Set Up Operations and Administration
Start a Freelance Business A-Z
1. Start a Freelance Business A-Z
Estimated time: 12:26 minutes
(Completed) (Completed) (Completed) (Completed)2. Identify Your Niche and Target Audience
Estimated time: 12:03 minutes
(Completed) (Completed) (Completed) (Completed)3. Get a Handle on Your Finances
Estimated time: 12:25 minutes
(Completed) (Completed) (Completed) (Completed) (Completed) (Completed)4. Set Up Operations and Administration
Estimated time: 16:39 minutes
(Completed) (Completed) (Completed)5. Develop Your Freelance Brand
Estimated time: 15:05 minutes
(Completed) (Completed) (Completed) (Completed) (Completed)6. Market Your Freelance Business
Estimated time: 12:44 minutes
(Completed) (Completed) (Completed) (Completed) (Completed) (Completed) (Completed)7. Find and Convert Clients
Estimated time: 17:16 minutes
(Completed) (Completed) (Completed) (Completed)8. Maintain Client Relationships
Estimated time: 11:40 minutes
Module 3 –Set Up Operations and Administration
Don't wait until you launch to set up systems and processes. Take care of the practicalities of running a freelance business from the outset, so that when you launch, you can focus on finding (and keeping) clients and doing the actual work of freelancing (e.g., consulting, writing, designing, coaching etc.). That said, don't let paperwork and legalities delay your progress or use them as tools of procrastination. Keep your initial set up simple but design it in a way that allows for growth and expansion.
⦁ Lesson 1: Make It Official
⦁ Lesson 2: Take Care of Administration and Infrastructure
⦁ Lesson 3: Choose Your Office Space
Lesson 1: Make It Official
Depending on where you live, the anticipated growth of your freelance business, or how you plan to get paid, you may need to register your business, or at least get an understanding of the process. You don't want to find yourself in a situation where you are scrambling to correct an early misstep.
To Register or Not to Register?
When you first start out, you can freelance under your own name without registering your business. But, depending on the types of clients you have or the industries you work in, some companies, non-profits, or government agencies won't work with freelancers who don't collect goods and services taxes and/or VAT. For example, if you are a teambuilding coach that works with groups in large corporations, you may be required to have your business registered and charge taxes when you submit your invoice.
The process of registering a freelance business, if it's required, varies depending on where you live. But if your goal is to build a successful freelance business, it is recommended that you register. Here are some benefits:
⦁ A registered business/sole proprietorship has more tax advantages versus filing as an individual
⦁ A business comes with some legal protections from lawsuits
⦁ To open a business bank account, you will need proof of business registration
For U.S.-based businesses, some resources include the U.S. Small Business Administration (SBA) website, specifically the pages 'Register your business' and, if required for your type of business, 'Apply for licenses and permits', and the IRS website. Two valuable resources if you live in Canada are Canada.ca and Bizpal. If you're in the UK, visit the Working for Yourself site.
For other countries, use the search terms: 'register a freelance business in [location]' or 'license permits freelance business [location]'.
Establish a Business Bank Account
Depending on the route you take, a business-only account may not be necessary, but it makes tracking finances and filing taxes much easier. If you decide to open a business account, you will need a registered business name and number.
Key Takeaways:
⦁ When you first start out, you can freelance under your own name without registering as a business. But keep in mind that some companies, non-profits, or government agencies won't work with unregistered freelancers who don't collect goods and services taxes and/or VAT.
⦁ A business-only account may not be necessary for your type of freelance business, but it makes tracking finances and filing taxes much easier.
Action Steps:
⦁ Research freelance business registration in your country and/or state or province using the websites provided in this module.
If you don't live in any of these countries, some search terms that may be helpful include:
⦁ 'Register a freelance business in [your location]
⦁ 'License permits freelance business [location]'.
⦁ Answer the following questions:
⦁ What relevant information did you learn in your research?
⦁ Is it necessary for you to register your business as a freelancer? If so, why?
⦁ Do you need to open a business bank account? Explain.
Lesson 2: Take Care of Administration and Infrastructure
It is important to set up all your business processes from the start. It will be tempting to jump in and focus on marketing and relationship building, waiting to deal with administration as issues present themselves. Take care of as many of these details from the outset. You will thank yourself later. Make sure to:
⦁ Create any templates you will need for your business, including estimates and invoices
⦁ Purchase any software and apps needed to operate your business
⦁ Look into apps that can help you with time management, note taking, and organization
Create Estimates and Invoices
Two of the most important templates you will create is your estimate template and your invoice template. These two documents will not only communicate your rate to your clients, they will also briefly outline your terms.
Within the estimate, you will not only communicate how much the client needs to pay to secure your services, you will also outline what is included in that rate and the terms, for example:
⦁ How many hours it will take you to complete the assignment or project
⦁ What is included in the rate (for example, if you are a designer, you can specify that the rate includes a web page with two rounds of edits). If clients add more work, let them know you will have to charge for additional hours or changes.
⦁ Within the estimate, you can also stipulate terms. For example, you could require 50% up front, 50% upon completion. These are terms that you will have to decide based on client history, the type of service you are providing, or the duration of the project. Your invoice will also contain payment terms, for example, full payment upon receipt, within 30 days, etc.
You can create estimates and invoices using templates within Microsoft Word or other word processing software. These allow you to modify and customize, changing fonts, adding your logo, removing some of the extra graphics Microsoft adds etc. You can also create these templates in Canva's free invoice maker. If you have decided to use an accounting system like QuickBooks, they often have invoice creation capabilities. (You will also find an example estimate and invoice template included).
Payment
Decide how you will accept payment from your clients. Many freelancers are paid by PayPal transfer, Stripe, bank transfer, direct deposit (usually clients who hire you consistently and regularly or on contract), or check.
Think about the options that are best for you and what you need to do to facilitate this and get paid in a timely fashion. For example, set up a PayPal or Stripe account or have your banking information ready for clients who want to pay by direct deposit (bank account number, branch number, branch address etc.).
Track your time
A critical part of running a freelance business is tracking your hours. It is essential for your finances and client relations. A time tracker will help you determine if you are charging clients enough to compensate for the number of hours you are spending on a project. And a formal tracking system will allow you to present your hours to clients if there are any serious challenges to invoices or questions about time spent on a project.
TopTracker is a free time tracking app which includes tracking by project, client, and tasks, with screenshot and invoice processing capabilities. Similar apps include Toggl and Clockify.
Key Takeaways:
⦁ It is important to set up business processes from the start – create templates, set up email accounts, purchase software and apps etc.
⦁ Two of the most important templates you will create is your estimate template and your invoice template. These two documents will not only communicate your rate to your clients, they will also briefly outline your terms.
⦁ Accurately tracking your hours is critical to your finances and client relationships. You can find free tracking apps online that allow you to track hours by project, client, and tasks.
Action Steps:
⦁ Think about your freelance business and what templates or forms you will need to create. List them in your Action Guide and make a schedule to create them before you launch.
⦁ Using the Estimate Template, create a sample estimate (or create your own from scratch). Decide on your terms and customize within the templates. Consider these questions as you are developing your terms:
⦁ How quickly do you need to get paid after invoicing?
⦁ Do you want to get paid a percentage in advance? If so, how much and under what circumstances? (For example, 50% up front for major projects that will take more than 25 billable hours to complete).
⦁ How many edits or changes can the client make before you will charge additional hours?
⦁ Using the Invoice Template, create a sample invoice (or create your own from scratch).
⦁ Set up your chosen payment methods.
⦁ Research time tracking apps online, choose one, and set up an account. Write down details about why this time tracker is best for your business needs (for example, if you want it to also generate invoices, provide screenshots etc.).
Lesson 3: Choose Your Office Space
Now it's time to determine where you will spend your time working. Your most common options are:
⦁ Your home office
⦁ Coworking space
⦁ At your clients' offices
For most freelancers who are just starting their business, a home office is the most popular option.
Home Office Set-up
If you decide to operate your freelance business out of your home, create a dedicated space to do your work, with clear physical and mental boundaries. If you don't have the space to dedicate an entire room to your office, at a minimum create a zone that is strictly for work. And at the end of the day, leave that area and 'go home'. If you don't create these boundaries for yourself, it will feel like you are always at work (or always at home). If you share your home with other people, make sure they respect your workspace.
Other Options
If you decide to get an office space to create work/life separation, make sure it is within your budget. You might decide to rent space with another freelancer, or look into coworking spaces in your city on sites like Coworker, Upsuite, and LiquidSpace.
Key Takeaways:
⦁ If you decide to operate your freelance business out of your home, create a dedicated space to do your work.
⦁ If you decide to get an office space outside the home, make sure it is within your budget.
Action Step:
⦁ Decide where you will conduct business: home, shared office, coworking space, or even a local coffee shop. Create an action plan based on the decision you make (e.g., how you'll find a co-working space, create your home office/work area etc.).
Don't wait until you launch to set up systems and processes. Take care of the practicalities of running a freelance business from the outset, so that when you launch, you can focus on finding (and keeping) clients and doing the actual work of freelancing (e.g., consulting, writing, designing, coaching etc.). That said, don't let paperwork and legalities delay your progress or use them as tools of procrastination. Keep your initial set up simple but design it in a way that allows for growth and expansion.
⦁ Lesson 1: Make It Official
⦁ Lesson 2: Take Care of Administration and Infrastructure
⦁ Lesson 3: Choose Your Office Space
Lesson 1: Make It Official
Depending on where you live, the anticipated growth of your freelance business, or how you plan to get paid, you may need to register your business, or at least get an understanding of the process. You don't want to find yourself in a situation where you are scrambling to correct an early misstep.
To Register or Not to Register?
When you first start out, you can freelance under your own name without registering your business. But, depending on the types of clients you have or the industries you work in, some companies, non-profits, or government agencies won't work with freelancers who don't collect goods and services taxes and/or VAT. For example, if you are a teambuilding coach that works with groups in large corporations, you may be required to have your business registered and charge taxes when you submit your invoice.
The process of registering a freelance business, if it's required, varies depending on where you live. But if your goal is to build a successful freelance business, it is recommended that you register. Here are some benefits:
⦁ A registered business/sole proprietorship has more tax advantages versus filing as an individual
⦁ A business comes with some legal protections from lawsuits
⦁ To open a business bank account, you will need proof of business registration
For U.S.-based businesses, some resources include the U.S. Small Business Administration (SBA) website, specifically the pages 'Register your business' and, if required for your type of business, 'Apply for licenses and permits', and the IRS website. Two valuable resources if you live in Canada are Canada.ca and Bizpal. If you're in the UK, visit the Working for Yourself site.
For other countries, use the search terms: 'register a freelance business in [location]' or 'license permits freelance business [location]'.
Establish a Business Bank Account
Depending on the route you take, a business-only account may not be necessary, but it makes tracking finances and filing taxes much easier. If you decide to open a business account, you will need a registered business name and number.
Key Takeaways:
⦁ When you first start out, you can freelance under your own name without registering as a business. But keep in mind that some companies, non-profits, or government agencies won't work with unregistered freelancers who don't collect goods and services taxes and/or VAT.
⦁ A business-only account may not be necessary for your type of freelance business, but it makes tracking finances and filing taxes much easier.
Action Steps:
⦁ Research freelance business registration in your country and/or state or province using the websites provided in this module.
If you don't live in any of these countries, some search terms that may be helpful include:
⦁ 'Register a freelance business in [your location]
⦁ 'License permits freelance business [location]'.
⦁ Answer the following questions:
⦁ What relevant information did you learn in your research?
⦁ Is it necessary for you to register your business as a freelancer? If so, why?
⦁ Do you need to open a business bank account? Explain.
Lesson 2: Take Care of Administration and Infrastructure
It is important to set up all your business processes from the start. It will be tempting to jump in and focus on marketing and relationship building, waiting to deal with administration as issues present themselves. Take care of as many of these details from the outset. You will thank yourself later. Make sure to:
⦁ Create any templates you will need for your business, including estimates and invoices
⦁ Purchase any software and apps needed to operate your business
⦁ Look into apps that can help you with time management, note taking, and organization
Create Estimates and Invoices
Two of the most important templates you will create is your estimate template and your invoice template. These two documents will not only communicate your rate to your clients, they will also briefly outline your terms.
Within the estimate, you will not only communicate how much the client needs to pay to secure your services, you will also outline what is included in that rate and the terms, for example:
⦁ How many hours it will take you to complete the assignment or project
⦁ What is included in the rate (for example, if you are a designer, you can specify that the rate includes a web page with two rounds of edits). If clients add more work, let them know you will have to charge for additional hours or changes.
⦁ Within the estimate, you can also stipulate terms. For example, you could require 50% up front, 50% upon completion. These are terms that you will have to decide based on client history, the type of service you are providing, or the duration of the project. Your invoice will also contain payment terms, for example, full payment upon receipt, within 30 days, etc.
You can create estimates and invoices using templates within Microsoft Word or other word processing software. These allow you to modify and customize, changing fonts, adding your logo, removing some of the extra graphics Microsoft adds etc. You can also create these templates in Canva's free invoice maker. If you have decided to use an accounting system like QuickBooks, they often have invoice creation capabilities. (You will also find an example estimate and invoice template included).
Payment
Decide how you will accept payment from your clients. Many freelancers are paid by PayPal transfer, Stripe, bank transfer, direct deposit (usually clients who hire you consistently and regularly or on contract), or check.
Think about the options that are best for you and what you need to do to facilitate this and get paid in a timely fashion. For example, set up a PayPal or Stripe account or have your banking information ready for clients who want to pay by direct deposit (bank account number, branch number, branch address etc.).
Track your time
A critical part of running a freelance business is tracking your hours. It is essential for your finances and client relations. A time tracker will help you determine if you are charging clients enough to compensate for the number of hours you are spending on a project. And a formal tracking system will allow you to present your hours to clients if there are any serious challenges to invoices or questions about time spent on a project.
TopTracker is a free time tracking app which includes tracking by project, client, and tasks, with screenshot and invoice processing capabilities. Similar apps include Toggl and Clockify.
Key Takeaways:
⦁ It is important to set up business processes from the start – create templates, set up email accounts, purchase software and apps etc.
⦁ Two of the most important templates you will create is your estimate template and your invoice template. These two documents will not only communicate your rate to your clients, they will also briefly outline your terms.
⦁ Accurately tracking your hours is critical to your finances and client relationships. You can find free tracking apps online that allow you to track hours by project, client, and tasks.
Action Steps:
⦁ Think about your freelance business and what templates or forms you will need to create. List them in your Action Guide and make a schedule to create them before you launch.
⦁ Using the Estimate Template, create a sample estimate (or create your own from scratch). Decide on your terms and customize within the templates. Consider these questions as you are developing your terms:
⦁ How quickly do you need to get paid after invoicing?
⦁ Do you want to get paid a percentage in advance? If so, how much and under what circumstances? (For example, 50% up front for major projects that will take more than 25 billable hours to complete).
⦁ How many edits or changes can the client make before you will charge additional hours?
⦁ Using the Invoice Template, create a sample invoice (or create your own from scratch).
⦁ Set up your chosen payment methods.
⦁ Research time tracking apps online, choose one, and set up an account. Write down details about why this time tracker is best for your business needs (for example, if you want it to also generate invoices, provide screenshots etc.).
Lesson 3: Choose Your Office Space
Now it's time to determine where you will spend your time working. Your most common options are:
⦁ Your home office
⦁ Coworking space
⦁ At your clients' offices
For most freelancers who are just starting their business, a home office is the most popular option.
Home Office Set-up
If you decide to operate your freelance business out of your home, create a dedicated space to do your work, with clear physical and mental boundaries. If you don't have the space to dedicate an entire room to your office, at a minimum create a zone that is strictly for work. And at the end of the day, leave that area and 'go home'. If you don't create these boundaries for yourself, it will feel like you are always at work (or always at home). If you share your home with other people, make sure they respect your workspace.
Other Options
If you decide to get an office space to create work/life separation, make sure it is within your budget. You might decide to rent space with another freelancer, or look into coworking spaces in your city on sites like Coworker, Upsuite, and LiquidSpace.
Key Takeaways:
⦁ If you decide to operate your freelance business out of your home, create a dedicated space to do your work.
⦁ If you decide to get an office space outside the home, make sure it is within your budget.
Action Step:
⦁ Decide where you will conduct business: home, shared office, coworking space, or even a local coffee shop. Create an action plan based on the decision you make (e.g., how you'll find a co-working space, create your home office/work area etc.).
