Freelancing can give you the opportunity to work from home full time or be an additional source of income. Freelancing is different from owning your own business; because you are usually providing services instead of products and do not often hire other people to work for you. The overhead of freelancing can be much lower, and your initial start up costs may be lower depending on the field that you are going into.
1. Freelance in an Area of Expertise
If you are considering freelancing you should choose an area that allows you to utilize your skill set. For example if you work in the Public Relations department for your business, you could become a PR consultant or write press releases for smaller companies that do not have their own PR department. If you work in the film or TV industry, you can freelance for that as well.
2. Advertise to Grow Your Freelance Work
Once you begin freelancing you will need to advertise. You may want to start with word of mouth and apply for freelance jobs that you see on various online sites. Several industries take an insider contact to begin working, and it may take awhile for your work to build up to a good point. Successful freelancers are the ones that are able to sell themselves.
3. Set Up an Accounting System for Your Freelance Work
Once you have work you will need to create an accounting system that tracks your invoices, and when you have been paid. You should also keep track of your expenses so that you can deduct them at the end of the year. This can save you on your taxes, and a good system will help you when it comes to tax time.
4. Consider the Tax Implications of Freelance Work
Additionally you will need to consider the tax implication that making the extra money will give you. You should be setting aside estimated taxes your first year, and if you have switched to full time you will need to pay your taxes quarterly. If you are doing this part time you may be able to decrease the number of withholdings and cover yourself that way. However, once the business begins to make a lot of money, you will need to pay your taxes quarterly.
5. Protect Your Freelance Work
Finally consider any insurance or other things you may need to protect yourself. Some cities and states require you to purchase a business license even if you are just freelancing. You should check your local laws to make sure that you are covered.
