A 2023 Upwork study found that freelancers in the US (all 64 million of them) contributed $1.27 trillion to the nation’s economy. Those numbers have only continued to rise, especially with freelance platforms projected to grow nearly 20% annually through 2029, per The Business Research Company. 

This surge reflects more than just economic impact; it signals a growing shift in how people want to work. Greater control over your hours and output is the main promise of a freelance career. A freelance writer, for example, may forgo a steady paycheck and staff writer position if they believe they can reliably contribute to multiple magazines. This may come with more income and greater freedom to set their own hours and creative vision.

Let’s take a deeper look at how to build your own thriving freelance business.

What is a freelance business?

A freelance business develops around an individual’s unique skill set or professional offering. Freelancers build sustainable careers by taking on one-time projects, as well as long- or short-term contracts. Many work with multiple clients at once, allowing them to maximize both their time and revenue.

Freelancers set their own rates and hours, choose the clients and projects they want to pursue, and can typically work from anywhere. This flexibility makes it an attractive business model for entrepreneurially minded individuals.

Freelancers work across a wide variety of industries and job functions, with particularly high representation in art and design (77%), marketing (58%), tech (53%), and construction (52%), according to Zippia.

Why start a freelance business?

Freelancers are drawn to the lifestyle for more than just income. According to Upwork research, top motivations for starting a freelance business include schedule flexibility, financial control, and the ability to work from home (or anywhere).

Take Mike Alfaro, a longtime freelancer and former copywriter and creative director for brands like Taco Bell and Honda. He’s also the creator of the beloved card game Millennial Lotería.

“I think about how much time I want to be spending on different projects and how much time I want to be spending with my family,” he tells Shopify Masters. “It’s not just about handling the different sides of the business; the personal aspect of your life is really important. Being my own boss allows me to set my own hours and schedule time to do both.”

As Mike’s freelance career grew, so did his ability to shape its direction.

“A lot of the projects that I do are stepping stones for other bigger things,” he says. “You get to pick and choose what projects are going to give you that step forward.”

And, as a bonus, think about how much you can learn from working with different companies on different projects.

“[Since] I’m just there for a little while, I think about it like a partnership,” Mike says. “Try to get as much as you can from working at a place. You’ll learn things they don’t teach you in business school or advertising school by being thrown into the fire and figuring it out.”

How to start a freelance business

1. Identify your services and goals
2. Write a business plan
3. Set up your business
4. Map out financials
5. Identify tax and legal requirements
6. Build a portfolio website
7. Find clients
8. Open a business bank account
9. Create a project pipeline

If stories like Mike’s have you thinking about the possibilities freelancing offers, maybe it’s time to start your own freelance business. Here’s what to keep in mind as you get started:

1. Identify your services and goals

The first step to building a successful freelance business is specificity: What exactly are you offering? You might focus on one service, like copywriting, or combine several—such as brand strategy, website design, and social media marketing—for clients with broader needs.

Writing a personal brand statement can help clarify not just what you do, but how you uniquely add value through your personal brand. This will guide your marketing message and help you pitch services more effectively to your target audience.

Set measurable goals and outline how you’ll achieve them. This allows you to determine how many projects you’ll need to take on to hit your financial targets. It also sharpens your competitive positioning by forcing you to define your audience and focus. Tools like a SWOT analysis (strengths, weaknesses, opportunities, and threats) can help you identify your place in the market.

2. Write a business plan

Once you have a clear picture of your services, it’s a good idea to capture it in a business plan. Unlike a traditional business plan, a freelance business plan is less about external fundraising and more about creating a road map to sustainability.

Include how you plan to distinguish yourself and who your target clients will be. Outline how you intend to find customers (having a marketing strategy and an outreach plan can help) and how you plan to price your services.

3. Set up your business 

Next, it’s time to choose an appropriate business structure. For instance, limited liability companies (LLCs) allow freelancers to shield personal assets in the event of a lawsuit. Operating as a sole proprietor is simpler. You won’t need to file anything with the state to form this sort of business, but it doesn’t provide the same level of liability protection. 

Freelancers usually don’t have to register their business, but it may be advantageous or required in some cases, in some states. For example, if using a name other than your own name, you may need to register a doing business as (DBA) name.

An attorney and a tax professional can be helpful resources when deciding what the best entity type is for your business. Once you’ve decided, you may need to register your business through your state’s secretary of state office or business division.

4. Map out financials

The rates you charge for your services may vary due to client budgets, bandwidth, or scope. Decide how flexible you’ll be and how much you’ll negotiate. If you’re just starting, you may accept lower-paying jobs to build your portfolio, but as you gain more experience, that should change.

Although it may seem counterintuitive, doing free work occasionally may help you build a sustainable freelance business.

“Sometimes I’ve done favors, or something for free, and they’ll come back with a whole paid campaign around it,” Mike says. “Small [favors] at the beginning can lead to people really seeing what else you can do.”

Create a projection of expected income and estimate your business expenses, like equipment, supplies, or travel. If you’re just starting, you’ll need to forecast income based on the work you hope to secure. Accounting software can make all this easier. Other popular tools used by freelancers include project management software and time tracking or productivity apps.

5. Identify tax and legal requirements

Freelancers must pay state and federal income tax, along with a self-employment tax. When it comes time to pay taxes, any clients who have paid you more than $600 in a given year should send you a 1099 form. Make sure to pay quarterly estimated taxes throughout the year rather than waiting until the April 15 deadline.

Legal requirements vary by state and city. For example, in California, the Freelance Worker Protection Act (FWPA) requires a written contract between parties for any freelance work valued at more than $250. The contract should outline the project details, agreed-upon rates, and payment deadlines. New York City has adopted the Freelance Isn’t Free Act, which protects freelancers in the case of breach of contract or a client’s failure to pay.

6. Build a portfolio website

A professional website adds legitimacy and acts as a digital home base for your freelance business. It is a seamless way for potential clients to learn more about your professional background, see samples of your work, contact you for quotes, and schedule appointments.

If you’re just starting, keep it simple. A clean, well-designed landing page with the basics—your contact info, work examples, and a description of your services—can be very effective. Shopify has numerous themes you can use to set up a beautiful, secure website.

7. Find clients

A freelancing business isn’t viable or profitable without a regular flow of customers. How you find those first clients will depend on your industry. Some companies, like media platforms, require freelancers to submit formal pitches before being hired for a specific assignment. Others require a project proposal detailing the services and results you’ll provide.

Networking is one of the best ways to find new business. Whether you’re at an industry mixer, dinner party, or other networking event, be ready to explain what you do and who you do it for (a.k.a. the elevator sales pitch). Don’t be afraid to use the connections you already have to surface new leads or provide opportunities for you to showcase your work.

Creating profiles on freelance work platforms like Upwork or Fiverr can also be a great way to find clients and generate business.

Mike found that highlighting the personal aspects of his work helped him connect with his audience on a deeper level. He was able to leverage his social media followers, who were following him “as a creator, not just as the brand.”

“Now I have this business that’s doing well and I can organically promote it on my social media,” he says. “I can also work with different brands that want to reach out to my audience through things that interest me.” 

8. Open a business bank account

Opening a business bank account keeps your business expenses separate from your personal ones. This makes things much easier during tax season and helps you track the financial health of your business. A dedicated account can also help you take advantage of small business benefits, like expanded lines of credit.

9. Create a project pipeline 

Much like a traditional sales pipeline, freelancers should aim to line up new projects before current ones wrap up. That way, you won’t lose momentum (or income) between jobs. This may require some prospecting and pitching while you’re still working on active assignments.