How Do You Set Up Your Freelance Business?

HomeBusiness.jpg Freelancing has become a common way of working in the last decade, and is likely to achieve even greater prominence as companies seek ways to cut staff costs during economic turmoil. One of the basic decisions a freelancer has to make is whether to work as a sole trader, or incorporate themselves as a company. The latter offers some tax advantages, and can help secure your assets if the business gets into difficulties, but involves a lot more paperwork and can seem like overkill. While you should always get individual advice from an accountant, we'd like to know which route Lifehacker readers have taken when they've gone the freelance route. Share your experiences in the comments.


Comments

    i'd love to hear how designer types have found freelancing through and agency vs going out on your own. any takers?

    I freelanced in Brisbane for 18 months or so in ad agencies and had prior to that point been the person responsible for hiring freelancers in the design studio I had worked in. Me experience was that no-one wanted to deal with a placement agency if they could help it. They all lied about the level of competence of the placements anyway.

    If you're a senior with good contacts you'll be better off on your own, you'll make the full rate, but you'll have to manage all the paperwork. If you're more junior it's going to be harder to find placements and more difficult to negotiate a rate, so maybe a placement agency would work better for you.

    Bear in mind that once you sign on with a placement agency it's normally in your contract that you can no longer approach people for work directly ...

    This could be different in other cities though.

    Sorry, I also meant to say that for me, setting myself up as a Pty Ltd company was the smartest move I ever made from a business perspective. My freelancing turned into direct client work which turned into a small studio. I had no idea where I wanted to go with it all when I started out and the company structure allowed me to do all this without changing the core structure of the business.

    I've seen too many other people in the same situation spend tens of thousands of dollars dissolving poorly set up structures and setting them back up again.

    Spend the $1,500 or so going to an accountant and getting advice appropriate to your circumstances, it may seem like a lot, but it's like car insurance ... if you can't afford it, you can't afford to drive.

    I also set myself up as a Pty Ltd company. I've been freelancing full time for 2 years and part time for about 5. It means, myself and my wife are basically employees in our own company. We pay ourselves a set wage and superannuation each week. Any profits we take from the company is treated as a dividend. Definitely, speak to an accountant about it.

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