would earn as a full-time employee elsewhere. Let's say $100,000/year. Expenses: Don't forget taxes and insurance. Maybe this is $30,000/year. Annual Billable Hours: You work 40 hours a week, 48 weeks a year, because you take vacation. That's 1920 hours. But 35% of your time is spent on office overhead and marketing yourself. So really 1248 hours. ($100,000 + $30,000) / 1248 = $104 This looks good, but we forgot your profit. Round that puppy up to $120/hour for good measure!

    • How much do you want your salary to be?

      Treat yourself right. It's better for all of us.

    • What are your annual expenses?

      Insurance, equipment, software, subscriptions, font licenses, and the occasional conference add up. Don't forget taxes!

    • How many billable hours do you have in a year?

      Be honest. You'll spend 30-50% of your time on non-billable work. And you'll need a vacation.

    • Pad that rate.

      An extra 10-15% helps your grow and gives you a little cushion when things go sideways. And they will.

    • Be bold.

      If a client questions your rate, remind them that you're running a business too. You have taxes, insurance, and equipment that you are providing so that they can pay a simple inclusive rate.

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Handle clients who don’t pay

2 contributors · 10 action items
  • Amy Hood

      Preventative Action is the key! Incorporate a clause into your contracts that stipulates the Client pays 50% up front to start the job, and must pay the remaining 50% in order to receive final files/artwork.

    • Always sign an agreement with a Client that outlines payment schedule.

      If you don't want to do an agreement/contract, at the very least get this in writing in an email and get the client to confirm.

    • In contract, define payment schedule and require a downpayment to start work.

      This is a deposit. It's a show of good faith from your client that they pay on time and understand you don't work for free. It's very standard. If clients don't want to pay it, it's usually a red flag. On bigger jobs, we'll often take this 50% deposit down to 33% or 25% depending on size of the contract.... See more

    • Create benchmark goals for the remainder of the payments

      These benchmarks are based around big project completion moments. If you're doing a branding package that includes a logo, a style guide, and stationary set, you could stipulate that after the logo is finalized they owe the second payment, after the style guide is done they owe the third payment, and after the stationary is done they owe the final fourth payment. This will also be what you refer to for kill fees. If the client kills the project in the middle of any of those stages, payment is due for work done to that point.... See more

    • Don't deliver ANY files until the client has paid.

      It will be tempting to make exceptions for friends or clients you like, BUT don't give final artwork to the Client until you've received their check or online payment. It may take some time to train your clients in this system, but it's so worth it and you'll never have to chase money if you stick to it.... See more

    • Get an easy online payment system.

      Sure these accounting softwares take a percentage cut. Sure you'd rather get the full amount in a check. BUT, making it easy for clients to pay means they'll pay quicker and not forget. To me it's worth that 2-3%. Clients also appreciate the ease and quickness. Happy clients mean repeat customers!... See more

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  • Patrick Johnson

      I AM NOT A LAWER - Just a freelancer :) Depends on the sum of money which is being withheld. In the instance of a $2500 USD project, it may not be worth the headache to chase the client. In that case, take it as a loss. If it's a $25000 USD project, you may need to consult your lawyer.

    • Ensure your client signed your contract

      Contract should define the "rules of the game" both parties agree to follow.

    • Ensure you have client contact information prior to starting project.

      This can be defined in the contract as the "point person" and at least one back-up person in case the point person is on vacation, unreachable, etc.

    • Properly define who owns the work within the contract.

      A lot of contracts assume work-for-hire which can mean the client owns all the work at any given point throughout a project. If you do not have this information defined in your contract add it! Ensure that rights to the work are yours until the client pays in full, and at that point, the rights are transferred to the client. Some contracts go as far as stating the creator always has ownership of work.... See more

    • Reach out to back-up contact person

      If the company is large enough there may be another team member playing support on the project. This could be a colleague or a superior at the clients company. If necessary, CC this person on emails to garner attention and a response.

    • In some cases, if the remaining sum of money is large enough, it may warrant reaching out to your lawyer

      If there is a large amount of money remaining to be paid some instances may warrant legal attention. It could be as small as a letter from your lawyer or legal action. CONSULT A LAWYER BEFORE ACTING. This is the nuclear option. Use it carefully, if at all.... See more

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Decide when to charge by time vs. project

1 contributor · 3 action items
  • Coleen Baik

    • I recommend charging a flat fee for most projects.

      Charging a flat fee (with a minimum) per project has worked well with a wide range of clients over the years. This is easier for both parties: it limits ambiguity, encourages flexibility, and removes the overhead of counting hours. That said, sometimes charging by time can be a better way to go.... See more

    • If the scope is super loose, consider charging by the hour.

      Sometimes it's not possible to scope projects tightly ahead of time. This hasn't happened often, but it does happen, particularly with very early-stage start-ups that're looking for you to define deliverables yourself. While you can make educated estimates before diving in, my experience is that this can mean you come out grossly under or over-billing. As a matter of principle I've returned funds in the latter case (only happened once), but I wouldn't expect reciprocity from clients. If you don't know the client well, and scope-definition is largely up to you (and likely to shift), charge by the hour. This is especially suited for shorter-term engagements.... See more

    • Split the difference.

      If there's a level of uncertainty around load and complexity, but also a solid schedule and only a few different ways it could go, you can build in flexible billing ahead of time. Perhaps start out with a lower-tier flat rate, write in a mid-term assessment, and shift to a higher-tier rate that was formerly agreed upon (or shift to hourly) if the project is turning out to be more work than anticipated. Communicating often and setting clear expectations from the outset is of course key.... See more

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Manage your time

3 goals · 14 action items

Pursue freelance opportunities while working full-time

3 contributors · 5 action items
  • Amy Hood

      Make it known to your community that are open for business and taking on side work. If, after that, you aren't getting offered projects, hire yourself. Make your own project to 1. develop a new skill or 2. show proof of skill where your portfolio is lacking.

    • Verbalize what you want.

      It sounds simple, but it's something many forget to do or feel sleazy doing. But it's not! The truth is, most people don't remember every detail of your life. You're not the first thing they think of when they wake up and the last thing before they go to bed. They HAVE forgotten that you are a [insert job title here], and they HAVE forgotten how good you are. So you have to remind them. Post your work to Dribble, Twitter, Facebook, Instagram, your website/blog, and wherever else people might care to know. And don't be afraid to be direct and just tweet/post/email to previous clients: "Hey, I'm currently available for new projects. www.mywebsite.com"... See more

    • Make your own project to develope a new skill.

      If no one is hiring you, take that free time to create your own project that will help you learn a new skill or program. Don't know anything about animation? Create some design sprint exercises or projects to begin to develop that skill, and then apply yourself to learning it. Whether it's signing up for Skillshare, Treehouse, or Lynda.com, there are a slew of reasonably priced online resources.... See more

    • Make the kind of work you want to get paid for.

      When we first started our company Hoodzpah, we knew we had the potential and know-how to do great work, but we'd never really been given the opportunity. So our portfolio was greatly lacking. We wanted to get more packaging jobs, but no one would hire us because we didn't have examples of that in our portfolio. So we created our accessories line Odds and Sods (www.oddsandsods.co) as an excuse to diversify our income AND prove that we knew how to make killer packaging. It worked. That self-initiated project led to paid work.... See more

    • Make it a way to diversify your income.

      Side projects are a great way to diversify your income and get a little extra cash for vacations or a new pair of Jordans. Think of things that are easy for you to make that you know there is a demand for. For example: I always find it hard to find script fonts that I like, and always end up having to make my own. So I'm currently working on making a font to sell, which will fill a hole I see in the market, and which will hopefully generate some nice passive income that I don't have to do much management on.... See more

    • Make it a way to hang out with friends.

      Creative people attract other creative people. You probably have a handful of friends you've been dying to collaborate with. Pitch some side project ideas to friends. Not only will you grow through collaboration, you'll also have someone to hold you accountable to the project, and an excuse to hang out with your talented friend/collaborator more often.... See more

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Decide if freelancing is for you

1 contributor · 6 action items
  • Coleen Baik

    • Clarify your priorities.

      So you’re thinking of going independent. Are you able to explain why freelancing appeals to you, clearly and succinctly? What does that life give you that a salaried one can’t? People become freelancers for a host of different reasons: family, health, artistic pursuits, the desire for more autonomy. Freelancing isn’t easy but can also be extremely rewarding. But those rewards depend on your priorities, what you’re willing to give up for, and how you plan to pursue, them. Paying the bills is only a part of it. You don’t need to have all the answers up front, but it’d be wise to have an idea of what you want the big picture to be before making the shift. List out your priorities and take a good long look. How does freelancing support or complicate their fulfillment? Be brutally honest with yourself.... See more

    • Weigh the risks and understand the responsibilities.

      Write down the pros and cons of salaried versus freelance life. Freelancing isn’t just about choosing which day of the week will be Sunday, or working in your pajamas. You’ll have a lot more to take care of than just client work. You’ll pay taxes four times a year instead of once. Healthcare will cost a lot more. $500/mo isn't unheard of for single coverage PPO (high deductible, no dental or vision) even as a healthy young person with no pre-existing conditions. Get creative in navigating this brave new world. Taken one step at a time with some forethought, it can be done. If you’ve a domestic partner who can add you to their plan, great; Stride Health is a good resource; an FSA card is worth looking into. You’ll pay for all of your software, tools, conferences, and classes. You'll be your own HR, salesperson, CEO, manager, and PM. You'll have to deal with awkward situations (like clients who don’t pay on time). Expect to make mistakes, iterate on structure, and refine process. Does this give you cold feet or feel like an adventure? Pay close attention to how you feel as you assess what freelancing entails.... See more

    • Talk to people.

      The less of a black box it is, the less stressful it'll be, and you’ll be able to reserve more of your headspace for the actual work of setting yourself up as a freelancer. You can start by sitting down to compose key questions, then asking some veterans. Why did they start? What did *they* do when a client balked at their rate? What’s the biggest lesson they've learned? There are a ton of freelancers on this platform (👋) and others like Twitter. Reach out, come prepared with questions, buy them coffee. Listen closely and don't forget to thank them. Striking out on your own can be scary, and it helps to hear others’ personal stories while building on their knowledge.... See more

    • Assess your safety net.

      Money will no longer magically show up in your checking account every two weeks. Sad, I know. Holidays and weekends may not seem so shiny anymore, and the idea of taking vacation might be stressful, not fun. It's normal to be stressed. Do everything to mitigate this stress. Take a look at your savings, for a start. A well-cited rule of thumb is at least 3 months' worth, but I would recommend a year's worth (or more) for emergencies and dry periods. No more 401K matching either so you’ll need to set up alternatives (IRA, SEP-IRA) for retirement as well.... See more

    • Form a strategy.

      How are you going to get gigs? You can put yourself out there among the hundreds in a sea of portfolios, but ideally you get introduced to projects through personal connections who understand your skillset and can vouch for your expertise. Without a strong network, you may be subject to taking on unedifying jobs purely for the sake of paying the bills, and if that’s the case you may as well keep the security of a regular paycheck. Prepared to put out a few feelers? Put a portfolio together. Get some endorsements in place. Reach out on Twitter or other networks where you can get seasoned folks to help you spread the word. Many often can’t take on all the gigs that come their way so they’re relieved to pass on some overflow.... See more

    • Give yourself permission to fail.

      Once you’ve done your homework, squared yourself with the risks, balanced your books, and can clearly articulate why you still want to freelance, take a deep breath and come on over to the dark side. So maybe everything isn’t as organized as you’d like. Maybe you have only a vague whiff of a Plan B, no partner, nor a mountain of savings. But you still want to do this! Go for it! What’s the worst that can happen? So you make some mistakes, get some curve balls, return to being on a payroll. You might realize that freelancing isn't for you, or that it’s not for you *yet.* It’s not a crime to crave a regular paycheck, cheap healthcare, or paid vacations. But if you don't give it a try, you won’t know the joy that comes from, and whether it’s worth, steering your own ship, when and how you’d like.... See more

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Reduce the overhead of freelancing

1 contributor · 3 action items
  • Matthew Ström

      Time management!

    • Most painful things can be automated or offloaded.

      Invoicing, taxes, health insurance, expenses, and many other things can be done by other people for a small fee. Get an accountant you trust, and leave the rest to services like JustWorks, Oscar, Freshbooks, etc.

    • Over time, strong client relationships make contract negotiation less painful.

      Focus on doing great work for first-time clients. Repeat clients are significantly easier to manage.

    • Time management will always be painful.

      When you're your own boss, you can't delegate. You have to get really good at prioritizing and keeping track of your responsibilities, and unfortunately, that's what freelancing is all about. Practice, be mindful of what you spend time and energy on, and give yourself a lot of slack.... See more

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Set up your company infrastructure (USA)

3 goals · 7 action items

Decide between an LLC and S-Corp

1 contributor · 4 action items
  • Andrew Carroll

    • Figure out what your freelance income will be for next year.

      S-Corps help save on payroll taxes, and tend to work best in the $80k and above range. If you are between $80k and $110k, it makes sense if you are trending upwards or plan to stay freelance for a long time. Above $110k in income it will almost always make sense to be an S-Corp.... See more

    • Commit to setting up the infrastructure

      If you go S-Corp, you have to have a separate bank account, books, and payroll. There are lots of new tools out there that can make this much easier, but it is more work than just being a sole proprietor. Don't shoot yourself in the foot - if you are going to do it, commit to doing it right.... See more

    • Make sure that you don't have any "pitfalls" to trip up your S-Corp

      If you plan to raise outside money, then an S-Corp might not be the best plan. If you work in a "specified trade or business" (accounting, medical, legal, or endorsements type advertising) you'll want to make sure that you get professional help to not run afoul of the new tax laws and state licensing rules.... See more

    • Create your entity!

      You can use a lawyer or a service like incfile.com or legalzoom.com. If you want more service, I suggest checking out hyke.me. All of these will help you get an LLC formed which you can turn into an S-Corp!

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Set up a bank account and bookkeeping

1 contributor · 3 action items
  • Andrew Carroll

    • Open a business bank account

      The absolute first thing a business needs is it's own bank account. Even if you aren't doing to do the S-Corp set-up or even if you aren't getting an LLC - having one account that you can segregate business activity from personal activity is key. It helps make sure that you have good data for tax time, it makes bookkeeping a breeze, and will help you at audit time.... See more

    • Pick a credit card for the business

      It doesn't need to be a business credit card per se - most often I tell business owners to just pick one of their personal credit cards (since most people have two now a days) and designate it as business. The important thing is to make sure you segregate the expenses - so if the IRS shows up you can say confidently "All the expenses are there and nowhere else".... See more

    • Create your books

      You can use lots of different systems (there are lots of good ones out there - Xero, Freshbooks, QBO) but you need to use something. The good news is that the robots make it very easy - you can plug in your online credentials for your bank and credit card account and they'll download the activity and do most of the bookkeeping for you!... See more

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Manage your taxes (USA)

6 goals · 10 action items

Report your S-Corp income

1 contributor · 4 action items
  • Andrew Carroll

    • Fill out a new W-9

      You can get the form here: https://www.irs.gov/pub/irs-pdf/fw9.pdf Remember, on Line 1 this is the business name - NOT your name. Since an S-Corp files its own return, the name ON the return will be the company name. Your name doesn't go on this version of the form.... See more

    • Provide the new W-9 to Clients

      The W-9 form is how they know who to pay and how to report income. Once you have an S-Corp you want to give them a new one that provides them the name of the business and its EIN.

    • Redirect deposits and automatic payments to business account

      Make sure your vendors know where to send checks and that you deposit all income in the business bank account. Check your online payment tools (like online payments in Freshbooks, or your merchant account) and update the bank accounts to your new business bank account.... See more

    • Update your books weekly!

      With all the money headed into your business bank account, it will be super easy at tax time to figure out your income!

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Pay owed S-Corp taxes

1 contributor · 3 action items
  • Andrew Carroll

      Once you have your entity set-up, the money flowing into the correct place and your expenses on point, you'll be ready to start paying (lower) taxes!

    • Check your books

      Make sure your books are up to date. I suggest taking 20 minutes every Friday morning. If you do that, you'll be able to easily run an income statement that shows you what your profit for the year is.

    • Figure your tax

      For most solo freelancers figure about 20% of the profit (NOT the gross or top line profit is what you billed minus expenses) for your taxes. Ass in your state rate (e.g. CA needs to pay about 7%, NY the same, TX 0%, etc).

    • Submit Payments

      You can make an estimated whenever you want. But the IRS likes them four times a year: April, June, September and January. You can make most payments online. I try to keep updated links for the most current place to make payments on my website: https://andrewcarroll.co/tax-payment-information... See more

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Write off S-Corp expenses

1 contributor · 3 action items
  • Andrew Carroll

      Making sure you get the most out of your deductions is key to being a successful entrepreneur.

    • Figure out what to deduct

      What you can deduct is a SUPER common question. The trouble is, it varies by person and business. The IRS standard is whatever is "ordinary and necessary". So what is ordinary and necessary for a freelancer, might vary based on your business, where you are, and how you operate. But generally, you can deduct Any direct client expenses Phone, internet, and other tech items Online software and subscriptions (adobe, Dropbox, Github, etc) Travel to and from clients Meals where you are meeting clients or potential clients Any activity where you are getting your name out there (Advertising) Home Office expenses Hardware (computers, tablets, phones, etc) Office supplies and expenses... See more

    • Pick a business credit card

      The BEST way to write of expenses is to run as much as you can through a business credit card. GET THOSE POINTS! You don't truly need a "business" credit card - any credit card will work, as long as it is used exclusively for business. This is key - as I mentioned before, separating personal and business is CRITICAL. But since most people have multiple cards, I usually just tell people to pick one of them and say "this is my business card". Link it up to your books and ONLY use it for business expenses and you'll be all set!... See more

    • Move over subscriptions

      You also need to go through your personal bank and credit card statements to look for things that are auto billing. Moving them over is a pain, but will save you cash come tax time. The upfront investment WILL pay off!

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