The ultimate business checklist for new freelancers

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Leaving the 9-to-5 to start your own freelance business can be an exciting prospect. You get to be your own boss, set your own hours and potentially make a much higher salary. However, a lot of effort, strategy and planning typically goes into earning those benefits.


If you’re up for the challenge, read on. Whether your goal is to earn some money on the side or make freelancing a full-time career, here’s everything you need to know to launch your own successful freelance business.


Related: Tips for becoming financially independent

What is a Freelance Business?

Having a freelance business lies somewhere between working for a company as an employee and being an entrepreneur. That’s because the freelance business is a “gig” business, meaning you’re often paid to complete a specific project that isn’t necessarily ongoing or enough to fill full-time hours.


Like an employee, freelancers are often given a task and a timeframe for completion. Unlike an employee, however, they can typically work any hours they want and are done working for that particular employer or client once they finish. More work may come in, but that’s at the discretion of both the freelancer and client. Freelancing can be one of the fastest and most affordable ways to start your own business, especially if you offer services in a skill you already excel at.


Another benefit is that you can usually charge more per hour in your freelance business than employers pay for the same work. However, you may end up working much fewer hours than a full-time employee and work is not typically guaranteed. Unlike a W-2 employee, paychecks for freelancers usually are not issued according to a set schedule.

How Do You Know Freelancing Is Right For You?

Freelancing is much less structured than a traditional job. As an employee, you’re generally expected to work certain hours and the objectives and expectations of your role are clearly laid out. If you require this kind of environment to thrive, then working as a self-employed freelancer might not be the best fit for you. As a freelancer, you will be your own boss, which means that the only person you are accountable to is you. If you find it easy to motivate yourself to work, no matter how boring or complex the task, then you may be well-suited for freelance work.


As a freelancer, you may also need to:

  • Work long hours
  • Work alone
  • Scout and apply for future work
  • Negotiate pay
  • Self-edit your work
  • Pay for your own benefits (like health insurance)
  • Pay your own taxes (your clients won’t withhold taxes like your employer does)
  • Deal with income fluctuations
  • Restart/revise projects to meet clients’ expectations

You know freelancing is for you if its challenges pale in comparison to its freedoms. For many people, a reliable paycheck is enough incentive to stay where they are. But for others, they prefer the flexibility that comes with freelancing.

What Work Can You Do in a Freelance Business?

Pretty much any type of job can be done on a freelance basis. However, some business ideas lend themselves more to a freelance setup. These include:

  • Writer/copywriter
  • Web designer
  • Photographer
  • Graphic designer
  • Art director
  • Interior designer
  • Software developer
  • Marketer
  • Accountant/ bookkeeper
  • Translators
  • SEO specialist
  • Virtual assistant

Related:  18 freelance ideas for 2022

Starting a Freelance Business Checklist

The idea of starting a freelance business can feel overwhelming. It can help to break the process down into a series of smaller steps. Here are some ways to get started.

1. Find Your Niche

What is one strength you have that you feel you could market to other people? You probably have a few, but you’ll likely have more success by focusing on clients within a certain niche, particularly one in which you have some solid expertise or experience. One good way to start brainstorming is to research freelance job ideas.


You may also want to consider combining your skills and your personal interests. If you’d like to become a freelance writer and your favorite hobby is cooking, for example, you might focus on getting freelance writing jobs for a food website or publication.By sticking with a particular niche, you can keep your work focused and become an expert. As you develop your freelancing business based on your niche, you can later branch out into other directions as your interests change and your client list grows.

2. Set Short-Term and Long-Term Goals

As your own boss, you are responsible for setting your own goals and earning targets. In order to stay motivated — and continually grow your business — it can be helpful to set out some clear objectives. Consistently reaching milestones you’ve set for yourself can also help build your confidence as a freelancer.


When setting goals, it can be a good idea to make sure they are specific, measurable, attainable, and time-based. You may want to set three different types of goals: short-term, long-term, and ongoing. A short-term goal, for example, might be getting your website launched within three months. A long-term goal could be reaching a certain annual salary within three years. An ongoing goal might be sending out five pitches a week or devoting a certain number of hours to networking each month.

3. Develop Your Digital Presence

These days, an online presence is usually a must in the freelancing business, as most freelancers network and find a lot of their work online.

Starting a Website For Your Service

It’s important to get a website up and running as quickly as possible, since this will likely be your first point of contact with many customers. Having a well-structured, visually appealing site that’s easy to navigate assures potential customers that your business is legitimate and professional.


Creating a website isn’t hard — you simply need a domain (that’s your website’s URL) and hosting (that’s where all your website’s files will be stored). Most web hosting providers offer both, so getting a basic site set up can often be as simple as clicking a few buttons. Your business website should showcase your work and explain who you are, how you help clients and what you’ve achieved. If you can, provide client testimonials.

Social Media for Small Businesses

The growing social media scene has given small business owners a way to promote their businesses online for relatively little or no investment. Most social platforms allow you to create a profile, upload an image or icon, and possibly create a customized profile page for free. Since your goal is to find freelance work, you can use these platforms to connect with people who may be interested in your services, as well as those who do the same type of work (who may be able to lead you to clients).


As your business grows, you can use your social accounts to showcase your best work and announce the completion of projects as you go. Any time you share something from your portfolio, you can link to your website or list your contact info so potential clients can get in touch with you about their own projects.

Network with Other Professionals

If you want to get to a point where you’re no longer constantly applying for jobs and pitching to clients, you will likely need to network. Network properly and jobs may often come to you with little to no effort on your part. Indeed, it can be a good idea to start networking even before you leave your job by telling everyone you know, from colleagues to work acquaintances to friends and family, about what you’re planning to do. This may start generating leads right away.


As you build your business, you’ll want to figure out who your target client is and where they likely hang out — both online (think LinkedIn, online forums and Facebook groups) and offline (such as industry events). It can be a good idea to do a mix of virtual and in-person networking.

4. Evaluate Your Finances

Pay can be erratic once you become a freelancer. And, there will likely be some start-up costs involved. Before you leave your day job, it’s a good idea to determine how much you will need to earn to cover your living expenses each month, as well as how much savings you have to help get your business launched. If you need some additional capital to get your business going, you may qualify for a small business loan for self-employed people.


It’s also a good idea to keep track of everything you spend to start and run your business (and to save all of your receipts). Expenses such as internet access, a new laptop, travel and attendance to industry conferences, etc., may qualify as self-employed tax deductions and reduce your taxable income.


Keep in mind, too, that as a freelancer, you will be solely responsible for paying taxes. Since your clients won’t withhold tax from your fee, it can be wise to set aside some of your earnings to meet your obligation. You may also have to pay estimated taxes every quarter. You may want to speak with an accountant to figure out how much to save for taxes and how to set up estimated tax payments.


Related: Applying for a small business loan in 6 steps 

The Takeaway

When you become a freelancer, you own your own business and you set your own prices. You get to choose the clients you want to work with, and the amount of time you want to spend working. At the same time, you’ll be saying goodbye to a regular paycheck and will likely need to put a lot of time and effort into marketing your business, networking and managing your finances.


Learn More:

This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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Paying tax on personal loans


There are plenty of reasons to take out a personal loan, many of which are totally financially savvy. For instance, you might be thinking about consolidating high-interest debts like credit card balances.

Or you might plan to borrow in order to repair the roof or remodel the kitchen to help increase your home value.

Maybe you’re considering taking out an unsecured personal loan to pay for an unexpected medical bill.

Whatever the case, personal loans can be a useful tool to help you cover expenses and stabilize your finances. Plus, they may be easier to qualify for than other types of loans and come with less red tape.

But as in all things finance, Uncle Sam wants his cut, too. So, as you consider your borrowing options, you might wonder about how taxes work on unsecured personal loans.

For instance, you may question if a personal loan can be taxed as income and whether you can get a personal loan interest tax deduction.

If you are trying to decide between several types of financing, reviewing the potential tax implications of each borrowing option can help you figure out a financing strategy that fits your situation.

In this article, we’ll cover things you’ll likely want to know about when it comes to tax on personal loans, including whether personal loans qualify as income, and whether the interest on them is tax-deductible.

Plus, we’ll cover some scenarios that can come with tax benefits that might apply to you and your loan. This way you’ll be armed with helpful knowledge useful when making the right borrowing decisions for you.

It is, however, important to note that we’re not tax experts. For any tax-related questions or advice, you’ll want to consult a tax accountant — and not a blog post like this one.

Related: A guide to understanding your taxes




When you take out a personal loan, your lender agrees to loan you a particular amount, and you agree to pay that loan back over a set period of time with interest.

Which is actually good news on the tax front: Even though it seems like a windfall that you could be taxed on, it isn’t. Since you are agreeing to pay that money back, it does not qualify as income the way wages from a job would.

The only instance when money from a personal loan can be taxed as income is if your lender agrees to forgive the loan. Loan forgiveness can be a rare occurrence and typically occurs under the following circumstances:

  • You are renegotiating the terms of a loan you are struggling to repay.
  • You’re declaring bankruptcy.
  • Your lender decides to stop collecting on the loan.

This is called a cancellation of debt, and it can carry tax liabilities since you’re receiving the remainder of the loan without the caveat that you’ll be paying it back.

For instance, let’s say you’ve taken out a $10,000 personal loan and have paid back $8,500 of it when the debt is forgiven or cancelled. The remaining $1,500 that you’d no longer have to pay back can be taxed as income during the year it is cancelled.

Typically, your lender will send you a tax form (a 1099-C) stating the amount cancelled, which you must subsequently report to the IRS on your tax return. Again, this is a very, very rare circumstance, so it’s nothing to count on.

Bottom line: In most situations, personal loans are not taxable as income — but if your loan is cancelled or forgiven, the remainder of the loan amount that you’ve yet to repay can be taxed the same way regular income is.




The IRS regulates which types of loans come with tax deductions. While there are some types of loans that have tax-deductible interest, unfortunately, personal loans don’t fit into that category.

The interest you pay on personal loans is not tax deductible. So, if you take out a loan and pay a few hundred dollars in interest over the course of your repayment, that’s not a cost that will reduce what you owe in taxes come April.


Although personal loan interest isn’t tax deductible, there are many other types of loans that do carry special tax benefits and interest deductions. For instance, student loan interest and mortgage and property loan interest can be deductible up to certain amounts, although there are some restrictions.



Michael Krinke


You may deduct up to $2,500 of interest on qualified student loans or the full amount you paid during the tax year,whichever is the lesser.

However, this deduction is gradually phased out as your income increases, and it is not available if you or your spouse can be claimed as a dependent on someone else’s tax return.


fizkes / istockphoto


In the majority of cases, you can deduct every cent of interest you pay on your home mortgage. The loan must be secured (that is, your home must be offered as collateral on the loan; this deduction will not work if you use an unsecured personal loan to cover some or all of the cost of your housing).

As of 2018, you can deduct the interest on up to $750,000 of a qualified home loan if married and filing jointly, or up to $375,000 of qualified debt for single filers. (These limits were lowered from $1 million under the Tax Cuts and Jobs Act of 2017, but if you signed your mortgage before December 16, 2017, you’re grandfathered into the previous limit.)


Some business expenses are tax deductible, and that includes the interest you pay on loans taken out for business-related purposes. However, you can also deduct business expenses you pay for using an unsecured personal loan, which we’ll dive into a little bit more deeply in the next section.


Although staying debt-free is standard financial advice, sometimes taking out a personal loan can be a smart money move, especially if you’re already dealing with high-interest forms of debt, such as consumer credit cards.

Debt consolidation, a financial tactic, which involves taking out one large loan to cover multiple smaller debts, may reduce your credit utilization ratio and potentially help you save money on interest, not to mention make your bill-paying schedule a whole lot simpler.

For example, maybe you owe $8,000 on one personal credit card and $4,500 on another credit card, both with high (and different) interest rates. With multiple bills coming due at different times of the month, chances are you’re only paying the minimum required amount on each of them, which means you’re paying them off slowly and paying a lot of interest.

However, if you were able to qualify for and take out a $12,500 personal loan at lower interest rate, you’d only have to worry about one payment date, and you might even save money on the sky-high credit card interest rates, which could simplify both your life and your finances.

Personal loans (home improvement loans) can also help you get started on major home renovations, which may increase the value of your house and help you earn back your investment in the form of equity.

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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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