A Persephone Magazine reader and friend of mine recently asked me to break down some of the crucial steps in starting a business from home. She saw our abundant writing on the subject last week but did not see much on getting into the working-from-home game. Just a few years ago, I took the leap and left my own desk job. Granted, I had a nice, safe contract all set up for me with a local publishing house, but still: I had so many considerations to make in a very short period of time with no clue whatsoever about where to begin. I would have welcomed a little help myself! Below, I’ve laid out some of the critical steps to working from home, as well as some nice resources on the topic.
- Get your business license.
Before you start setting up contracts and spending copious funds on resources, you need to get your business license. Different states (and certainly different countries) have varying regulations about who needs business licenses for what. Likewise, different cities have their own separate rules. In the state of Washington, for example, I had to apply for both a city and state business license. For most people who plan to work in a freelance capacity, a Sole Proprietorship is the way to go. A Sole Proprietorship ties your personal funds to your business and makes you a single tax entity. While that sounds scary, it really means that paying taxes gets much easier (more on that below).
- Track income and expenses.
Once you have your business license, begin tracking every bit of income you earn, but don’t forget to track every single business expense. This means the miles you drive to go pick up office supplies, the cost of coffee at the lunch with the client, the cost of the new computer chair you need for your office: in short, everything. Every dime and nickel. It helps to design a little Excel spreadsheet where you can enter every expense. On that token, hold onto every single receipt from said expenditures. For those in the States, it’s worthwhile to hold onto Internet, cell phone, utility, and mortgage (if applicable) bills, as well. See, you get to claim a portion of these amounts as business expenses.
- Consider hiring a CPA for your first year.
A CPA costs an arm and a leg, but they’re worth every penny. A CPA will set up all your taxes, remind you to renew your business license, and handle your taxes at the end of the year. At the time of publication, my CPA charges around $90/hour, but she does everything for me. At tax time, I gather up all my receipts, count all my income for the year, and fill out a little paperwork. She does the rest, in very little time: no surprise, she does taxes for a living and what would be a 12-hour nightmare for me is a 2-hour yawn-fest for her. A CPA can also provide valuable information on just about everything related to your business, including getting a business license. Once your CPA has everything set up, you can take over from there. He or she can explain how to pay your quarterly taxes, if applicable, and track all necessary information.
- Read about being your own boss.
It’s not easy becoming your own boss. For one thing, if anything goes wrong, it’s your own damn fault. On the other hand, if everything goes right, you get all the credit. Do yourself a favor and get a little reading on the subject. Some of my favorite reading included My So-Called Freelance Life: How to Survive and Thrive as a Creative Professional for Hire, which was a lighthearted top-to-bottom overview of what it means to start your own work-from-home freelance business. Countless other books detail the topic, however, and I recommend finding one that works for you.
- Create your own website.
You may know nothing of web design, or you may know everything. In either case, you should build your own website or find someone to do it for you. The days of placing ads in print media are nearly gone. You want to hand people a card and point them to a URL. Similarly, you want people who search for the service you provide to find you online. The website needn’t be complex. For writers and editors, a page on services, writing samples, experience, and maybe a bio will pretty much cover all the bases. Do not fear web design. So many tools make it easier these days. Try works like On WordPress to help you set up your own website using WordPress, which offers a spiffy UI and instant customization options. Or, buy a textbook on web design and go from there. If you have a BFF who makes websites for a living, grab her ankles and don’t let go until she agrees to build you one. The how is up to you.
- Be not proud, but be practical.
Look for work everywhere; look for clients in every corner of every room you enter. Most freelancers do not have the luxury of work falling into their laps. Each contract represents several hours and forms of self-promotion. But, look, you want to work from home because you hate having to do stuff that sucks out your soul. That’s okay! So if you really don’t want to write marketing copy, be practical: don’t go looking for marketing copy contracts. Or, charge such a high price that if you get the job, you won’t be sorry you took it. In either case, remember you have bills to pay, but ideally enough room to avoid soul-sucking work. Get business cards and hand them out everywhere you go. Tell all your friends what you’re doing and get them to recommend you to their friends. And network! Find people who do what you do: if they have too much work or, say, a type of contract that really isn’t their thing, they might pass the client your way, instead. Networking also connects you with people who’ve been around the block a few times and can answer your nagging questions (if you ask politely).
- Know what you’re worth.
Here’s the thing: few freelances have work to fill up 40 hours a week, 52 weeks of the year. Likewise, nobody takes out taxes for us: we have to pay our own. So we need to be smart about how much we charge per hour, and we also need to make a living while we’re at it. To figure out how much you need to make per year, and so per hour, start with the bare minimum you need to pay your bills and eat. Then add 20% to that for taxes. Then add another 30% for gravy. That last 30% is marginally-negotiable to help you get a job if bidding is tight. Divide your yearly salary amount to figure out what you need to charge per hour. If work is scarce, you may need to charge more, not less, to make sure you cover those bills. So, let’s pretend I need to make $2000 a month to pay all my bills. I need to figure out my working hours in a month – let’s say 180 hours and figure that I may not be working for 60 of those hours. Now, I’ll divide $2000 by 120 hours. Now I’m going to add 20% for taxes to that base amount. We’re at $20.40/hour now. Next I tack on my 30% gravy money: $26.52/hour will give me some very comfy living indeed if I work 120 hours out of the month. If you’re me, you’ll tack an extra 10% onto that number because I believe women have to be fierce about asking for what they’re worth. Men often get more money because they ask for it. You should ask for it, too. Of course, you do need to work about 120 hours a month for everything to come up roses in the equation.
- Set up your office.
While a benefit of working from home is perpetual pantslessness, everyone needs an office space. Your life is about to lack structure in a way that will blow your mind. An office space reminds you that you have business things to do. Now, don’t go blow $1500 at Ikea: you’re not making money yet, remember? But do make sure you have the red pens, printer paper, or other items critical to performing your tasks. The rest you can buy later. Organize the office space. Remove distractions from it. Ideally, you want someone who walks in to see that this space is productive. If it looks productive, then chances are, it is productive.
- Level up your charisma.
Time to step in front of a mirror, put on your most professional face, and repeat the following: “I am capable, professional, and worth every penny.” Did you say it ten times? Good. Now, go find some clients and say it to them. You need to believe it, or they won’t.
- Set aside some money.
Before you step out (or rather, in) to the bright world of working from home, make sure you have funds set aside to accommodate the lean times. Chances are, it will take a little time to find your first few clients and pay those bills. Plan for at least 3 months. While you work to find clients, don’t neglect building your online or industry profile. If you want to do freelance writing and editing, by all means, get writing! Websites like HubPages give you ready-made, easy-to-use options for publishing articles, though they take a 40% cut of most earnings. Or, start your own blog on Blogger or WordPress.com, or even on your shiny new website.
- Done? Then don’t dally!
If you’ve done all of the above, what are you waiting for? Go start finding clients! Use Craigslist or other online sites pertinent to your expertise to find work. Respond to every email and every phone call. Be the very pinnacle of professionalism. Believe it or not, companies do need freelancers. Most cannot afford to hire a full-time or even part-time employee to carry out its here and there tasks. But they can afford to hire you! Remember our “Be not proud, but be practical” step? Put that into action. If you are a freelance editor and you visit a website with terrible copy, send the website an email with a few suggested changes and invite them to hire you. Be proactive: no one will do it for you. Make mistakes and learn from them; triumph and use the momentum to find more work.
Do you have any questions or additional thoughts to add here, seasoned work-from-homers or hopefuls?