Home Based Service Business/Freelancing

This page provides a brief overview of a growing class of workers in the US job market who are self-employed and work from home. They are often called freelancers. They generate their income by offering services to clients such as other individuals, companies and institutions.

There are many pros and a few cons to being a freelancer.

Pros:

  • You are your own boss.
  • You can spend exactly as much time as a project requires and then do the things you want to do.
  • There are no regular work hours/days. You work when you want/have to.
  • Quality is the key factor in your success.
  • You have the flexibility to pursue multiple career paths, and live wherever you want to (so long as wherever offers great internet access).

Cons:

  • Your tax rate is higher (self-employment tax).
  • You face uncertainty while your business grow because there will be slow periods (which are a great opportunity to catch up on paperwork and marketing)

If you are thinking about becoming a freelancer, GO FOR IT! Below are some steps that may help you with your journey.

Step 1: Identify Your Key Strengths

  • Identify what you are excellent at doing.
  • Identify what you can do better, faster and more creatively than others.
  • Identify what you love to do and what interests you.
  • Identify what field or area you would like to get involved in or transition to.
  • Talk to someone who does the type of work you are interested in doing.

Step 2: Identify Certification, Training and/or Education Requirements

  • Identify whether any certification(s) are required to provide the services you are interested in freelancing.

The following websites provide information on certification requirements for different professions:

US Small Business Administration: www.sba.gov

US Department of Labor, Employment and Training Administration: “Licensed Occupations” at careerinfonet.org

  • Identify whether you need to complete field-specific training or courses. Specialization distinguishes you from others, increases interest in your services and allows you to charge higher rates.
  • There are many free online tutorials and classes you can take. For example, see https://www.coursera.org and https://www.edx.org
  • You can also barter with others for training, look for lectures and workshops through professional associations, colleges and universities, or hire a tutor.
  • Identify what aspects of your previous experience and/or education are an asset that should be included in your marketing materials (cover letter, resume, website, Facebook page, etc.).

Step 3: Identify Your Rate Structure

  • Pricing is a critical component of the service you provide. The more experience you have in the field, the more you can charge. Research what other freelancers charge for the service you are interested in providing. If you are new to the field, you may want to charge 30%-40% less than your more experienced competition until you have gained more experience yourself.
  • Rate structures vary by service, but generally fall into one or more of the following categories:
  • Minimum fee
  • Hourly rate
  • Daily rate
  • Per unit rate (ex: per word, per article, per program, etc.)
  • In addition to your rate structure, you will need to decide how much “free” work you are willing to do for a “good” client to build up/maintain goodwill. There is no hard and fast rule for this but it invariably comes up.
  • Finally, you will have to design your invoice!

Step 4: Identify Your Business Structure, Tax Obligations and Safety Nets

The most common business structure, particularly when starting out, is a sole proprietorship where you offer your services under your own name. No paperwork is required. However, as your business grows, you may want to investigate other business structures such as a limited liability corporation. For more information on business structures, be sure to read Chapter 10 of THE FREELANCER’S BIBLE by Sarah Horowitz.

Freelancers’ tax obligations differ from those of employees working for an employer, because they have to pay the self-employment tax. Before launching a freelance business, you must understand your tax obligations and make arrangements to set funds aside to pay these tax obligations. Freelancers usually pay taxes quarterly. For more information on tax obligations, be sure to read Chapter 14 of THE FREELANCER’S BIBLE by Sarah Horowitz.

Freelancers should also look into whether there are sales taxes or sellers’ permits that are required for their type of business.

Freelancers must make their own arrangements for health insurance coverage and retirement savings. These safety nets are important and you should make sure to put them in place for your health and peace of mind. For more information on safety nets and resources, be sure to read Chapters 15-16 of THE FREELANCER’S BIBLE by Sarah Horowitz.

Step 5: Identify Potential Jobs and Clients, and Bid on Jobs

Since freelancers work for themselves, finding work requires searching the internet for job postings and potential clients, bidding on jobs, meeting deadlines, churning out excellent quality work each and every time, establishing relationships with clients and working hard to maintain these relationships.

A. Direct Contact

In some freelance professions, freelancers seek out companies that provide services to customers using freelancers. So, the freelancer communicates with the company, and the company communicates with the customer. For example, freelance translators, transcribers, proofreaders, voice-over professionals, and editors are among this type of freelancer. To find out if your chosen field works in this way, talk to someone who is a freelancer in that field, or use an online search engine like Google, Bing, Yahoo, etc. to find out. Once you identify companies that operate in that way, email them directly. You will need to prepare a short and focused email that highlights your strengths, areas of specialization, rates and availability. You will also need to indicate your willingness to take any test they require. You will also need to attach a well-crafted resume and one or two samples of your work. Make sure the samples are not protected by a confidentiality agreement with another client.

For more marketing and networking ideas, see Chapters 8-12 of THE FREELANCER’S BIBLE by Sarah Horowitz.

B. Indirect Contact

In addition to company-specific websites that advertise freelancing job opportunities, there are many online resources that advertise freelancing job opportunities. Some websites are specific to a particular field like web design, computer programming, and translation. Other websites advertise job opportunities across many different fields. Below are some of the most commonly used freelancing websites:

https://www.odesk.com/
https://www.elance.com/
http://www.freelancer.com/
http://www.guru.com/
http://create.demandstudios.com/
http://www.ifreelance.com/
http://www.peopleperhour.com/
http://www.virtualvocations.com/jobs
http://www.flexjobs.com
http://www.indeed.com
http://www.careerbuilder.com
http://www.journalismjobs.com/index.cfm
http://www.freelancewritinggigs.com/
http://www.problogger.net/jobs
http://www.freelancewritingjobs.ca/
http://www.getacoder.com/
http://jobs.smashingmagazine.com/
http://www.project4hire.com/
https://forums.digitalpoint.com/forums/other.24/
https://flippa.com/?spm=1
http://www.simplyhired.com/
http://jobs.metafilter.com/
http://www.dice.com/
http://www.behance.net/joblist
https://weworkremotely.com/
http://www.coroflot.com/jobs
http://www.crowdspring.com/index/1to1/
http://www.krop.com/#!/
http://www.sologig.com/
http://www.joomlancers.com/
http://www.authenticjobs.com/

These types of websites generally ask you to fill out a profile, including biographical information and rate structures. Below are some dos and don’ts when filling out these types of profiles.

Do:

  • Fill out your entire profile, with samples and references. Clients may contact you about jobs, so you need to make your profile as enticing as possible.
  • Take any test offered, suggested and/or required by the site if related to your skills. This shows clients what you can really do.
  • Take any test administered by the client if related to your skills.
  • Include a cover letter and resume for every job you apply to, just as if you were applying to a 9-to-5 job.
  • Look at the average proposal bid, located above the applicant list on each job. This will help you gauge what you might want to bid.
  • Communicate with your clients to reassure them that the work is being done and that you have things under control.
  • Set up your payment account, if applicable. Some websites do not offer this option. If they do not, you will need to make arrangements with the client directly.

Don’t:

  • Bid on a job where you have to pay the client to do the work.
  • Bid on a huge job right off the bat, unless you have worked with the client before and are sure you will get paid.
  • Bid a job that is larger than you can handle by deadline. One of three things will happen. 1. You will miss your deadline and ruin your reputation in the process. 2. You will meet the deadline with poor quality work and ruin your reputation in the process. 3. You will be forced to subcontract some of the work out, which may violate your agreement with the client, and you will be at the mercy of the subcontractor’s rates, work quality and timeliness, which may cause you to lose both money and your reputation in the process.
  • Request upfront payment unless you have significant experience and excellent feedback on the site.
  • Get discouraged if you don’t get a job right away. You may have to take something cheaper than expected to gain experience and feedback.
  • Get intimidated by the average bids. If they seem low, you still might get the job because of your experience.
  • Forget to leave feedback after a project is complete. When you leave yours, your client’s will show up on your profile.
  • Be afraid to apply for something different. Some of the best jobs I’ve ever gotten were for topics I had to learn more about.

Step 6: Paperwork

When doing business as a freelancer, there are likely to be agreements, contracts and/or forms that must be filled out. These include confidentiality agreements, contracts that specify the scope of work and payment terms associated with the job, and forms gathering information from you for tax purposes. Read all of these materials carefully and, when in doubt, consult an attorney.

The work you perform may also entail copyright and/or intellectual property right considerations. If that is the case, make sure to address any potential copyrights and/or intellectual property rights with your client and/or an attorney to ensure they are protected and covered by the appropriate agreements and procedures.

Step 7: Once You Have Landed the Job

You have landed the job! Congratulations! Now the hard work begins. Below are some pointers that may help you turn this client into a loyal return customer.

  • You must communicate with your client. Send brief update emails to let them know you have things under control.
  • Respond to their emails as quickly as possible and as thoroughly as possible.
  • Make sure you address any issues/problems they have with your work. Remember, THE CLIENT IS ALWAYS RIGHT, even if they have no clue what they are talking about. Try to accommodate their concerns to the best of your ability and gently explain why a client-requested change may not be possible and/or advisable.
  • Remain calm, polite and friendly with the client even if you have decided to part ways with them.

ALWAYS meet any interim/final deadlines. If the client makes a change that requires the deadlines to be adjusted, be sure to communicate that to them ASAP!

Step 8: Client Warning Signs

There are some red flags that every freelancer must watch out for when beginning a relationship with a new client or prospect. Below are some items to keep in mind.

You may want to avoid the client if he/she/it:

  • Asks you for money to do the work
  • Asks you to provide a “free” sample that requires more than 1 hour of work
  • Fails to ask you to sign a confidentiality agreement and complete the necessary tax forms
  • Fails to communicate his/her/its payment procedures and fails to ask you for your billing procedures
  • Has failed to pay you in the past. Clients who hire freelancers usually pay them on a 30/60/90 day net basis (i.e. 30, 60 or 90 days after their client pays them). So a payment delay goes with the territory.

However, taking on more work from a slow-paying client may not be in your best interest. Try to diversify your client base so you can even out your payment schedule.