Freelancing. You’ve heard about it in the news. You’ve seen people on LinkedIn raving about it, and heck your neighborhood coffee shop is full of those people with laptops. Now you want to be one of those independent working folks.
This handbook will help to explain how you can start freelancing, step-by-step. It examines exactly how you too can get your first freelance client, your first payment and your first raving testimonial, and then put all of these things on repeat.
A freelancer is a self-employed person, working on a flexible basis with one, or multiple, client projects. Unlike regular employees, freelancers aren’t attached to a single company or paycheck. Instead, they choose their own gigs, name their rates and pitch their services to anyone interested in them.
🤓 Quick historic reference: The term ‘free lancers’ was first coined by Sir Walter Scott in the 17th century. He used it to describe medieval mercenaries, who “rented” their lances (spears) to whoever paid the most.
Legally, freelancing is a form of self-employment. In most countries, you’ll have to obtain registration either as a sole trader or as a legal entity such as a limited liability company (LLC). Compliance-wise, this means freelancers are obliged to report applicable taxes and pay social contributions, plus do other business admin tasks.
If that list seems like a lot to handle, don’t fret. There are ways to easily tackle each point, without breaking your back (brain) or budget. We’ll be sure to get to them all.
Freelancing in its modern sense isn’t as new as it may sound. Even before the rise of digital freelancing marketplaces, talented people chose to work solo: craftsmen, artisans, photographers, journalists, architects and many other pros.
But the Internet and the rise of digital professions (e.g., development, design, online content creation) gave a major push to the freelance economy as we know it.
That said, freelancing is often confused with other types of employment. So let’s clear some terms 👇
An independent contractor is a self-employed professional who joins a business for a specified period of time to complete a project. The contract period can last anywhere between several weeks to a year, with fixed or flexible hours.
The main difference between a freelancer and an independent contractor is that freelancers tend to work on multiple client projects at a time, while contractors are attached to one organization or contract (of course, this isn’t a hard rule).
Some contractors juggle a mix of fixed-price contracts for deliverables and take on extra hourly-based work from multiple clients. So the terms freelancer and contractor are often used interchangeably.
A remote worker is a payrolled employee, who does their job from anywhere outside of a traditional office setting — a home office, a coworking space, a hotel, etc.
Most remote workers are regular employees, meaning they have a work contract with one company. The employment contract specifies working hours, salary, benefits and any other perks. Their salary gets paid on a fixed schedule with most of the taxes being handled by the employer.
A digital nomad is a globetrotting freelancer or remote worker, who prefers to switch between countries, rather than stay in one place. As long as you don’t have a permanent ZIP code and work mostly online, you can claim the (pretty sweet) title of a digital nomad.
Plenty of countries now also offer digital nomad visas to entice the remote earning types to stay longer and contribute to the local economy.
Freelancers are a growing force, enticing more people to join. According to Fiver, 67% of GenZers globally are already freelancing or considering starting soon. For many, freelancing now appears as an equally viable career option as may a typical corporate job. Moreover, some 67% of Americans say that they feel more secure working independently.
Clearly, the benefits of freelancing are aplenty:
By stepping away from a traditional workplace, you bid goodbye to things that annoy you: low pay, fixed working hours, and a terrible boss. But you must also relinquish the good things, like a steady after-tax paycheck, a cozy office nook, and make-me-shake amounts of office coffee.
Let’s be candid: Freelancing comes with some cons:
Yet, all of these disadvantages can be turned into a positive with the right support, tools and mindset.
On the bright side of income, 50% of freelancers say they now out-earn their last full-time salary. Freelancing income also gets more predictable with the right money management practices in place.
As for business admin, it can and should be automated with some snazzy tools like Xolo Go or Xolo Leap.
Your income potential as a freelancer is limitless.
Solopreneurs are able to name their own hourly and/or project rates. To give you some ballpark estimates, European freelancers charge $98 per hour on average, across industries. Among freelance writers, 27% earn $50K or more annually, while German-based tech workers command an average daily rate of €746.
Ultimately, your income as a freelancer depends on your industry, region and experience levels.
Learn more about how much freelancers make with exact numbers by location and industry.
The truth is simply that you don’t need any secret knowledge to become a freelancer. What you need is a realistic game plan, a series of steps to begin selling services on the global marketplace.
If you’re just beginning then it's critical that you start by:
We’ll go into each of these in more detail, and tackle them in the order that any new freelancer should consider. Within no time, you’ll have a confident plan for success.
Freelancers are trading their skills, not time, for money. This means that your value isn’t necessarily determined by how much time you can allocate to a client’s task, but by the quality and results you can deliver.
Figuring out your most marketable skills as a freelancer can be a bit challenging after doing corporate work, but not impossible 👇
Think about the outcomes you delivered in your last position.
If you were a sales manager, you would’ve had a number of responsibilities, which can be refashioned into a freelance service:
Analyze your past work experience through the prism of outputs, results, and deliverables. Then validate the freelance demand for such services with a quick Google search command [your skill + freelancer or freelancing]:
If you see freelance marketplaces or personal websites of freelancers popping up in search results, you’re on the right track!
Want extra reassurance? Check which freelancing skills are high in demand right now. Many of these can be self-taught or mastered via a professional training program 😉
A niche is a segment of business where you have the most knowledge. It’s typically defined by your past life and work experiences, plus the industries you’ve worked in.
Let’s say you’re a graphic designer, who worked for a B2B SaaS agency, held a bunch of restaurant jobs in the past, and have a passion for yoga. In this case, you could:
You could even start anew, and venture into an absolutely different freelancing niche.
The goal is to progressively find a sweet spot between consistent demand (i.e., a large potential customer base), your expertise (i.e., things you know or are willing to learn) and your interests (i.e., work that won’t make you miserable).
Discovering your freelance niche instantly provides some major benefits to your career and journey. This self-discovery will lead you to greater:
That said, many freelancers start as generalists and then progressively niche down, based on their experiences with different clients and projects.
Pro tip: Don’t spend eternity contemplating your niche. As long as you see at least one other person doing freelancing in [your niche], give it a go. You can experiment with one, then switch to another if your first choice ended up being meh.
Having a portfolio certainly helps one get started as a freelancer. Then again, a big portfolio is something you acquire while freelancing. The best advice? Create a minimal viable portfolio. It can be a simple Google Docs document or a Notion page where you add:
Work samples can be anything from short descriptions of projects you did professionally to websites you’ve designed, applications you’ve developed, photos or videos you’ve produced or simple writing clips.
Pair your portfolio with an updated LinkedIn profile, and you’re good to go.
You have some ideas about your service line(s), now you need to find people who need them. Getting that first freelance client can seem like a big deal, but don’t stress. There are more obvious and hidden job opportunities than you think, many of which don’t involve having a huge social media following or sending 300+ emails per day.
As a freelance writer, I’ve got new clients through personal referrals (my dad recommended me at his workplace), bylines in online magazines, former colleagues, Slack communities and even off-hand replies to newsletters, which I liked 🙂
And here’s what the collective Internet wisdom has to say on getting the first freelance client in other niches:
As you can see, everyone’s My First Client story is different, but there are some repeating patterns that include: referrals, outreach, marketplaces and social media.
As you’ve seen, top-notch freelancers are using an array of methods for client discovery. Your most effective channel may change over time, meaning it’s worth testing them all out in the beginning. Be cautious not to spread yourself out too thin, however, as you may appear lazy in your approach.
It’s time to explore:
Want a deeper take on customer acquisition with a step-by-step strategy? Grab a free copy of the Ultimate Guide to Finding Freelance Clients (It’s a no-fluff guide, stuffed with checklists, templates and handy links!).
When it comes to setting prices as a freelancer, don’t let the clients always take the lead. Although many companies offer freelancers decent market rates, some still push for lowball offers.
The conundrum is that freelance rates can be all over the place. Some freelancers bill per hour or per project. Others go with a day rate or a retainer. Moreover, different markets and industries pay vastly different rates for the same type of work (e.g., web design or copywriting) 🤯
Your best option is to equip yourself with some ballpark figures on freelance rates in your niche:
Learn more about calculating your freelance rates like a pro.
Freelancing is a form of employment. As such it's regulated by labor laws, which are somewhat different in each country. Generally, you have two options:
In both cases you’ll have to liaise with the local tax authority and/or another government entity, regulating commercial activities.
Self-employment registration (a sole-trader status) is easier to obtain. There is less paperwork and eligibility criteria you must meet to start operations. Likewise, taxation is generally more straightforward.
The downside of a sole-trader status is personal liability. If anything goes wrong in your business (e.g., you cause some major damage to a client), you’d be held personally liable for covering those costs with both your freelancing and personal money. Also, some countries cap the annual revenue volume, which a sole trader can generate. Going beyond that threshold would trigger the need to incorporate as a business entity.
Company incorporation as a freelancer gives you extra liability protection. Now it’s your business, not you personally, responsible for any (hopefully unlikely) legal or financial troubles.
You also get the added benefit of flexible taxation, where you can choose to retain some profits and not pay social contributions and personal income taxes on them. Moreover, you can benefit from having a cool work title, a proper work contract with payslips and some extra room for future growth. Hiring subcontractors or even full-time employees requires business incorporation.
The downsides of company incorporation are the extra company maintenance costs and hurdles…unless you select a country like Estonia, with a simple, straightforward and solo-friendly company incorporation process.
Estonia allows anyone to remotely incorporate a company via its e-Residency program for as low as €265. The minimal share capital contribution is €0.01 per shareholder as of February 2023. There’s no corporate income tax on retained profits aka money you keep in the business, and a 20% flat-rate tax for almost everything else: VAT, distributed dividends, personal income (if you ever chose Estonia as your home base).
You don’t need to invest in multiple tools as a freelancer. To save money and energy, start with a minimal viable stack:
Pro Tip: Use a pay-as-you-go product like Xolo Go to easily manage your expenses and pay less taxes when taking on business supplies, educational materials and more!
Other miscellaneous tools include professional software you may need in your industry, plus online comms tools like Slack, Zoom, and Google Meets. We know there’s a lot out there, so we’ve put together this curated list of the best tools for freelancers – including banking, payment processing, accounting, and marketing apps!
Reality check: the first successful client sale may take anywhere between one day and several months.
Your goal is to be diligent and persistent with your outreach. Select two customer acquisition channels from the list above and set your daily/weekly goals. For example:
Your goal is to learn how to spot relevant job opportunities fast, and respond to them with high-value pitches.
Snag a quick template from our free eBook, if you’d like:
I am [your freelance specialty] for [industry + companies that meet your ideal client profile].
I am really good at [skill/service 1], [skill/service 2] — and also know [extra skill 3, 4]. That’s because I have [briefly summarize your experience or reference a successful project].
Always happy to chat about either of these things!
Tired of endless pitching? Switch gears to a more passive strategy: Create and publish content for your ideal prospects.
Jason Hewett, a freelance SEO writer, shared a great tip:
“Write a series of posts called “___ TIP OF THE DAY”
Where ___ is your desired position.
Ideally, your tips are about things you’ve learned over the years and best practices that make you good at your job. It could also be styles of work that you prefer
If you don’t have tips, share someone else’s content (and give them credit of course) and write 1-2 sentences about why you like their tip and why it reflects what you do.
Make sure you use 2-3 hashtags related to what you do in each of those posts. Do one per day. Schedule Saturday posts too.
The main reason you’re doing it is to tell the algorithm that you are someone who is relevant to those subjects, so that when a recruiter or hiring manager searches for “graphic designer” or “front-end developer,” they find your profile.
Don’t give up too soon. Even established freelancers spend three to six hours per week on active client-hunting. Keep going until you get the sweetest “Yes, here’s a work-for-hire contract” from your very first client.
Cha-ching! You’ve snagged that very first freelance gig. This definitely deserves a happy dance and a round of messages to your friends and fam.
After you’re done with a much-deserved celebration, it’s time to complete another important step: deliver a great client experience.
Customer experience is an area in which businesses spend an exorbitant amount of money. Why? Because they know that making a repeat sale to the same happy client is 2X-4X times easier than getting a new one. Freelancers should adopt the same mentality.
Companies also struggle to find good freelancers. So when they encounter a smart, reliable and talented independent, they’d prefer to stick with them for the long term. Your goal is to turn those one-off projects into longer ongoing engagements by sweeping clients off their feet with delightful service experiences.
And that’s easy to do if you follow several simple rules:
Don’t be afraid to gently push back on unreasonable requests and admit that a task is outside of your wheelhouse.
Once the job is done, it’s time to recuperate your payment, which is arguably the best thing about being a freelancer.
To do so, you must issue your client an invoice — a business document, which reflects the transaction details such as date, services rendered, payment total, applicable taxes and payment details.
You can invoice freelance clients with:
You may also send a digital invoice copy with your bank details on it.
After you’ve issued an invoice, your next step is to record the transaction for accounting purposes. You will need to keep track of all incoming payments (accounts receivable) and all outbound expenses (accounts payable) to do a total tally of your monthly income and profit. You’ll need those numbers during tax season!
If you’d rather not have your nose deep in a spreadsheet for several hours per week, get a smart invoicing app like Xolo Go.
Xolo Go combines compliant customer invoicing with integrated payment processing and expense management capabilities. You can invoice clients like a real company (without having to be a real company), then schedule withdrawals to your bank account. Moreover, you can also submit business expense reports and reimburse yourself in several clicks.
In the background, Xolo tracks all your money movements, organizes all the transactions in an accounting system and generates weekly/monthly cash flow insights. You can export your data at any time to prepare a tax report submission or get some advice from your accountant.
You’ve tasted freelancing and you loved it. Now you want even more gigs in your work planner.
To make that happen, you need to progressively build out your system for freelance client acquisition. A great system includes a mix of active and passive channels. Active client acquisition means that you’re on the hunt for work. Passive client acquisition means that work finds you.
Passive client acquisition means having a personal brand and a bit of clout that helps you attract your ideal clients and relevant job opportunities. It’s definitely a slower method of customer acquisition, but it’s more sustainable. Meaning you can allocate more effort towards delivering great service levels, instead of relentlessly pitching and following up.
If you need more work here and now, you should go on another customer outreach round. If your work planner is full for the next several months, invest those extra hours into building your personal website or creating some cool content for social media to improve your discoverability.
Keep your workflow steady by avoiding saying "Yes!" to every gig. Instead, create a system for saving those client inquiries for later:
Then process those leads as they come. If you have some wiggle room, offer to bump a prospect higher up your waitlist for an extra fee. If you’re back-to-back busy, offer to reach out again once you’ll offload a specific project (and do so by the date you’ve named!).
Learn more about managing multiple projects as a freelancer.
Strong customer retention is the key to never running out of freelance work.
Recurring tasks make workload planning and revenue prediction easier. You have an idea of how much work you need to complete by different deadlines and how much money you’ll land once it's done. Based on that, you can create extra client/project slots and book additional work to hit your target income.
To improve customer retention levels, try the following:
Finally, if your client doesn’t need any extra help at present, there’s one more great thing you can do — ask them to refer you out.
Referrals are the secret glue of the freelance economy. For example, 66% of experienced freelance writers get new work from client referrals, and 57% through referrals from their freelance colleagues.
Unlike other customer acquisition channels, referrals almost always result in new work. Such leads are easier to close because you get a 1:1 introduction to a relevant prospect, enforced by a peer recommendation.
The beauty of freelancing is that you’re not confined to doing one type of gig for the rest of your life. The world is your oyster. You have the freedom to explore new markets, industries or even business delivery models.
When you get bored of delivering one service, you can always switch things up a bit.
For example, switch from doing wedding photography to offering photo content creation for wellness brands. Or better yet — you can start consulting brands on editorial styling and offer art direction services instead.
Freelancing doesn’t come with a linear growth trajectory like a standard career. It’s promotion time whenever you decide to upskill or switch to offering a higher-value service.
To diversify your income, you can also launch productized services — fixed-scope, fixed-price service packages, delivered via repeatable workflows. In this case, you can farm out some of the steps in the service flow and focus on client management instead. Or you can always scale up into an agency or even launch an entirely different business with full-time employees.
That said, scale is good, but not always necessary. You can remain a solo and keep delivering the freelance services you like.
Becoming a freelancer can be one of the best decisions in your life…or a new locus of unwavering pressure if you don’t prepare yourself for some challenges.
Just like any other decision in life, freelancing isn’t fail-safe.
Since many people have walked before you, you can learn from their mistakes.
Never ever start delivering a service before you put things in writing. Period.
A work contract is a mutual agreement on the scope of work, payment terms, and obligations of both parties. It should be ironed out in advance to avoid any unsavory questions like “What happens if the work gets delayed from your end or the client’s side?”, “How many revisions are allowed?”, “When will I get my money?”.
If the engagement goes awry, you have a legal document, which protects your right to getting paid. Plus, it’s a document you can always point toward when the client makes unreasonable demands.
You can find plenty of free work-for-hire contract templates or use an online contract builder. Customizing a work contract takes minutes, but saves you hours in potential headaches later down the road.
As a new freelancer, you may be tempted to lowball your offers. That’s a rookie mistake 60% of beginners make.
But being new to freelancing doesn’t mean you’re new to the job market. Don’t undervalue your skillset and past work experiences. Likewise, don’t go with the recommended hourly rate for your profession, since such employee hourly rates don’t factor in self-employment taxes and business operating expenses.
If you’re unsure what to charge for this or that, browse recommended rate guides or post a question in a freelancing community to get some peer feedback.
Freelancers may want to avoid the hassle of opening a new bank account when they start out, and rather channel funds to a personal account.
If you’re registered as self-employed, this is legally allowed. But commingling business and personal funds will likely make the end of a financial year a nightmare. You’ll have to sort through countless transactions to highlight client payments and business expenses, then do a painful tally of those.
To avoid that, open a business bank account. With Xolo Go, you can get a free virtual business bank account in several clicks to receive payments via SEPA bank transfer, Visa, Mastercard and American Express. Other freelancer-friendly banking options would include Revolut, Monzo, N26, and Lance.
It’s normal to go through a feast and famine cycle in your first year of freelancing. What’s problematic is when you don’t plan ahead for the rainy day.
Don’t spend your entire income each month. Create a system of pockets where you set aside extra money to cover:
It’s important to maintain a business bank account, with a minimum of one month's worth of personal and business expenses as your safety net.
Late payments are not acceptable. If a delay happened once, give the client a polite, but firm reprimand. If late payments somehow become the norm, fire that client.
To avoid late client payments:
You should never agree to work with someone who becomes a source of financial anxiety.
You’re in charge, and you must be proactive about business management. This means being intentional and somewhat selective about the work you accept.
By accepting unsuitable projects — low-paid, irrelevant, or plain boring tasks— you’re limiting your ability to pursue more rewarding work, and to grow your personal brand.
Don’t accept every request falling into your lap. Create a set of criteria for evaluating different clients and projects. Stick to it.
No vacations, long working hours and no time for other personal commitments aren’t the way to go. Freelancing is about flexibility and freedom to focus on things you love the most.
Sure, growing your income is a great goal. It’s not worth the sacrifice of your physical and mental well-being. There are many things you can take advantage of to help in avoiding the burnout train.
Many people overthink becoming a freelancer, and underestimate themselves in the process. Sure you need to get some prep…but most importantly — you need to get started.
To become a successful freelancer you need to turn those initial woes of “What am I gonna do?! 😟” into a game plan of “This is how I will be tackling things 😎”.
It’s time to get going, freelancer!
Elena Prokopets writes content for tech-led companies & software development businesses, marketing to them. Her empathy for the customer, expertise in SEO, and knack for storytelling help create content that ranks well and drives industry conversations.
Elena uses Xolo so she can focus on her solo B2B content writing business without stressing over the compliance and admin overhead.
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