Want to turn your freelance work into a business? Here’s how

Freelance work is a fantastic way to supplement your income. Over the course of the last decade, more and more UK professionals have decided to swap their 9-5 for the lucrative benefits of freelancing. According to IPSE’s latest research, there are over two million freelancers in the UK as of 2024, accounting for 49% of the nation’s self-employed population.

Are you one of them, and wondering how to transition from a casual freelancer into a sustainable business? We’ve designed this guide to walk you through the basics. We’ll help you build up your freelance experience and create a solid foundation before going full-time.

Step 1: Develop experience and define your freelance offering

Before handing in your notice at your day job, take the time to plan exactly what you’re trying to turn into a business. Hobbies are an excellent place to start. Perhaps you’re a skilled photographer in your spare time, or maybe you’re a fitness fanatic passionate about helping others embrace a healthy lifestyle?

If personal interests are not quite the right route for you, think about what you’re good at. What professional skills do you have that other companies or individuals could benefit from, and what types of projects or work could you do for them? What would they be willing to pay for your services, and would it be enough to support you financially?

• How can I generate passive income for my company?
• How to form a limited company: 5 requirements
• Do I need to register my side hustle as a limited company?

If you haven’t already established yourself as a freelancer, you need to answer these types of questions before committing to freelancing. The best way to do that is to test the waters and gain some freelance experience while you’re still employed. Freelancing alongside your day job will allow you to make a name for yourself and start building up cash reserves to, eventually, bootstrap your business and give it a strong financial starting point. 

The rule of thumb is to save up between 3 and 6 months’ worth of income before freelancing full-time. These savings will help you cover your accommodation expenses and overheads, such as insurance, utilities, childcare, and personal living costs. 

Step 2: Write a business plan and define your services

Writing a business plan is key to staying organised. Take your time to create this document, explaining what your business is going to do or sell, how you’re going to deliver those offerings, and how much it’ll cost you to do that.

You should also outline your price points and marketing tactics, and conduct thorough market research to understand your target customers and competition.

Once you’ve put all these crucial elements together, your business plan will reveal just how viable your idea is. You’ll understand when you’re likely to break even, when you might start turning a profit, and how much money you will need to sustain yourself until then. Later down the line, your business plan could also help you to secure a bank loan or investor funding to grow your enterprise.

Step 3: Start attracting freelance clients

If you don’t have any customers yet or enough work to start building up a rainy day fund for your freelance business, you’ll need to grow your client base first.

One of the most effective ways to find customers is to spot gaps in the processes of companies you’ve worked for, businesses you’re familiar with, or people you’ve previously worked with.

Don’t be afraid to approach them with a phone call and confidently explain what you could offer them. If they’re interested, they’ll generally ask about your rates and timescales, so have the answers to these questions prepared.

That’s where your business plan will come in handy. You should have already thought about how you’re going to price your products or services. Hourly and daily rates are most common among freelancers, but you could opt for a flat fee or even by the word if you’re a freelance writer, for example. Then, it’s time to prove yourself by delivering exactly what you promised.

Join freelance networks to help customers find you

Having trouble approaching or finding first-time clients? Don’t panic. Freelance platforms like PeoplePerHour, Upwork and Fiverr make this easier.

Join these sites for free and upload your service pitch. Then, potential customers can sift through the platforms and approach you to take on their freelance tasks if they’re impressed by your pitch.

One thing to note is that while most freelance platforms are free to join, they generally operate on ‘freemium’ models that take a small percentage in return for generating you business. So, consider establishing yourself on these types of websites before approaching regular customers. Ask them to contact you externally to continue developing your professional relationship and avoid hidden platform fees.

Create a website and boost your online presence

Once you’ve started impressing clients, encourage repeat business and start casually marketing your services online. Start by launching a website, vital for showcasing your story, experience, and credibility.

Don’t worry if you’re a website-building beginner – it’s quick, easy, and low-cost. We recommend platforms such as WordPress, Wix, and Squarespace for freelancers. They are easy to use, contain plenty of free templates, and plans start from just £3 per month.

Also, create a social media profile for your freelance business to engage with your audience and showcase your work. Your social media pages are also an excellent place for happy customers to leave positive reviews, contact you, connect with one another, and direct friends and colleagues your way.

Step 4: Formalise your freelance business

With experience now under your belt, your freelance work should start generating a reasonable amount of income. Once you’re confident that you have enough saved up and a reliable client list, this could indicate that it’s a good time to set up a full-time freelance business.

Should I incorporate my freelance business?

In the early stages, you might prefer to operate as a sole trader. This means you’ll be self-employed, trading as a business owner. Legally speaking, you and your freelance business are one and the same, but that synergy can make life simple if you’re running a very small venture.

However, because there is no legal separation between a sole trader and their business, it could be worth forming a limited company, especially when your freelance earnings become substantial (around £30,000-£40,000 per year).

Incorporation gives your freelance business its own legal identity. Your liability for that company will be limited only to the value of your shares. That protection can offer vital peace of mind that your personal assets are protected if things don’t quite go to plan.

In summary, yes, it’s worth incorporating your freelance business if you’re making enough money from it and you plan to grow your operations in the future. Until then, you may find it simpler to remain a sole trader.

Your legal obligations as a sole trader

While you’re self-employed, your main legal obligation is to register for Self Assessment. Each year, you’ll need to declare your income to HMRC and pay the appropriate income tax on it. There are certain business expenses you could be eligible for to reduce your tax bill.

New to Self Assessment? Find the answers to the most common Self Assessment questions in our blog.

It’s also worth looking into business insurance at this stage. You don’t legally need business insurance (unless you employ people or drive a commercial vehicle), but you may want to protect your business equipment and inventory, etc.

Your legal obligations as a limited company director

UK limited companies have more legal duties than sole traders. Here are the key obligations to be aware of if you choose to incorporate your freelance business: 

• Register for Corporation Tax within 3 months of trading
• Register for VAT if the company’s annual turnover exceeds £90,000 a year
• File your statutory documents (confirmation statement, annual accounts)
• Keep accurate accounting records 

Depending on your earnings as a director, you may also need to register for Self Assessment and pay Income Tax.

We know this can all sound daunting. But don’t worry; our guide on what happens after you set up a company explains everything you need to know.

How Hope Batchelor went from freelancer to business owner

Looking for real-life inspiration? Here, we spotlight Hope Batchelor, a digital creator who transformed her kitchen hobby into a full-time food content career. From casual posts to brand deals, she’s built a standout presence in the online food space.

Starting on Instagram in 2020 with simple home bakes, Hope gained traction for her rustic style and honest, approachable voice. Her following grew steadily across Instagram and TikTok, two platforms which have been instrumental in boosting her brand awareness and engaging with her community.

Hope eventually left her 9–5 job to focus full-time on content creation, earning through brand collaborations (including Waitrose and Lakeland), affiliate links, digital products, and paid appearances.

Top tips for running a successful freelance business

Whether you’re self-employed or have formed a limited company, running a business is a constant learning curve. To help you clear the early hurdles, here are three top tips to help get your freelance work off the ground:

Set realistic goals

In all the excitement of quitting your day job to become your own boss, it can be easy to lose sight of what it is you’re hoping to achieve by going it alone. That’s why it’s critical you set realistic business goals that you can measure and achieve.

Present these goals in your business plan and timestamp them to keep track of growth. This will also help you reassess any elements that may not be performing well.

Prioritise customer service excellence

Your early customers play a huge role in shaping your business’s future. They decide whether they like your brand and your offering, whether they’ll recommend your business to others, and whether they’ll return.

The customer experience is crucial to succeed and grow your freelance business; that’s why it should be one of your top priorities from day one. Win those customers through:

• Empathy and active listening when they contact you
• Clear and effective communication that solves their problem
• Responsiveness and timeliness
• Consistency and a personalised experience
• Listening and acting on feedback

As Simon Sinek, author and business leadership speaker, says:

The [companies] who really create life-long relationships – deep, meaningful trusting relationships – are the ones that never forget that, fundamentally, regardless of what [they] do, they’re in the people business.

Don’t forget about taxes

Whether you’re self-employed or form a limited company, you’re responsible for paying your own (and your company’s) taxes. Familiarise yourself with your filing deadlines and key dates to ensure the administrative side of your freelance business runs smoothly.

Decided to incorporate? Our Full Company Secretary Service is the easiest way to keep your company compliant. Your dedicated account manager can assist you with structural changes to your company, maintaining and preparing your statutory registers, and filing your confirmation statements.

Make your dream business a reality

Going freelance is an exciting step, especially if you aim to turn it into a full-time venture. The great news is that anyone can succeed with a little preparation.

Focus on building up a list of clients, creating a portfolio, and remember to write a business plan. From there, it’s worth thinking about setting up a limited company to protect your assets and show your customers that you’re a serious, credible business.

Ready to register your freelance business officially? Discover just how easy it is to set up a limited company with Quality Company Formations in just four steps.