How To Make The Switch From Freelancing To Business Owner

Making the switch from freelancer to full-fledged business owner can be pretty exciting. While freelancing offers its own benefits, there’s really no feeling that compares to being the boss of your own organization. Freelancers operate on a pretty similar mindset to entrepreneurs, so you’ve already got the right idea; now it’s time to follow these simple steps to finally making the leap from freelancer to a business owner.

1. Decide if it’s Really What You Need

First, you’ll need to take a good look at what you do. Are you a freelance writer? Photographer? Graphic artist or designer? What you do will depend on whether or not your work is scalable to the size of business. That is, can your work be abundant enough to warrant the switch to a business model?

Next, you’ll want to look at your motivation for switching. Why do you want to make the switch? Do you want to be an employer? Make more money/connections? Answering these questions to yourself will help in solving an existential crisis. Sometimes a switch simply isn’t necessary. Businesses come with expenses, don’t forget! Starting a business will require setup and maintenance costs, whereas freelancing usually doesn’t have many costs associated with it.

If you decide that making the switch is the right move for you, then it’s time to move onto the next steps and get your small business running!

2. Figure out Your Business’s Structure

Once you’ve decided to make the switch, you’ll need to decide on a structure for your business. This will define how leadership is structured within your business, and also give you the tag on the end of your name (LLC, Inc., etc.)

There are several options to choose from when you register your business, including LLC, Corporation (which has a few varieties), Sole-Proprietor, or Cooperative. Depending on your state, each structure will have different requirements. No matter if it’s an LLC in Texas or sole proprietorship in California.

Be careful when choosing your business structure, as there are a lot of differences to research when it comes to LLC vs S-Corp.

You’ll need to register your business with state agencies and the IRS, and obtain an EIN, or employer identification number for when you begin hiring employees. Having a legal business structure will help protect personal assets in the event of a lawsuit or other legal action against you, and also helps solidify your legitimacy as a business entity.

You can file these documents yourself, or use a business attorney. Sites like LegalZoom offer business setup packages as well, generally for a lower price than traditional attorney services. They’ll also act as a registered agent with your state.

3. Start Small

It’s important to take small steps in both the practical and financial aspects of your business. If you bite off too much at once, you’re more likely to encounter greater obstacles or even financial ruin. If you don’t have the startup funds you need, don’t try to borrow money without a solid business plan in place with a contingency should you be unable to stay in business. Any loans will need to be repaid regardless of the success of your business, so borrow carefully.

Starting out small allows you to build on a more solid foundation, adding as you go instead of trying to build an entire structure at once. Starting from the ground up can be challenging, but it can be nearly impossible if you try to do it all at once. Take things slowly, build carefully and you’ll have much greater success.

4. Do Your Research

Be sure to perform research on your customers and your competition. Without this insight, you won’t know how to reach and grow your customer base, and likely won’t have much success as a business owner. Knowing your customers allows you to better tailor your products and services to meet their needs, thus encouraging loyalty to your brand instead of the competition.

Depending on your type of business you will also need to consider what tools you need like a contract management system, client relations management system and a vendor management software system. You may not need it in the beginning but you will definitely need it later if you’re aiming to scale your business.

You’ll also want to research any specific legal requirements or other guidelines you need to adhere to. This varies among industries, but you want to be absolutely certain that everything about your business is within federal and local regulations or risk penalties.

5. Expand Your Network

You likely have a great network of people available as a freelancer, but now that you’re making the switch to a business owner, it’s time to expand that network. Having an extensive network of people and services available to you can benefit both your business and personal goals. You can offer each other services, provide referrals, and act as support figures to each other’s businesses.

There is nothing more valuable than someone who truly supports your vision, and those people are seriously difficult to come by. Stay in contact with your networks by following up with contacts via email or use video conferencing to have a sort-of in-person meeting.

With a larger network at your disposal, you can better navigate any obstacles you may overcome. For instance, if you’re not great with finances, but you have a financial advisor in your network, you don’t have to risk paying someone you don’t know for a service. (You can compare financial advisors in Texas on

The Take-Away

Making the switch from freelancer to business owner isn’t difficult, but it can be challenging without the right information at your disposal. Remember to start small, and always be sure that you’re in compliance when filing documents or taxes. The quickest way to inflict financial ruin on your new business is to forget about or ignore the IRS. Keep things legal, stay motivated, and expand your network to ensure your success as a small business owner.

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