Doing freelance work is a great way to build your portfolio and earn extra money on the side. Studies show that freelancers tend to be better prepared for the future, as they are constantly learning and applying new skills. Almost 50% of millenials freelance today.
Things to Consider
Being Your Own Boss: Running your own business means choosing when you work, who you work for, and how you work. While this flexibility is oftentimes the best upside of doing freelance work, building a successful business requires having the self-discipline to meet your clients' needs.
Determining Your Business Structure: When you register as a business, you will need to decide whether to register as a sole proprietorship or LLC. Most freelancers will register as a sole proprietor, as it is easier and less costly. Registering as an LLC, however, protects you from the debts and liabilities of the business.
Pricing Your Worth: While freelance may first seem like easy money, there are costs that you will have to incur. Use NPPA's Cost of Doing Business Calculator to determine how much income you need to make in order to reach your desired salary. Consider project pricing vs. hourly pricing. Remember that unlike a regular job, you will not have benefits (ex. vacation, sick leave, or retirement) and will also have to pay self-employment tax. Keep track of income and expenses (ex. mileage driving to clients, programs such as Adobe Creative Cloud).
Paying Taxes: As a self-employed individual, it is recommended that you save about 30% of income for taxes to cover self-employment tax. If you anticipate owing more than $1000 when you file your taxes, you will need to pay quarterly taxes (read about the Safe Harbor Rule to determine if this applies to you).
Protecting Yourself: As a sole proprieter, you will need to protect yourself in case of lawsuits. You may need to hire a lawyer to write a contract to use when working with a client. Consider clauses such as requiring a retainer fee, describing scope of work, and determining who owns the copyrights after the job is done. Business insurance is also recommended.
Registering as a Business
- Apply for a free EIN (Employer Identification Number). This number is for tax purposes. For example, if you do work for a company, the
company may ask for your EIN or social security number to report work expenses on
- Register your business at the City of San Jose. Click on the Register link on the right hand column to download the business registration
form. For information on creating a home-based business, click here. *If you live in another city and intend on basing your business in another city,
go to the city’s website to find the correct forms and information.
- Fill out the Business Tax Exemption Form. This will waive the annual business license fee for the first year. You will need
to fill out this form every year to continue receiving this fee waiver if you still
qualify for the exemption.
- If you are registering your business in San Jose, turn in the business license and
business tax exemption forms to the San Jose City Hall.
- If your business name includes your full name (ex. Ima Spartan Designs), you do not
need to register for a Ficticious Business Name. However, if you wish to operate under
a name other than one with your first and last name, then you must register for a
Ficticious Business Name.
- If you intend to sell or lease tangible personal property that would ordinarily be subject to sales tax if sold at retail, then you must register for a Seller's Permit.
NOTE: The SJSU Career Center is not a legal entity and cannot provide legal advice. This information is only intended to provide guidelines and resources. All information and policies are subject to change without notice.
Creating a Website
Creating an online portfolio or website for your business is crucial for getting clients and advertising your work. Use these website builders or portfolio sites to start building your business presence online.
Promoting Your Business
List your business online, network at community events, and join local business groups to promote your business.
Check out these freelance job boards to connect with potential clients.
- Business Owner Space - information on creating a business
- SJPL Works - business resources at the King Library
- Lawyers in the Library - free 20-minute legal consultation
- I.D.E.A.S. - student organization focused on creating innovative ideas
- Freelancers Union - resource on pricing your work
- Silicon Valley Center for Enterpeneurship - courses, research, and innovation challenges through the College of Business
- San Jose Silicon Valley Chamber of Commerce - nonprofit focused on promoting businesses in the Silicon Valley
- Silicon Valley SBDC - business resources
- Silicon Valley SCORE - free mentoring and low cost workshops on business development
- FranNet - franchises for sale