Is Freelancing A Business? Here’s Why You Should Treat It Like One

You’re a freelancer, so you probably already know the basics of how to land clients, find the right opportunities, and build your network.

But there are a few things you might not have thought about—like how you can use your business to create new opportunities for yourself.

By treating your freelancing work as a business, you’ll gain access to all kinds of benefits that will make it easier for you to grow and develop over time. It’s like getting two jobs for the price of one!

In this article, we’ll tell you why you should treat your freelancing gig like a business—and what it can do for you in the long run.

Takeaways
Freelancing should be treated as a business to ensure long-term success and stability.
Adopting a business mindset helps freelancers establish a professional reputation and attract high-quality clients.
Effective financial management is crucial for freelancers, including budgeting, multiple income streams, and setting appropriate rates.
Scaling a freelance business requires strategic planning, marketing, networking, and creating scalable systems.
Marketing your freelance services through a professional website, social media, and content marketing can help attract clients.
Managing legal and administrative aspects, such as contracts, taxes, and licenses, is essential for freelancers.

Why You Should Treat Your Freelancing As A Business

Whether you’re a writer, designer, programmer, or something else entirely, if you work as a freelancer, then you’re in the business of selling yourself.

But what does that mean?

Well, for one thing, it means that you should be trying to get clients instead of just waiting for them to come to you. It also means that you need some sort of portfolio of your work that clients can look at before they make the choice about whether or not to hire you.

You may think that these things are obvious, and if so, then congratulations—you’re already doing better than most people who freelance! For some reason, many freelancers don’t seem to understand that what they do is actually a business, and they don’t take the steps necessary to make sure that their business is a success.

Here are 11 reasons why freelancers should treat their work as the business that it is:

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1. You Can Build A Reputation

When you work as a freelancer, it’s easy to build your reputation as an expert in your field. I’ve had the same clients for years because they trust me to do good work and they know they can rely on me when they need something done quickly or have other special requests. That’s why it’s important that you treat your freelancing as a business.

2. You’ll Find More Opportunities

Freelancers are all over the place—it’s estimated that there are over 59 million of us in the United States alone. Most freelancers drift in and out of gigs and projects with no formal structure to their work or their careers. But if you can establish yourself as a viable business entity, your skills and services are much more likely to become known.

3. You’ll Get New Clients

It’s easier to attract new clients when you already have an established presence, and this presence is only possible through professionalism in branding and communications. Once people see that you run a serious business, they’ll be more willing to trust that you can deliver a high-quality product.

4. You’ll Keep Your Current Clients

Treating your work as a business means that you take care of your customers and make sure they know how much they matter to you. That’s important if you want them to stick around!

5. You’ll Learn New Skills

Running a business requires different kinds of skills than working for someone else does. By treating yourself like a real business owner, you force yourself to learn these valuable skills (like how to manage people) on the job.

6. You’ll Feel More Professional

Formalizing your freelancing efforts by setting up a separate bank account and claiming your freelance work as a business on tax forms will help you feel more like an entrepreneur. You’ll be able to separate your personal and business spending, which will allow you to see how much money you’re making or losing through your freelance endeavors.

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7. You Could Also Benefit From Tax Breaks And Deductions

You might be able to deduct things like business travel expenses or office supplies, for example. The only way these deductions are available to you is if you consider yourself self-employed and a business owner, so if you think of your work as “just” freelance work, then that won’t happen.

8. Structure Helps You Think About Your Business Strategically

When you put structure in place to support your freelance business, it gives you the space to think about your work in a strategic way. You don’t have to worry about the day-to-day running things anymore because you’ve already laid out how things are going to happen. Now you can take a step back and look at the big picture.

What is working? What isn’t working? How could you do things better? How can you get closer to achieving your goals? Structure helps you identify what needs to change so that you can make sure you’re doing everything possible to grow your business.

9. You’ll Get Paid More

If you treat your freelancing as a business, you’ll get paid more. When you’re running a business, clients know they will be expected to pay more than they would if they were offloading tasks onto their cousin’s friend who lives in their building.

And that means that they will more likely choose someone like YOU, who is serious about what they do and treats it as a profession, rather than someone who is just looking for some extra pocket money.

10. You Will Protect Your Assets With Insurance

You can protect your assets with insurance. If something happens and someone gets injured while working with you, general liability insurance can cover their medical costs and protect your business from getting sued and having to pay out of pocket.

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11. You Won’t Have To Chase The Money

Every freelancer has been there: an invoice that goes unpaid for months, or even years. It’s painful when it happens, but it makes sense if you don’t think of yourself as a business owner who should be compensated for her work. When you bill monthly, clients tend to pay that monthly bill regularly, like they would for any client.

Not Treating Freelancing As A Business Has Negative Effects

We all know there are two sides to every coin. Well, when it comes to freelancing, there are at least 8 negative effects of not treating your freelancing as a business:

1. You Don’t Pay Enough Attention To The Market

If you’re not in business, you may be tempted to approach your freelancing career like a hobby or side gig—which means taking work as it comes and not strategizing about your future. But this approach can also mean that you end up with less-than-ideal clients, which can lead to dissatisfaction and burnout.

2. You Don’t Track Your Expenses

If you’re not treating freelancing as a business, the last thing you want to think about is expenses. But tracking these costs can help you make better decisions about pricing and other business choices, as well as help when it comes time to file taxes and potentially write off some of your costs.

3. You Don’t Pay Attention To Legal Compliance

This is a HUGE mistake, and could result in your business being shut down by the IRS or other regulatory body if they audit you—and even if they don’t, failure to comply with current laws can lead to hefty fines and fees.

4. You Don’t Pay Yourself Enough

When you don’t run your business like a business, it’s easy to let your expenses slip out of control—and when that happens, it’s usually because you’re not paying yourself enough for your work.

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5. You’re Not Prepared For Changing Circumstances

When you’re working hard at something, the hope is that things will just keep getting better—you can take on more jobs, get clients who will provide more consistent work, and maybe even start hiring people to work with you. But that’s not how things always go! There may be slow periods where opportunities dry up. Without preparation, those slow times could cause problems for your finances and stress levels.

6. You Don’t Watch Out For Your Health And Wellness

It’s also important to take care of yourself when you’re running any business. But if you’re not working in an office, it can be easy to let this part fall by the wayside.

7. You Don’t Think About Your Retirement Or Future Plans

Once you start bringing home the bacon from your freelance business and keeping track of everything in accounting software like QuickBooks, it can be tempting to put all of your extra cash into fun purchases or even just spend less and save more.

While that means you’ll have an awesome wardrobe (and maybe a killer savings account), it also means that you’ve put nothing aside for your future plans. If you want to retire someday, or even just move out of mom and dad’s basement, it’s important to start saving now!

8. You Can’t Handle The Pressure Of Being Your Own Boss

Since you aren’t thinking of yourself as an entrepreneur, you also don’t give yourself credit for all the hard work that goes into freelancing. It’s hard to be your own boss and to keep yourself motivated and accountable for everything that needs to get done. And it can feel pretty lonely when no one is around to provide encouragement or support.

What Can You Do So That You Treat Your Freelancing As A Business?

If you’re looking to start a freelancing business and are wondering what steps you should take next, one of the first things you should know is that it’s never too late to start treating your freelancing as a serious business.

Step 1: Register Your Freelancing As An LLC Or Sole Proprietorship

You might not think of yourself as a business owner, but that’s exactly what you are when you’re freelancing. So start by registering with the IRS and your state as an LLC or sole proprietorship (depending on which structure makes sense for your business). This will help you manage your expenses and pay taxes on your earnings.

Step 2: Get A Business Account

If you’re still using your personal checking account for your freelance work, it’s time to open up a new account just for your business. Having a separate bank account will help keep things separate when it comes time to do taxes or file other paperwork related to your business. You should also look into getting a business credit card for any expenses related to running your business.

Step 3. Keep Your Finances Organized

Now that you’ve registered as a freelancer, it’s time to start paying attention to the money side of things. Make sure all of your income is labeled properly (for example, if it comes from different clients), and be diligent about tracking all of your expenses so that it’s easy for you to file them at tax.

Step 4: Start Charging Sales Tax On All Your Products And Services

If you’re a small business, there’s a good chance that you’re not charging sales tax on your products and services. Freelancers especially often overlook this important step, which can lead to costly consequences later on.

Depending on where you live, your business might be required to pay sales tax on the products and services it sells. In fact, some states require businesses to collect and remit sales tax even if they don’t have a physical presence in the state! That’s why it’s so important to understand how your state defines and requires you to charge sales tax once you’ve started freelancing.

Step 4: Rebrand Yourself As A Small Business (Not A Freelancer)

The thing about being an entrepreneur is that you need to think of yourself as one, in order to reap the benefits of running your own business. If you think of yourself as a freelancer, you’ll be more likely to take jobs here and there without any sort of commitment or direction. But if you think of yourself as running a small business, you’ll have a better sense of direction and purpose for what you’re trying to accomplish. Besides, “freelancer” doesn’t exactly sound like someone who is on top of their game, does it?

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Final Thoughts

Freelancing is a business. It’s a decision you make to run the way you want, work when it fits your life, and how meet your goals in a certain period of time. Treating it as such will put you in the best possible position to succeed professionally.

Further Reading

Here are some additional resources to dive deeper into the topic of freelancing as a business:

Why It’s Important to Treat Your Freelancing Business Like a Business: Discover the reasons why freelancers should adopt a business mindset to achieve long-term success and sustainability in their freelance careers.

What Is a Freelancer?: Gain a clear understanding of the concept of freelancing and the role of a freelancer in today’s professional landscape.

The Business of Freelance: An Increasingly Popular and Very Profitable Business Model: Explore the growing trend of freelancing as a business model and its potential for profitability and success.

People Also Ask

As A Freelancer, Do I Need To Treat My Freelance Work As A Business?

You bet! It’s an easy question to answer. While it may seem like you’re just working on your own schedule and doing things that you love, there are some key differences between working as a freelancer and being a hobbyist. If you want to make sure your freelance work is legal, profitable, and sustainable in the long term, then you’ll need to treat your freelance work like it’s a business so you can:

-keep accurate records of all your income and expenses

-pay any applicable taxes, fees, and licenses

-protect yourself from risk

-make sure you’re providing quality service and satisfaction to your clients

Is Freelancing A Business?

Of course, it is! It may take some time for you to reach the level of success you want, but freelancing is most definitely a business—you are selling yourself and your services.

What Should I Charge For My Services?

This is up to you, but it’s a good idea to research what other freelancers in your area are charging for similar services before setting your own rates. Learn more here!

Is Freelancing Legal?

Freelancing is legal as long as you’re paying taxes on your income. However, this depends on your state.

Is Freelancing A Business?

Yes! Freelancing is a business. Just like any other type of work, freelancing involves selling your time and expertise in exchange for money. It’s a business that you’re running—even if it’s just you and a computer.

So Should I Register It As A Business?

Yes. You should register it as a business because that’s what it is: a business. Whether you freelance part-time or full-time, if you’re doing work for other people and getting paid for it, then it counts as a business. And there are tax benefits to registering your freelancing as a business!

What Are The Benefits Of Doing That?

There are two main benefits: first, if you spend money on things that are related to your freelancing (for example, buying new software or taking a writing course), those expenses can be written off. Second, you can deduct half of the amount of payroll taxes that self-employed workers pay from their income tax (this is called the “self-employment tax”).

What’s The Difference Between A Freelancer And A Consultant?

A consultant is someone who knows more about the business, industry, or subject matter than the client does. A freelancer provides services that can be learned, such as coding, writing, web design, social media management, etc.

A consultant has to have years of experience in a specific field in order to be an effective consultant. They often have to have business degrees and experience running their own businesses in order to be successful in consulting.

What’s The Difference Between A Freelancer And An Entrepreneur?

An entrepreneur is someone who creates a business from scratch that usually involves creating their own products and/or services. Freelancers are not entrepreneurs since they don’t create their own products or services.

What Are The Aspects Of Running A Business That I Shouldn’t Overlook?

You need to make sure that you have enough money saved up to cover six months of expenses before you start freelancing full-time. After all, work can dry up at any time and without warning. You also need to make sure that you have excellent credit so that if your income dries up and you have no choice but to borrow money, you’ll be in a strong position to receive more favorable interest rates. 

Finally, when it comes to taxes, don’t wait until April 15th! Instead, make quarterly estimated tax payments