Disclaimer: I’m not a business guru or coach. I’m a former project manager, educator, and the daughter of a small business owner. I’m a strategist and a planner—so much so that a friend once said she wished that I could be the CEO of her life. In my mid 30s, I decided to leave corporate, expand my freelance business, and become a solopreneur. This post is a collection of my insights and suggestions based on my personal experiences growing my side hustle into my full-time gig.
In my last post, I provided my tips for getting started as a freelance editor. That post was largely focused on determining what your goals are and acquiring the skills to become a professional editor.
This week, I want to dive into the actual business side of becoming a freelance editor (or any type of freelancer, really).
The thing is, once you go into business for yourself, all of the work and liability falls to you. Getting yourself set up for success from the start will help you keep everything running smoothly.
Research How to Run a Freelance Business
If you’ve never run a business before, you won’t understand everything you need to do to get set up and to keep your business in good standing.
You’ll need to:
- name your business (this was one of the hardest things I had to do and I finally settled one one to shut myself up)
- choose which business structure is best for you (sole proprietorship, LLC, etc.)
- understand the legal aspects of establishing your business
- set up a budget and projections (and maybe a business plan)
- maintain income and spending records
- pay taxes (estimated and annual in the U.S.)
- obtain insurance (personal as well as professional)
- set up contracts
- develop a marketing strategy (including your website and social media)
- set up a client and/or project management system
And so many more things you won’t realize until you’re in the thick of it.
When I started my business, I got a mentor through the SBDC (if you live in the U.S., every state has a chapter and it’s free to access their resources!). My mentor helped ensure I was setting myself up for success, wouldn’t have issues with taxes, etc. and she gave me a kick in the behind when I dragged my feet on properly marketing myself. (You can also check out SCORE, although I found they had a more old school business/corporate-y feel and withdrew from my mentorship there. They do have workshops and templates to go through, though.)
I also spoke with a bookkeeper for recommendations on setting up my budget sheets and maintaining my records, researched contracts, and made lists of professionals I needed to have or may eventually need to have in my corner (professional insurance, lawyers, CPA, etc.). I met with other editors for mentorship and to help set my expectations, and I attended webinars on starting a business, marketing, etc.
And, thankfully, I was able to lean on what I had learned from my past positions.
(On that note: If you don’t have a lot of experience, working for someone else first and getting on-the-job experience is a great way to build skills without floundering. You can also learn a lot about how to run a business under the guidance and mentorship of those you work for, helping you to start off on the right foot when you’re ready to go out on your own.)
Prepare to Pivot
You can research and plan, and you’ll be setting yourself up right. That doesn’t mean that things won’t change and you’ll have to make adjustments or pivot all together. That’s part of learning. But the stronger your foundation is at the start of your business, the easier it will be for you to roll with those changes.
Research Platforms & Resources
You’ll need to know where you will set up your website, which social media platforms are best for your target audience, which services you may need, and so on.
Here are some things to consider and just a few examples to get you started.
Website Builders
Some builders, like WordPress, may require hosting if you wish to set up a custom domain and email address.
- WordPress (what I use currently and one of the most adaptable with the right plugins and tools)
- Squarespace
Client/Project Management Platforms
Meeting Software
If you plan to meet with clients, either for discovery calls or for one-on-one sessions/feedback calls, the you’ll want to determine the best way for them to schedule and meet with you. (Certain CRMs like Honeybook offer scheduling as a built-in feature.)
E-Signatures
You’ll need clients to be able to sign your contracts. Some of the CRMs may offer this, but if you aren’t using one then you’ll want to look into alternatives.
- Docusign
- Dropbox
- Google Workspace (Google recently added e-signature features to certain Workspace plans)
Obviously there are so many more options and other great services out there. These are to get you started as you think about how you want to operate.
And finally, the big thing you’ll need to tackle . . .
Know Your Worth and Set Your Rate
It’s easy for people who are just starting out (or who are letting imposter syndrome invade their thoughts) to undervalue themselves. But by doing so, you not only risk burning yourself out to pay the bills on meager wages, you also contribute to misconceptions many authors have about the cost of proper, professional services.
How do you make sure you’re properly paying yourself?
If this will become your only source of income, then you need to figure out exactly how much you will need to reasonably cover all of your expenses.
When you are working for yourself instead of for someone else, there’s a lot more to account for.
That means to maintain your standard of living, your pre-tax income needs to be higher than it would be if you worked for a company. (It’s estimated that people who are self-employed actually need to make between 30-60% more than they did as an employee to sustain the same standard of living. See this and this for some details on that.)
Whip up a spreadsheet and factor in things like:
- business expenses (marketing, software, professional development, services, etc.)
- living expenses (rent/mortgage, bills, food, fun, etc.)
- healthcare and other benefits (unless you are married/have a partner who provides these)
- retirement
- taxes (self-employed people in the U.S. should be saving around 30% of their income for taxes as we pay all our own social security, medicare, etc.)
Setting Your Rate
Once you know what you need to make per year, you can do the math to set your rate.
First, research average and median costs for each level of editing. Both the EFA and Reedsy are great references here. This will help you set proper expectations for yourself so you avoid lowballing yourself or coming in too high.
Next, you’ll need to do some math! And in doing so, you’ll have to make sure that your billable hours account for your non-billable hours.
- Billable: active hours spent on a project
- Non-billable: emails, sample edits, marketing, administrative work, etc.
Let’s say you want to work 40 hours max per week and make $90,000 a year before taxes (remember that 30% of that is earmarked for the IRS!). You might think that that’s an easy equation:
- 52 (weeks) x 40 (total hours per week) = 2080 total hours per year
- $90,000/2080 (hours) = $43.27 per hour
That doesn’t seem too bad, right? It’s not—if you’re working for a company where all of your hours are paid for and you have benefits like PTO and sick days.
But working for yourself, you won’t be paid for every hour that you work. Each week, you might find that you’re spending five hours on marketing and another five on admin. That knocks you down to 30 billable hours available. So your equation is now:
- 52 (weeks) x 30 (billable hours per week) = 1560 billable hours per year
- $90,000/1560 (hours) = $57.69 per hour
But hang on! You may also want to take time off here and there, and because you work for yourself, that’s time you won’t be paid for. If you give yourself four weeks off per year, then we have to adjust that equation again:
- 48 (weeks) x 30 (billable hours per week) = 1440 billable hours per year
- $90,000/1440 (hours) = $62.50 per hour
That’s a big jump from $42.27 to $62.50, right?
If you’re a freelance editor (or writer) you can then figure out your per word rate by dividing your per hour rate by your average words edited (or written) per hour. (Ex: $62.50 per hour / 1500 words edited per hour would be $0.04 per word.)
There’s just a couple more things…
One, if you would like to keep the cost of your actual services lower, you may be able to come up with opportunities for passive income that, once you’ve set them up, generate income on their own. (Think PDF resources or self-paced courses, etc.)
Two, until you’re established (and even then sometimes) you likely won’t be filling up every billable hour that you have available. This means having a solid plan for what you’re going to do to pay those bills while your business grows.
Please know I’m not trying to scare you. The best thing a fellow editor did for me was help me to set my expectations so that I could do right by myself (and others in the industry) from the start.
Words may be our thing, but I’m begging you: do the math. Know your worth.
Freelance Rate Calculator
I adjusted the “calculator” I made for myself and made a public version. You can access that here.
(If you have a Google account, you can make a copy to edit it for yourself, or you can download it as an .xlsx files and the formulas should still work.)
Disclaimer: This is not exact. There are a lot of nuances to consider, and I’m not a financial advisor, CPA, etc. This sheet is based loosely on the work I did for myself when determining what my ideal income and work-life balance would look like when starting my business. It is meant to help get folks to start thinking about these things for themselves, not to replace the advice of an accounting professional.
Wrapping Up
Starting your own freelance business is an exciting venture—one you should be proud of. The best thing that Present You can do for Future You is to start it off right. Research what you need to know, make a plan (and know that plans can change), and pay yourself what you’re worth.
Have more questions? Have some tips to offer? We’re all better when we keep learning, so feel free to share!