How to Set Up a Freelancer Business in 2024

Working for yourself sounds like a dream, right? You can wave goodbye to the standard 9-5 and any toxic work culture, by becoming a freelancer.

Freelancing has become increasingly popular across the UK, with 13.6% of people aged 16 and over doing at least some freelancing. This rise in popularity has empowered individuals to take charge of their careers with flexibility and autonomy, across a broad range of industries. You may have been weighing up going freelance for a while now but are hesitant to take the plunge. Or maybe you’re ready to commit to freelancing and have handed in your notice at your current employer, but have some questions on where to start. If you’re wondering how to set up freelance and begin your journey to independent work, we’re here to help. 

We’ve put together this in-depth guide on how to start freelancing, to answer any questions you may have on how to kickstart your new venture. With our tips and tricks, you’ll know how to build a freelance business and the steps you should take to turn your passion into profit. 

Which freelance niche is right for you?

If you’re asking ‘How can I start freelancing?’ the first step is deciding which industry or niche to operate in. Perhaps you’re a skilled copywriter looking to share your craft with the world, or a talented video editor looking to tell stories through video. To decide which area you’re looking to pursue as a freelancer, you’ll need to identify your skills and expertise, as well as understand the market you plan to enter.

Here are some of the ways you can identify the right freelance niche for you:

• Assess your interests and skills: If you’re looking to start freelancing and break free from working for an employer, you’ll want to make sure you’ll enjoy the work you’ll be doing. Choose a niche that aligns with your interests and values, as you'll be more likely to succeed and find fulfilment in your work. Start by making a list of your key skills, expertise and motivations. Perhaps you’re a great communicator, a natural wordsmith or a born creative. Reflect on your professional background and the knowledge you have that you could share with potential clients. 

• Evaluate market demand: Market demand is crucial for profitability. Make sure there’s a need for your service by looking at industry trends and any pain points that your service could help to solve. Consider factors such as market growth and competition in your chosen industry or local area. 

• Consider your USP: What will make your freelance business stand out against competitors? Your unique selling point is what will set you apart from other freelancers and encourage potential clients to choose your expertise over others.

• Try things out: If you’re torn between different niches, why not test the waters? You could take on several smaller projects or freelance gigs to help you decide which you prefer. This will not only give you experience, but you may also develop connections which you can contact again once you’ve made your decision. 

• Open to change: Remember, your freelance niche doesn’t have to be set in stone. As your freelance business develops, you may discover new interests or opportunities that lead you to change your service or expand to different niches. Try to stay flexible and be open to new possibilities that come your way throughout your freelance journey.

If you’re searching for how to start freelancing, chances are you already work in a certain industry or profession that you’re looking to freelance in. But if you’re stuck for a business idea, take a look at our guide to choosing a business idea for inspiration. 

Steps to starting a freelance business

So, you have your business idea and the motivation behind you, but how do you go about starting your freelance business? Below, we’ve put together a list of how to start freelancing, step-by-step, so you can tick off each task as you go. 

1. Understand the legal and financial considerations

Getting your head around the legal and financial obligations of your freelance business can be daunting, but it doesn’t need to leave you feeling overwhelmed. If you’re searching for how to register a freelance business, the first step is choosing a legal structure. As a freelancer, you can choose to operate as a sole trader or as a limited company. One of the biggest differences between being a sole trader and a limited company is limited liability. As a limited company, you gain limited liability which means your personal assets are protected should your business face financial hardship. This is because limited companies are treated as separate legal entities from the business owner, whereas as a sole trader, you’re personally liable for any business debts.

If you decide to set your freelance business up as a limited company, you’ll need to officially register your business with Companies House. You can choose to register your business yourself for a £50 fee, or you may prefer to use a company formation agent like SUAZ to take care of the hard work for you. Here at SUAZ, we cover the cost of your business registration, meaning forming your limited company won’t cost you a penny. What’s more, you’ll gain our support and expertise should you need it, every step of the way.

Financial considerations 

As a freelancer, it’s vital that you understand what tax applies to your business, so you aren’t left caught out further down the line. 

Here are some key financial considerations to keep in mind:

• Business tax: Depending on the legal structure of your business, you’ll be liable to pay certain types of business tax. For example, as a limited company you’re legally required to pay Corporation Tax. 

• National Insurance: You’ll pay National Insurance (NI) contributions on your salary, should you earn more than £12,570 a year.

• VAT: If your VAT-taxable turnover is more than £85,000, you’ll need to register for VAT. VAT is charged on ‘taxable suppliers’ such as goods and services and selling your business assets. 

For more information on the tax you may be liable to pay, check out BSC’s guide on small business tax.

You may choose to hire an accountant to keep your business finances in check. Here at SUAZ, we can help match you with a vetted and reliable accountancy supplier, through our BSC platform. 

Understand the ‘bottom line’

Your ‘bottom line’ is the minimum amount of money you need to get by each month. Calculate how much money you need to cover your bills and day-to-day living costs. From there, you’ll know your target amount and can work out what you need to do to achieve it.

As a freelancer, you may be waiting around to receive payments from clients at times, so it’s important to check in with yourself financially on a regular basis. How much money do you have due to come in for recent or upcoming work? Make sure you have enough work lined up to achieve your bottom line.

What equipment will you need?

As a freelancer, the equipment you’ll need to carry out your work will depend on the nature of your business and the industry you operate in. Generally speaking, you may need the following equipment: 

• A reliable computer: Choose a computer or laptop that fits your budget and responsibilities. For example, if you’re a graphic designer make sure you have a high-performance computer that can process large files.

• Software: Depending on the industry you work in, you may need to invest in specific software to deliver the best service.

• Your workspace: Decide where you’ll work from and how you’ll make your workspace somewhere you want to work from. If you work from home, make sure you have an assigned workspace so you can separate your work from your home life. Looking to maintain your privacy and boost your professional image? A virtual office address may be the solution, allowing you to work from anywhere with a business address to your name to boost your professionalism. 

• Communication tools: Make sure you have the right tools to hand to keep in touch with potential clients, from messaging apps like Skype or Slack, to video conferencing tools like Microsoft Teams and Zoom.

Do you need business insurance? 

It’s easy to assume that business insurance doesn’t apply to you as a freelancer, but that isn’t the case. While you won’t need employer’s liability insurance as a freelancer as you won’t have employees, you may choose to take out other types of business insurance to protect you and your reputation should the worst happen. For example, Professional Indemnity Insurance can protect you if you make a mistake or your client suffers (or claims to have suffered) financial loss because of your services. Your policy will then cover any legal or compensation costs should your client make a claim. Similarly, Public Liability Insurance is designed to protect you should a member of the public make a claim against you. Without it, you could face significant legal fees and compensation costs that could threaten your financial stability. 

When it comes to business insurance, it’s always better to be safe than sorry. Like all types of insurance, the hope is you’ll never need to actually use it, but it’s there to offer peace of mind should disaster strike and you need a helping hand. 

Our partner, Business Support Club, can match you with reputable and reliable business insurance providers, giving you the reassurance that your business and reputation are protected. 

2. Identifying your branding and positioning 

Next, you’ll want to prioritise your branding and positioning as a freelancer. Branding is a crucial element of freelancing, as it helps you to establish a distinctive identity, especially in a competitive market. Having a well-established brand to your name can inform potential clients why they should choose you over your competitors. Your branding can also instil confidence in your potential clients, letting them know you’re serious about what you do and are a professional in your industry.

To begin with, you’ll need to define your target market and brand values. What sets you apart from others? What values do you want your brand to represent? Perhaps you consider yourself a flexible freelancer, or you pride yourself on your creativity. Make sure your strengths and USPs are at the forefront of your branding. From there, you can consider the visual representation of your brand such as your business logo and website to reflect your brand identity. 

By prioritising the branding of your freelance business, you’re one step closer to attracting and retaining the right clients and securing the profits you deserve. 

3. Setting rates and managing finances

When it comes to setting your freelance rates, getting the balance right is key. You’ll want to make sure you’re being paid enough for your time and expertise, while remaining competitive in your industry. 

To gauge how much other freelancers charge for your services, research average rates for your specific skill set and services. Make sure you factor in your geography location too, as how much you can charge may vary depending on where you live. Similarly, you should factor your level of experience into your rates - after all, your hard work and dedication should be rewarded. The more experience you gain, the more you can justify higher rates to reap the rewards of your hard work.

Other considerations include your monthly expenses and taxes. Put together a list of your monthly expenses, as well as the costs you incur as a freelancer such as fees for software. You’ll want to make sure you can cover your monthly expenses and enjoy life too! 

It’s important to remember that as a freelancer, your taxes aren’t automatically deducted from your salary each month. Instead, you’re responsible for reporting your income and ensuring you pay the right amount of tax. If you’re registered as a sole trader, for example, you’ll need to submit an annual Self Assessment tax return on your earnings. It’s important to factor this amount in when deciding how much to charge potential clients. 

4. Finding and retaining clients 

Deciding to start a freelance business is one thing, but finding potential clients is a whole other ball game. Building strong client relationships is key to a thriving freelance business and maintaining a stable income. 

Here are some tips to find and retain clients for the long haul.

• Networking: Make the most of networking events and participate in communities and online forums in your industry. Networking allows you to build relationships with potential clients, as well as other freelancers you can learn from.

• Online platforms: There are numerous platforms out there to advertise your services, such as Upwork and Fiverr. Take the time to optimise your profile, to showcase your skills and expertise.

• Your portfolio and website: Make sure your website and portfolio is up to date and showcases your passion and skills. Also consider optimising your website for SEO by including keywords related to your industry, so potential clients can find you when searching online. 

• Social media: Shout about your freelance business across your social media platforms and showcase your hard work to potential clients. Be sure to engage with relevant hashtags to increase your visibility. 

When it comes to retaining your clients, quality and consistency are vital. Make sure you’re consistently delivering high-quality work on time, to encourage repeat business and referrals. By consistently meeting deadlines and providing top customer service, you’ll build trust and reliability with your clients, ensuring a steady stream of work and long-term success as a freelancer.

Tips for managing time and workflow

As a freelancer, it can be all too easy to become absorbed in your work and struggle to maintain a healthy work-life balance. Setting yourself boundaries is key to helping you manage your time and increase your productivity. 

Here are some time management techniques you can use to help manage your time and prioritise your tasks as a freelancer:

• Time blocking: Try to allocate specific amounts of time for different tasks or projects throughout your day. Not only does this hold you accountable to get things done, it also prevents you from trying to juggle several tasks at once, increasing productivity.

• Set SMART goals: SMART goals are Specific, Measurable, Achievable, Relevant and Time-bound. Breaking larger goals into smaller, more manageable tasks can make them feel achievable and easier to accomplish. This method also helps you to track your progress.

• Limit distractions: Try to minimise distractions while working by ensuring you work in a dedicated workspace - particularly if you’re working from home. You can try various strategies to help with this, such as turning your phone on flight mode when you’re focusing, turning off notifications and using website blockers to avoid procrastination.

• Project management software: There are several tools out there to help you manage your workload, such as Asana and Trello. Project management software can help you visualise your workflow, create to-do lists, collaborate with clients and track your time.

Start your freelance business today with SUAZ

We hope our guide has answered any questions you had around how to start freelancing, and left you inspired to take the leap towards entrepreneurship. 

Starting your own business can feel daunting, and with so many hoops to jump through, it’s easy to feel overwhelmed. But it doesn’t need to be that way. Forming your business with SUAZ can eliminate any anxieties you may have, by having a support system to guide you every step of the way.

Freelancing offers a lifestyle you won’t find anywhere else, allowing you to work in a way that serves you, with freedom and passion at your fingertips. So, what are you waiting for? Form your freelance business today and watch the magic happen.