Can I start a Company in Freelancing?
Becoming a business owner can be daunting, and there’s often no clear road map for how to build the legal entity of a business. In this article, we cover practical tips on how to get started turning your freelance passions into a sustainable business.
How do you define your clear business offer?
Your business is two things, a brand that customers know, and a legal entity that protects your work and your rights as a creative. Whether creating products or services through freelancing, have a clear description of what your business aims to offer, in plain language not only makes it easier for potential clients to find your particular talents, but to really understand if there are financial and legal risks that you can reduce when building a sustainable business in freelance.
When is the right time to start a separate bank account?
If you have more customers than you can count on one hand, it’s probably a good time to consider separating your business transitions into a separate account. The benefits to this are double: it creates a clear and transparent record of your business’s cash flow, and it can also be a huge help in establishing a business bank account. Business bank accounts often offer more flexibility for freelancers who are looking to grow their businesses to meet growing demand in the digital and real world marketplace.
How do you create cash flow around your time management?
A major challenge of successful freelancing can be avoiding burnout when there’s demand for the work you love to do. To make sure that you are building a business that can be sustained, track how much time it takes for each product or service you offer to be created, as well as how much time it takes from creation of a product or service to sale. Knowing this lets you prioritize your business growth strategy intentionally around different growth strategies. Depending on your own preferences, you may want to prioritize either the offers with the highest financial return in the long term if you are looking for niche clients, or on products that have a short time to sell in the short term you want to rapidly scale your client base. More great tips on freelance money management can be found here.
Which is better, a Sole Proprietor or Limited Liability Corporation?
Digital freelancers generally begin as sole proprietors, meaning they are personally responsible for the debts and liabilities if anything goes wrong. To prevent this, many consider establishing their business as its own legal entity when they become Limited Liability Corporations that then employ the business owner, legally protecting them from the entity's legal and financial ties. There are many considerations when expanding your business by making any additional hires or bringing business partners into the mix, an LLC can be the best way to protect yourself as a business owner, and allows you to sell the business entity if you decide to follow new ventures.
Ready to quit your day job? Starting your dream business can be an incredible journey, and stay tuned here for more tips on how to thrive through freelance work.