How to Become a  Freelancer in 2025: The Ultimate Handbook

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. 

Freelancing has evolved significantly, becoming a prominent career choice for many. As of 2025, the freelance market is projected to reach $8.39 billion, growing at an annual rate of 14.5%. This handbook provides an updated, step-by-step guide to starting your freelance journey, securing clients, and building a sustainable business.

Moreover, 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. 

What exactly is a freelancer?

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.  

Legal responsibilities of a freelancer:

• Sign legal work contracts with clients 
• Issue compliant invoices 
• Collect applicable sales taxes 
• Handle payment processing 
• Maintain bookkeeping records
• Submit personal and business tax reports
• Pay self-employment taxes 

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.

What are the advantages of freelancing? 

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: 

• Independence. Get to choose how you work, when you work, and for how much money. You call the shots on every aspect of your work — be it saying “No!” to annoying people and “Yes!” to higher pay. 
• Flexible work schedule. No more dreaded 9-to-5. Work as much or as little as you want, take impromptu breaks, and organize your work schedule in a way that suits you best. 
• No income ceiling. Freelancers don’t have to wait for a pay raise — they make it happen anytime by switching clients, increasing rates, or launching higher-value services. 
• Variety of work. Cherry-pick projects that are dear to your heart or challenge you professionally. Work with different people and companies to learn the “inner kitchen” of multiple industries. 
• Diversification. Tired of your core service work? Switch to consulting, speaking or training. Want more passive income? Look into productizing your services, or starting a side hustle.
• Location independence. Trade a stressful high-cost-of-living area for a more chill, affordable place. Or (slow) travel the world if that pleases you. As long as you get the work done, the place doesn’t really matter. 

Possible disadvantages of freelancing to consider

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: 

• No employee perks 
• Lower social security 
• A tax bill to cover
• Inconsistent income 
• Extra businesses admin

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. 

• With Xolo Go, you get a convenient app for invoicing global clients like a company. Get a VAT-compliant invoice generator with an integrated payment processing app.
• With Xolo Leap, you get expert help in an e-Residency company incorporation and all subsequent business admin tasks, done by a competent team of accountants and some smart process automation.  

How much can you earn as a freelancer?

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. 

How to become a freelancer: Step-by-step 

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: 

1. Evaluating your skill-set 
2. Selecting your niche and target audiences 
3. Deciding on your customer acquisition channels
4. Figuring out your prices 
5. Sorting out the legal setup 
6. Getting the essential tech
7. Making the first sale 
8. Executing a successful project 
9. Invoicing and recording payments 
10. Getting more leads into your pipeline 
11. Improving customer retention 
12. Looking into opportunities to scale  

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.

1. Identify Your Marketable Skills 

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: 

• Customer research (responsibility) →  Customer journey mapping (service) 
• Sales slide decks and demos → Pitch deck design or presentation critiques 
• Client prospecting and outreach → Sales pipeline design and automation 

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 😉

2. Select Your Niche 

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:

• Graphic design for B2B SaaS startups 
• Graphic design for yoga studios and holistic brands 
• Or graphic design services for restaurants 

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:

• Personal branding. You’ll soon become known as the go-to person for X in industry Y. 
• Client acquisition. You’ll have a great roster of results and portfolio items to persuade leads. 
• Personal productivity. You’ll get to know the ropes, and will find yourself breezing through many tasks. 

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.  

Do I need a portfolio to start freelancing? 

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:

• A quick professional bio 
• Your contact deets 
• Key service lines
• Several work samples

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. 

3. Decide On Your Customer Acquisition Channels

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 🙂

Everyone’s My First Client story is different, but some repeating patterns include referrals, outreach, marketplaces, and social media. 

Best Customer Acquisition Channels For Freelancers

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:

• Your network. Announce to your personal and professional connections that you’re available for hire. Don’t be shy about breaking the news to former employers, colleagues, mentors, friends, second cousins (and their partners), whomever! Be loud! Be proud! And share everything about your freelancing status. 
• Freelance job boards and newsletters. Become a regular on popular freelance job boards (check out Xolo's job board here). 
• Online communities. If you prefer to network in a close-knit environment, join online groups for your industry. Find active subreddits and Slack channels, where freelancers, solopreneurs and digital nomads mingle, exchange client leads and post cool job ops. 
• Outreach. Offer to handle outflow work from more experienced freelancers as their subcontractors, or reach out to managers at companies you love with a personalized service pitch. This is best done through LinkedIn or via email. 
• Niche freelance marketplaces. Instead of bumping elbows with flooded marketplaces like Upwork and Freelancer, you may consider setting up a Xolo profile that provides better projects and clients, as well as a fleet of tools to help you succeed beyond gigs.

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!). 

4. Figure Out Your Freelance Prices 

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:

• The Graphic Design Salary Transparency spreadsheet by AIGA has data on average hourly and project rates for freelancers 
• Arc lists average hourly rates for different types of software engineering and tech positions 
• Incense has sample rates for different types of content creation projects 
•  The British Union of Journalists has rates recommendations for freelance photographers, public relations gigs, and translation work 
• The American Writers and Artists Institute has recommended freelance rates for copywriters, digital marketers, and SEO pros 

Learn more about calculating your freelance rates like a pro. 

5. Sort out your legal status

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:

• Register as a self-employed person 
• Incorporate as a business entity 

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). 

6. Get the essential tech stack

You don’t need to invest in multiple tools as a freelancer. To save money and energy, start with a minimal viable stack:

• Hardware for your job: Laptop, mouse, tablet, camera or whatever it is that you need to do your core work 
• Invoicing app for creating customer invoices and collecting payments. Choose a tool with embedded payment processing and easy transaction exports for bookkeeping purposes 
• Accounting software to maintain a ledger of all incoming and outbound payments, plus you may prep ahead for the tax season 
• Project management tool to organize projects and keep track of the deadlines. This can be something as simple as a spreadsheet or a Notion template or a swankier SaaS app. 
• Cloud storage. You’ll need plenty for storing and sharing customer documents and deliverables, be sure to check for the best plans available 

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!

7. Make the first sale happen 

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:  

• Reach out to X former colleagues via email
• Add X new relevant connections on LinkedIn
• Apply to X open freelance jobs  

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: 

Elevator pitch template 

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.

WHY????

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. 

8. Execute a successful project

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:

• Under-promise and over-deliver.
• Be ultra-prompt in communication 
• Deliver by the deadline 
• Explain and educate on your services
• Be transparent about the scope of the service  

Don’t be afraid to gently push back on unreasonable requests and admit that a task is outside of your wheelhouse. 

9. Invoice and record payments

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:

• An invoicing app
• An online payment processor 
• A mobile card reader 

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.  

10. Keep your pipeline choke-full of great clients

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. 

• Active channels include actions like outreach, job applications, online and in-person networking. 
• Passive channels include assets like personal website, online mentions (e.g., directory listing, bylines, social profiles) and referrals.  

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: 

• Establish a minimum lead time for new projects (e.g., I need a minimum of 2 weeks before jumping on a new project) 
• Communicate your availability to prospects upfront (e.g., I’m currently booking new work starting from January 2024) 
• Set up an automatic form for collecting new client inquiries. To better evaluate prospects, ask for all the preliminary information you need such as company name, project type, budget, expected turnaround time, etc. 

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. 

11. Improve customer retention and referrals

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: 

• Set up a project wrap-up sequence. Once you’re done with an assignment, don’t just send over an invoice and call it a day. Instead, wrap things up with a quick email, requesting feedback (e.g., what could be done better next time) and asking about the client’s next plans and goals. Keep the conversation rolling to understand how else you could help them. 
• Pitch complementary services. If the client doesn’t need another round of [your core service] atm, try upselling your other competencies. As a photographer, you can offer help with photo retouching. As a copywriter, you can pitch email copywriting services after doing new landing page copy. 
• Start offering retainers. A retainer is a subscription-styled service offering, which assumes delivering a defined scope of work over a fixed amount of time. For example, 3 blog posts per month. Typically, retainers are paid for in advance, meaning you get an extra financial cushion at the beginning of each month. 
• Stay in touch with casual follow-ups. Connect with your past clients on social media and send occasional “check-in” emails. But make those meaningful: congrat them on a successful launch, comment on recent news, share a quick free tip, and so on. The secret to great customer retention is adding a personal layer to an otherwise transactional relationship of selling services. 

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. 

12. Look for opportunities to scale and thrive 

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. 

Takeaways 

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!

About Elena

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.

Your Q&A about becoming a freelancer answered 💪

Q: What initial steps should I take to start my journey as a freelancer?

A: Begin by identifying your skills and market demand. Set clear goals for what you want to achieve as a freelancer, whether it's earning extra income, gaining flexibility, or pursuing your passion. Research your target market, understand your competition, and define your unique value proposition. Additionally, familiarize yourself with the legal requirements for freelancing in your area, such as registering your business if necessary.

Q: How can I find my first clients and start building a portfolio?

A: Leverage your personal and professional network to find your first clients. Use social media platforms, freelancing websites, and professional networking sites like LinkedIn to showcase your skills and services. Offer your services at a discounted rate or even for free to trusted contacts in exchange for testimonials and work samples for your portfolio.

Q: What are the best practices for setting my rates as a new freelancer?

A: Research the going rates in your industry and niche to set competitive yet sustainable prices. Consider factors like your experience, the complexity of projects, and your target market's budget. Initially, you might set your rates slightly lower to attract clients but plan to increase them as you gain experience, skills, and a stronger portfolio.

Q: How do I manage my finances and taxes as a freelancer?

A: Keep detailed records of all your income and expenses. Use accounting software tailored for freelancers to streamline your financial management. Set aside a portion of your income for taxes, and consider working with an accountant familiar with freelance businesses to ensure you're meeting all tax obligations and taking advantage of any allowable deductions.

Q: What strategies can help me sustain and grow my freelancing business?

A: Continuously market your services through networking, social media, and content marketing. Seek feedback from clients to improve your services. Invest in ongoing education to keep your skills relevant and competitive. Diversify your client base to ensure steady work and consider offering additional services or packages that can add value for your clients.