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What is a freelancer and how can you become one? A step-by-step guide


According to The Association of Independent Professionals and the Self-Employed (IPSE), there were 1.9 million freelancers in the UK in 2021.

But what is a freelancer exactly and why would you want to join their ranks? Be sure to read this comprehensive guide on how to become a freelancer.

From tax and sourcing clients to insurance and structure, here’s our top advice.

What is a freelancer?

Freelancers are a big part of the UK’s self-employed workforce. They work on shorter-term projects for a variety of clients on a contract-by-contract basis.

They usually have specialist skills that they can market to clients, who like using freelancers because it’s flexible. It gives them access to expertise without the need for long-term employment commitments, which is particularly useful for start-ups and earlier-stage businesses.

For their part, freelancers often enjoy this freedom and flexibility too. Freelancers should see themselves as running their own business, as they have to actively win work and deal with admin like tax and invoicing.

Freelancers come in many guises, but here are the top five occupations according to IPSE (these account for almost 50 per cent of all UK freelancers):

  • artistic, media and literary
  • teaching
  • managers and proprietors in other services
  • functional managers and directors
  • sports and fitness occupations

How to become a freelancer (and have a successful first year)

Whether you’re experienced in your field or a fresh graduate, going freelance could be the most rewarding thing you’ll ever do.

Hopefully, like so many of the small businesses we insure, you’re passionate about your craft. If you understand how to market it, you can make a living from that passion.

It’s getting paid to do what you love. Who wouldn’t want that?

The difficulty, of course, lies in how to make the decision, get the ball rolling and maintain that passion when you’re six months (or six years) in.

So, here’s our checklist on how to start freelancing, focused on what UK businesses need to look out for at the moment. Use it to make going freelance a reality.

Shift your perspective before going freelance

You could be considering leaving a job to start your own business, or might even be a student mulling over next steps. Whatever your experience, prepare for a shift in perspective when becoming freelance. Think about the responsibilities, commitments, and personal ‘non-negotiables’ that, when combined, map out your lifestyle and circumstances.

The obvious ones are family commitments and financial responsibilities.

With a regular paycheque you have income, and often as a result of that secure income you start building up liabilities. These might be rent or a mortgage, plus all those Direct Debits you know are going to go out each month, usually as soon as you’ve been paid.

You could drop some of these easily if necessary, for example a gym membership or Netflix account. But what would happen if you missed a utility bill? Are you in the middle of any building work? Paying childcare fees or getting a credit card under control?

If you’re giving up a regular salary to become a freelancer, make sure you have a complete picture of your income and outgoings, and minimise the risk of missed payments.

This will also be a useful task if you’re not employed at the moment, but are weighing up the pros and cons of freelancing against regular employment. You can consider the sort of lifestyle you want to have.

Here are some further guides that can help:

Going freelance requires discipline

Becoming your own boss literally means ‘being boss’. If you’re largely based from home, there’s no manager to report into, no sick pay, and definitely no work dress code for your kitchen table.

Without the usual workplace rules and boundaries, it’s important to work out how to go freelance and stick to a productive routine in the process.

For some people freedom is great, especially if you’re a good self-motivator. But for many, complete flexibility can take a while to get used to.

Before you hit day one of freelance life, write a business plan. Give yourself a firm goal for billable hours to clock up in the first quarter, or a target for how much you need to invoice. Even if you tweak these once you get going, the goal itself can be enough to keep you oriented.

If nothing else, try to stick to your routine, minus the commute. There may be lots of lovely photos of freelancers in their pyjamas working from bed, but is this going to work in reality?

Set your alarm, have a decent breakfast, and get dressed.

You could even consider arranging with a client to work from their office once a week, to add a bit of expectation and structure.

Or you could consider joining a coworking space which can give you a base to work from and also help get your name out there to other local businesses.

Work out your freelancer fees and rates

Working out how much you’re going to charge is possibly the most important part of becoming a freelancer. Your earnings could come in either as flat project-based fees, or as daily (or hourly) rates.

Do some basic research and get a sense of the going rate for your services or skill set. Of course, it’s going to depend on your level of experience, but there’s no sense in charging rock-bottom rates only to find that you can’t afford to pay your bills.

Remember the importance here of building up a good reputation and referrals. Earn the respect and trust of a group of solid clients with reasonably-charged work, executed to brief, on time and to a high standard.

Working out how to become a freelancer who’s indispensable to your clients will be the key to your self-employed success.

Freelancer business structure

Becoming freelance means deciding on a business structure. You’ll need to decide on this before registering with HMRC. Unless you’re setting up with someone else in a partnership, you’ll likely be either a sole trader or limited company.

Each has pros and cons. Read up on what makes sense for your business and don’t rush into a decision. Ask around your industry contacts and see what’s worked for them in their first few years of trading.

Advice from people already in business can be invaluable, especially if you’re getting conflicting guidance online.

Freelancing as a sole trader

Typically, sole traders have less paperwork and more privacy than limited companies (although don’t underestimate the work you’ll be putting into your annual tax return).

But they do carry all the risk, for example debt and other financial liabilities. That’s because legally freelancers aren’t separate from their business. Sole traders will need to register as a freelancer with HMRC.

Freelancing as a limited company

Limited companies are separate legal entities, meaning your personal assets won’t be liable if your business goes into debt.

Running a limited company can make your business look more professional to clients, too.

But there’s much more paperwork, rules and regulations involved when setting up (and running) a limited company. You will need to register with Companies House and complete a company tax return, as well as your own Self Assessment.

How to find clients as a freelancer

Learning how to sell your skills is all part of becoming a freelancer. Be realistic about how much work you can take on as one person.

But before you take the plunge and become your own boss, it’s important to have some idea of who your first clients might be, or where to find them.

Get to know your target market and do some research. For example:

  • if you’re working out how to become a freelance designer, speak with a few local businesses about who they employ to create their publicity flyers, posters, or even website
  • if they’re doing it themselves, consider offering an introductory rate and showing them how good you are
  • research a business’s network to find out how likely they might be to recommend you to other contacts

Marketing plays its part too, but word of mouth, smart networking, and a few meetings while still employed (in your own time, of course) can really help to get things moving.

How to register as a freelancer for tax

It makes it easier for you to understand your tax responsibilities early on, so register with HMRC as soon as you’re up and running. This is an essential step regardless of your business structure and something you can manage mostly online.

There’s a registration deadline you need to meet, which is after the end of your first tax year.

One top tip – make sure you have an easy-to-locate email folder, as well as a paper-based one, for all your early communications with HMRC. As you pay tax across the year, you’ll need to provide certain details and login codes, and it can be tricky to locate everything.

If you’re full steam ahead on becoming a freelancer, getting organised now will pay off down the line, preventing lengthy call-waiting times with the HMRC helpdesk.

Get more information at our tax and Self Assessment hub.

How to invoice as a freelancer UK

After you start winning clients, you’ll need to invoice them for completed work. This involves being clear on your payment terms and keeping on top of who has paid you.

The unfortunate reality is that some clients will be better at paying you than others, so be sure to set up a system for getting paid. Here are some resources that will help:

Get freelance insurance

If you’re largely working from home, a typical home and contents insurance policy might not cover you for your business activities.

So it makes sense to look at tailored freelance insurance that’ll give your fledgling business protection like:

Plus, there are plenty more covers that might be specific to your business.

We’ve answered lots of the most common questions around business insurance for freelancers in our FAQ section. Make it a key part of your ‘how to become a freelancer’ checklist.

Going freelance: what’s your trade?

As mentioned, setting up as a freelancer lets you make a business out of a hobby or passion.

With this in mind, we have a number of tailored guides depending on your trade:

Guides and resources for the self-employed

Got a burning how-to-go-freelance question? Ask away in the comments.

Looking for freelancer insurance?

As the UK’s biggest business insurance provider, we protect the self-employed workers who’re building Britain. Why not take a look now and build a quick, tailored freelancers insurance quote?

Jessie Day

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