How to Start a Freelancing Business in 7 Steps

Starting a freelancing business is more than just a job switch. It’s a big change that gives you freedom and chances to grow. Going freelance doesn’t just mean earning cash how you like — it’s about gaining control over your money and future. With freelancing, you get so many options. 

Being your boss means you’re not stuck in the usual 9-to-5 job. You can pick projects you’re excited about and match what you’re good at. This way, you’re always doing the work you care about, and syncs with your life and future plans. The best part? You decide when you work. Whether you’re an early bird or a night owl, want to take breaks when you like, or even work while traveling, freelancing lets you set things just how you want.

Read on to learn how to start a freelancing business with this step-by-step guide.

What Is Freelancing?

Freelancing refers to working on a contract basis for a variety of clients, rather than being an employee for a single company. Freelancers are essentially self-employed individuals who offer their skills and services directly to clients. Examples of services that can be offered as a freelancer include:

  • Writing (articles, blog posts, copywriting)
  • Graphic design (logos, brochures, websites)
  • Programming and web development
  • Photography and videography
  • Consulting in various fields such as marketing or finance
  • Translation and transcription services
  • Tutoring or teaching a particular skill

Why Start a Freelancing Business?

While freelancing offers freedom and potential benefits, it’s essential to be aware of and prepared for its challenges. Weighing the advantages against the limitations can help determine if it’s the right career move for you.


Starting a freelancing business comes with a host of benefits that can make it an attractive option for many. Firstly, freedom and flexibility stand out as primary advantages. Being your own boss means you have control over your schedule, allowing you to work at times that suit you best. This can be particularly beneficial for those who are not morning people or have other commitments during traditional working hours.

Secondly, there’s the potential for increased earnings. While traditional jobs often come with a fixed salary, freelancing allows you to set your rates. If you have a unique skill set that is in high demand, you can command higher fees, and as you gain experience and build your portfolio, your earning potential can grow.

Lastly, freelancing offers diverse opportunities. You’re not confined to a specific role or industry. You can work on various projects across different sectors, ensuring that your work remains exciting and you’re continually learning and growing.


However, freelancing is not without its challenges. One significant drawback is inconsistent income. There might be times when work is plentiful and other periods when it dries up, making financial stability a concern for some.

Another limitation is the lack of benefits. Traditional employment often provides perks like health insurance, retirement benefits, and paid vacations. As a freelancer, you’ll have to manage and fund these benefits on your own, which can be a significant added expense.

Being a freelancer requires strong self-discipline. Without a supervisor or a set work environment, it’s easy to get distracted or procrastinate. Staying motivated and managing your time effectively becomes crucial to ensure productivity.

There’s also the administrative burden. Invoicing clients, chasing payments, and handling taxes are all tasks that freelancers must manage themselves, which can be time-consuming and at times, stressful.

How to Start a Freelancing Business in 7 Steps

Venturing into the world of freelancing can be both exciting and challenging. This journey of becoming your own boss and building a brand requires careful planning and execution. Here are the key steps involved in kick-starting a freelancing business.

1. Write a Business Plan

When setting up a freelancing business, it’s crucial to have a clear roadmap. Here’s how to create a comprehensive business plan:

Build a Portfolio: Start by showcasing your work. This could be projects you’ve completed in the past, sample pieces, or even personal projects. An online portfolio website can be a powerful tool to display your skills and attract potential clients.

Find Projects and Clients: Utilize freelancing platforms like Upwork, Freelancer, or Fiverr to find initial gigs. Additionally, leverage your network by reaching out to former colleagues, attending industry events, or joining online forums related to your field.

Price Your Services: Research the market rate for your services. Consider factors like your experience level, project complexity, and client budgets. It’s also wise to offer both hourly rates and project-based fees, giving clients flexibility.

Create a System: Organize your workflow. This might involve setting up project management tools like Trello or Asana to track tasks, deadlines, and communication.

Manage Income and Expenses: Keep a clear record of all transactions. Consider using accounting software like QuickBooks or FreshBooks. Set aside money for taxes, and track all business-related expenses to leverage deductions.

2. Decide on Your Business Structure

After laying the groundwork with a solid business plan, the next vital step is determining your business structure. This will influence your tax obligations, personal liability, and the way you run your business.

Sole Proprietorship

This is the simplest business structure, in which you and your business are one entity.

Advantages: Easy to set up and requires minimal paperwork. It’s also straightforward for tax purposes as you report business income and expenses on your personal tax return.

Disadvantages: You’re personally responsible for any debts or liabilities, which means your assets, like your home or car, could be at risk.

Limited Liability Company (LLC)

An LLC blends elements of partnerships and corporations.

Advantages: Members aren’t personally responsible for company debts or liabilities. It also offers flexibility in terms of how you want to be taxed (like a corporation or a sole proprietor).

Disadvantages: More complex and costly to set up than a sole proprietorship. Some states also charge annual fees or taxes specific to LLCs.


This structure involves two or more individuals who share the ownership of a single business.

Advantages: Easy to establish and each partner shares the workload and financial investments.

Disadvantages: Each partner is personally liable for the business’s financial obligations. Disagreements can arise, making a partnership agreement very important.


A corporation is a separate legal entity owned by shareholders.

Advantages: Shareholders have limited liability for the corporation’s debts or judgments. It can also raise funds through stock sales.

Disadvantages: Setting up a corporation can be expensive and time-consuming. They’re also subject to double taxation – the corporation pays taxes on profits, and shareholders pay taxes on dividends.

3. Register Your Freelancing Business

To establish your freelancing business formally, you need to register it. This involves choosing a suitable business name, determining its legal structure as mentioned above, and registering with the appropriate government authorities. Registration requirements can vary depending on your location, so it’s crucial to research and comply with local regulations.

4. Obtain the Necessary Licenses and Permits

Operating a freelancing business may require certain licenses or permits depending on your industry and location. These licenses and permits ensure that you are legally allowed to offer your services. To obtain them, you’ll typically need to apply with the relevant government agencies, provide the necessary documentation, and pay any associated fees.

5. Open a Business Bank Account

Separating your personal finances from your business finances is essential. Opening a dedicated business bank account allows you to manage your income and expenses effectively. To do this, you’ll need to choose a bank, provide the necessary documentation, and set up a business account. 

Some documents that you may need include:

  • Business Formation Documents: Depending on your business structure, you may need to provide documents such as a Certificate of Incorporation, Articles of Organization, or Partnership Agreement. These documents prove the legal existence and structure of your business.
  • Employer Identification Number (EIN): You’ll likely need to obtain an EIN from the IRS if your business is structured as a corporation or partnership, or if you have employees. This unique tax identification number is essential for tax reporting.
  • Business License: Some banks may require proof that your business has the necessary licenses and permits to operate legally. Make sure to have copies of your business licenses ready.
  • Ownership Documents: If your business has multiple owners, be prepared to provide ownership documents, such as an Operating Agreement for an LLC or a Partnership Agreement for a partnership.
  • Personal Identification: You and any other authorized signatories will need to provide personal identification, such as driver’s licenses or passports. This is to verify the identity of the individuals associated with the business.
  • Business Tax Returns: Some banks may request copies of your business’s previous tax returns to assess your financial history and creditworthiness.
  • Business Plan: Although not always required, having a business plan can be helpful, especially for startups. It outlines your business’s goals, financial projections, and strategies, which can demonstrate your business’s viability to the bank.
  • Proof of Address: Banks may require proof of your business’s physical address. This can be in the form of a utility bill or lease agreement.
  • Initial Deposit: You’ll need to deposit an initial amount of money into the business account to activate it. The required minimum deposit varies from bank to bank.

6. Get Business Insurance

As a freelancer, consider obtaining business insurance to protect yourself and your clients. Different types of insurance are available, such as professional liability insurance, which can cover you in case of errors or omissions in your work. 

You may want to explore general liability insurance and health insurance options, depending on your specific needs and risks.

7. Market Your Freelancing Business

Marketing is crucial for attracting clients and growing your freelancing business. Consider creating and optimizing a professional business website to showcase your services and portfolio. 

Establishing a strong presence on social media platforms can also help reach a wider audience. Attending networking events is essential for building connections and gaining referrals in the freelancing industry.

Do It Right With doola

If you’ve decided that freelancing is the right path for you, it’s crucial to do it correctly from the start. This includes considering essential aspects like legal structure and financial management. When it comes to forming an LLC for your freelance business and managing your books, there’s no need to navigate the complexities on your own.

doola is available to assist you in the LLC formation process, ensuring that your business is set up in a way that protects your personal assets and complies with legal requirements. For seamless bookkeeping and financial management, doola is an invaluable resource. They can help you maintain accurate financial records, track expenses, and maximize your financial efficiency.


Is it possible to freelance while working a full-time job?

Yes, it’s possible to freelance while working a full-time job, but it requires effective time management and a clear understanding of your commitments in both roles.

How do I build a strong client base as a freelancer?

To build a strong client base, focus on networking, showcasing your skills through a portfolio, delivering exceptional work, and seeking referrals from satisfied clients.

How can I handle multiple clients and projects efficiently?

Efficiently managing multiple clients and projects involves setting clear priorities, establishing a well-structured workflow, and using project management tools to keep track of tasks and deadlines.

Can I freelance internationally?

Yes, freelancing internationally is possible. Many freelancers work with clients from around the world, thanks to the internet and digital communication tools. However, it’s important to consider tax and legal implications when working across borders.

doola's website is for general information purposes only and doesn't provide official law or tax advice. For tax or legal advice we are happy to connect you to a professional in our network! Please see our terms and privacy policy. Thank you and please don't hesitate to reach out with any questions.

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