Starting an online business can be a great option for many reasons. You could be unhappy at your job or you may want the freedom to set your own hours. Maybe you want to work from home or spend more time with your family. Whatever the reason, I hope this guide can help you on your way to creating the life you want and deserve.
Table of Contents
- Are you ready to start your own business?
- Don’t quit your job yet
- Top Reasons to Start Your Own Freelance Business
- What you need to get started
- Naming Your Business
- Accounting & Taxes
- Legal Structure
- Self Promotion
- Getting Clients
- Further Reading
Are you ready to start your own business?
I love having the freedom to choose my own work hours and work from wherever I want, but it’s not for everyone. You need to be ready to face challenges that come along the way. Are you self-motivated and willing to put the time and work in to learn the “not so fun stuff”? If you are, the rewards and benefits that come with having your own business can be amazing.
Don’t quit your job yet
Before you go all in and kick your job to the curb, it’s best to first establish yourself as a freelancer and build up some projects and clients. This will help to ensure you have some cash reserves so you don’t get into trouble with bills, operating expenses, and taxes.
I was working my full-time job and freelancing all at the same time for years until I knew I could make enough from my clients to pay the bills.
Freelancing is a great way to gain professional experience, expand your portfolio, and make a good living. It’s how I started my career. You can be your own boss while working either remotely from anywhere, for design firms, agencies, or individual clients.
Top Reasons to Start Your Own Online Business
Low costs to start up
Unlike a lot of other businesses, starting an online business can be fairly inexpensive. All you really need is a computer, software, and internet to get started.
There’s not a lot of risks involved with an online business. Unlike traditional brick and mortar businesses, there are little overhead costs because you don’t have to pay for a physical location or hire employees to work around the clock.
One of the biggest reasons why I love having an online business is the flexibility it provides. I am able to work anywhere with my laptop with access to the internet. Having my office at home also allows me to skip the commute to work which has many benefits on its own like not having to drive, spend money on gas, sitting in traffic, and avoid road rage.
Yes. I can’t tell you how good it feels to not have a boss or manager looking over your shoulder or micromanaging you. Having the ability to take control of your career can also make you more confident and stronger as a person.
This might be reason enough to start your own business. For me, having the ability to set my own hours, avoiding the commute, and spending more time with family has helped to lower my stress levels and anxiety.
I have more time to exercise and I eat healthier by avoiding fast food for lunch. You can’t put a price on health.
What you need to get started
Before you get started, you will need a few obvious things like a good computer, software, and internet. Unless you are a total newbie, chances are you already have most of these items.
Chances are you already have one but having a really good computer is crucial and the heart of a web design business so invest wisely. I only work on Mac computers and they are the industry standard for design for several reasons. They’ve always been reliable for me and they last much longer than any other brand in my experience. If you are looking for a lower-cost option, you may be able to get an older model or refurbished option at a more affordable price. I see used computers all the time on craigslist.org, offerup.com, and Facebook marketplace. Most of them are still in really good condition but there are pros and cons to buying without a warranty. You can also get a certified refurbished computer with a warranty from a more reputable source like Macofalltrades.com, Best Buy, or direct from Apple.
If you don’t already own some software, you will need to get to know some of the industry standards like Adobe Creative Suite. They have several different pricing options depending on your budget and free trials for those who want to try first. There are also some free options if you are really on a budget but you may not have the features you would expect from the paid software.
Software I use:
- Adobe Creative Cloud: Includes all software from print, web, video, and much more including Photoshop, Illustrator, Dreamweaver, etc.
- FTP (File Transfer Protocol): Cyberduck
- Hosting: Siteground, GreenGeeks, InMotion
- Invoice & Time Tracking: Harvest for time tracking and invoicing
- Password Manager: MacPass, LastPass
See my resources page for a full list of tools I use.
The beauty of web design is you can work from anywhere. I’ve had my share of computers over the years but I prefer to work on Apple computers.
Here is my current set up:
- MacBook Pro: (15″ 2017): 3.1 GHz Quad-Core Intel Core i7 with upgraded 1TB SSD (This was a pricey upgrade)
- Fantom Drives 2TB External Hard Drive: Even though I have a fairly large internal hard drive, space can fill up very quickly with all the software installed, photos, and files. I prefer to keep most of my files on an external hard drive so my computer is fast and efficient as possible.
- Western Digital WD My Book 4TB External Hard Drive: Have a backup plan in case your hard drive fails. I have an extra-large backup hard drive just for that.
- Printer: I have a multi-function laser printer that I use for scanning, copying, and printing. It also has fax capabilities but I don’t need that.
- Autonomous Sit-To-Stand Desk: They say “sitting is the new smoking.” Keep your health in check by investing in a stand-up desk. Don’t worry, you don’t have to stand all day with memory settings that adjust to your height at the click of a button. I got my desk back when it was a Kickstarter project and so happy I did.
Naming Your Business
It’s important to find a good name that you will be happy with for a long time. Do a web search on names that you like to see if there are any other similar companies that are already using that name. I also like to check domain names to make sure there are good options available. You may want to think about including keywords in your name and URL to help with SEO when people search for your services.
I started with my personal name and created my website portfolio at cheungvong.com. Having just graduated from college just after the .com crash, I entered into a rough job market with a very high unemployment rate at the time. I was turned down by every design agency in Seattle so I had to look for an alternative route to start my career. That’s when I started my company Incorpmedia (incorpmedia.com). If the design companies weren’t going to hire me, then I’ll start my own.
Accounting and Taxes
You will be responsible for paying your own taxes. Instead of getting a W-2 like you would from an employer, you’ll be submitting a W-9 if the work you do is more than $600 for a given year. When tax season comes around, you’ll receive a form 1099 from each client you work with.
Depending on your state requirements, you may or may not need to pay both state and city taxes. Be sure to look into this so you are not underpaying or overpaying taxes.
I highly recommend finding a CPA (certified public accountant) in your area to do your taxes. You may need to do some research to make sure you find one close to you that will meet your criteria and price. They can also make recommendations and give you advice for structuring your business as a Sole Proprietor, LLC (limited liability company), or corporation.
This is one of the most important items in setting up your business. The business structure you choose will determine how much taxes you pay, the paperwork you need to file, and your personal liability. You’ll need to choose a business structure before you register for your business license. I am going to list the first three in the order in which I progressed my business structure.
By default, most freelancers start out as a sole proprietor. This is by far the easiest to set up and does not require any legal documents. This might be a good option if you are not sure if you want to completely go out on your own yet but it also does not separate your personal assets from your business assets which means if something were to happen, a client could potentially go after everything you own. That could be scary so I do recommend at least setting up an LLC to protect your personal assets.
Limited Liability Company (LLC)
LLCs can protect you from your personal liability and assets in case your LLC faces bankruptcy or lawsuits. It separates your personal assets from your business assets. I was a sole proprietor for the longest time and wished I had looked into this when I first started my company. There’s a misconception that an LLC will cost thousands of dollars as you need to higher a lawyer to do paperwork but this is not true. There are ways to do this online and with very little cost. Here’s a great website to help you get started.
S corp is a special type of corporation that’s designed to avoid double taxation drawback of regular C corps. They allow profits, and some losses, to be passed through directly to owners’ personal income without ever being subject to corporate tax rates. Not all states tax S corps equally so it’s good to speak with your CPA about this type of setup. S corps must file with the IRS to get S corp status which is another reason to talk with your accountant about help with setting this up. This is how I currently have my business set up. You will pay more fees to your CPA as there is more accounting involved but the tax benefits will most likely outweigh those costs.
There are a number of other options as well such as a partnership if you intend to go into business with another person but the downside is the owners will be jointly liable for what happens with the business. In my honest opinion, it’s always safer and easier to have one owner of a company. If anything goes wrong, you only have yourself to blame.
For more information about business structures, visit https://www.sba.gov/business-guide/launch-your-business/choose-business-structure
There are several different pricing structures you can use for your business. The two most popular ones are hourly and flat-rate pricing, which are the two pricing structures that I currently use. There are advantages and disadvantages to any pricing structure.
Hourly rate is the price you charge per hour. To bill by the hour, you will need to track all the time you spend working on a project. This can be great for long-term projects that may require a lot of changes.
Flat rate is a fixed price you charge for a completed project regardless of how many hours you work. This pricing structure can be great for projects that are difficult to estimate but the scope of work needs to be well defined. The benefit of flat-rate pricing is the client agrees to the price beforehand and will know what to expect for the cost of the project.
There is also a recurring fee pricing that can help to bring in steady monthly revenue. You can a client a negotiated monthly price for ongoing maintenance or updates for their website. This can get tricky if there’s not a well-defined scope. You may also end up working more for one month but less another month which would balance out.
Now that you’ve started your business, you gotta get out there and expose yourself. I mean… you know what I mean. You need to show off your talent and get recognized so you can get some clients.
Website and Portfolio
A good online portfolio is absolutely crucial if you want to be successful in this field. Try to create a website and portfolio that is easy to update and will help to attract new clients.Options for setting up a portfolio:
- WordPress & Avada Theme
You’ll need to learn some Search Engine Optimization tactics in order to show up for searches on Google and other search engines. Try to focus on your particular location or niche instead of broader search terms that are highly competitive and difficult to rank for.
Google business is a great way to show up for local searches and “get you on the map” for free. Get some reviews and you will build some credibility and possibly rank higher in searches.
Having a Yelp business listing will also help get you exposure as well. It’s free to set up but they will call and try to upsell you to paid advertising.
There are a lot of options for getting your name out there with today’s growing social media platforms. Make sure you sign up for at least a few that you are likely to manage, otherwise they will go stale and uninteresting.
- LinkedIn: Create a profile and business page
- Facebook: If you are already signed up, you can create a Facebook page for your business
- Pinterest: I don’t use this much but you can sign up as your business or yourself and start getting your designs out there
- Instagram: I don’t use a lot but can be really for sharing your work
Once you get established and have some projects you are proud of, you can start entering for design awards to gain recognition and notoriety.
Here are some publications that can help get your name out there:
- Graphic Design USA
- Communication Arts
Once you get your website and portfolio polished up and on the web, hopefully, you start getting some leads. In the meantime, there are some other ways you can start getting some projects under your belt. Word of mouth is one of the best ways to get new clients so get out there and start meeting some people.
- Local Business Events
- Conferences (WordCamp, Adobe Max, HOW)
- See if there’s a free skillshare at your library that you can volunteer for
If you would like to read more about starting your own freelance or web design business, here are some books and resources that can be helpful.