What Nobody Tells You About Freelancing – A Guide for New Contractors

While rewarding, the jump to self-employment can be hard. Let us make it easier for you with 10 important considerations in our freelancing startup guide.

Striking out on your own is becoming an increasingly popular career choice in the UK. According to the Office for National Statistics (ONS), the number of self-employed people has risen from 3.3 million in 2001 to 4.8 million in 2017, which comprises 15.1% of the total labour force. Clearly, freelancers are on the rise.

While the freedom and flexibility offered by the freelancing lifestyle sounds idyllic, the transition from a full-time job, a recently-finished higher study course or even a spell of unemployment can be a difficult one. With that in mind, this handy freelancing startup guide aims to point you in the right direction and ensure you don’t overlook any of the least glamorous but most crucial aspects of the business when it comes to setting up your own.

A freelancer checklist

With so many plates to keep spinning, it can be difficult to remember everything that must be undertaken in order to make a successful fist of this freelance malarkey. To simplify matters, the checklist below should keep you on the right track for taking your first steps into a life of self-employment and ensure you don’t veer off course.

Identify your market…

Knowing your intended audience is paramount for success in any business venture, but it can even more important when operating alone. With less time and resources to devote to both your marketing efforts and your client portfolio, you’ll need to ensure you’re targeting a market that will welcome and value your services.

…and market your identity!

Having pinpointed your audience, you’ll need to make them aware of your presence. Online is everything in today’s marketing terms, so a user-friendly, informative and engaging website is a must, while an active social media presence can also go a long way to raising brand awareness and spreading the word about your new venture. A portfolio of your work is also an effective way of demonstrating your abilities to those interested in your services.

Use freelance websites

With the rise in freelance culture, there have sprung up a number of sites dedicated to uniting buyers and sellers online. The competition may be fierce here, but they can be an excellent place to start your search and access a whole new database of prospective leads, rather than waiting for them to come to you.

Set your rates carefully

When starting out on the freelance scene, it can be difficult to know exactly how much to charge customers for your work. Will you operate on a per-project basis or set an hourly or daily rate? Get a good idea of what the current marketplace climate looks like by checking out your competitors’ rates, then set yours accordingly. Remember, undercutting with cheaper prices might be tempting, but could leave you overworked and out of pocket in the long run.

Personalise everything

With freelancers interacting with so many potential clients on a near-daily basis, it can be tempting to create templates and use the same pitch for multiple leads, time and time again. While it might be acceptable to replicate certain messages for like-minded targets, you should still take the time to personalise every email you send to show the recipient that you are serious about working with them and willing to devote the time to securing their custom.

Accrue customers and encourage referrals

Once you’ve landed your first few customers and completed a job or two, don’t rest on those laurels. Ask your customers to give you a review which you can use as valuable marketing material, while encouraging them to refer you to their colleagues or acquaintances can be a superb way of driving business and increasing outreach. If you perform every job with the same, care attention and ability you’re capable of, your client list will swell in no time.

Sole trader or limited company?

While securing income is one of the most crucial aspects of starting out as a freelancer, looking after your outgoings is equally important – especially in relation to your tax obligations. When registering with HMRC, you’ll need to decide whether you want to become a sole trader or set up a limited company. The former might be less stressful and involve reduced paperwork, but the latter offers impressive financial benefits and greater protection.

The umbrella alternative

A third alternative to the two options listed above could be to contract the services of an umbrella company. These professional firms essentially “hire” you as an employee, issuing you with a wage, offering you statutory benefits not normally available to freelancers (such as holiday pay, sick pay and maternity or paternity leave) and handling all of the difficult administration, in exchange for a weekly or monthly fee for their services.

Budget sensibly

Regardless of whether you opt to work as a sole trader, set up a limited company or go with an umbrella company, you’ll need to flex your budgeting muscles. Freelancers are far more in charge of their own finances than employees of other companies, meaning you’ll need to set aside funds for stock and equipment, premises on which you’ll work, your tax obligations, your personal pension and any other costs which might arise. An umbrella company can take the strain off some of these duties, but a prudent approach will always serve you well.

Insure yourself

One other financial overhead which is often overlooked by freelancers new to the scene is insurance. As well as protecting your assets, it’s quite probable that there are certain other forms of insurance demanded by your job, depending on the industry in which you operate. Professional indemnity and public liability are just two such policies which you may be required to take out, so make sure you cover yourself in the face of any eventuality.

Ready to compare umbrellas?

Our freelancing startup guide should help with most of the essentials in your journey to self-employment. For everything else, you can rely on an umbrella company. With Umbrella Supermarket, you can compare leading umbrella companies in minutes and get quotes tailored to your monthly income. Give it a try today to find the best deal for you.

Would you like more information on What Nobody Tells You About Freelancing – A Guide for New Contractors?

Explore More Resources

using an umbrella company

Beginner’s Guide to Using an Umbrella Company

If you are considering contracting through an umbrella company you will naturally have questions and queries over how they work.

After all, making the move to umbrella can be a big step for contractors. To help, in this guide Umbrella Supermarket explains how to get started with an umbrella company and share our top tips for using one in 2021.


PAYE and Umbrella

Guide to PAYE vs. Umbrella

PAYE or umbrella is a question asked by every contractor. Which one you opt for will have a big impact on your contracting career and lifestyle. So, it's important to make the right decision for you.

To help makes things a little bit easier, Umbrella Supermarket has put together this guide on PAYE or umbrella, outlining the key differences between each, to help you make the best and most informed decision for you.

Holiday Pay for Umbrella Contractors

Complete Guide to Holiday Pay for Umbrella Contractors

One of the many benefits to working through an umbrella company is that you will receive holiday pay as well as a range of other statutory benefits including sick pay, maternity and paternity pay.

To find out more about umbrella company holiday pay, and how to calculate how much you will be entitled to, Umbrella Supermarket has put together this handy guide.

umbrella company

When Shouldn’t You Use an Umbrella Company?

Contractors must make several decisions throughout their contracting careers. One big decision contractors have to make is how they will operate.

One way that contractors can work is through an umbrella company.

Umbrella companies have become an increasingly popular way to contract in the past few years, offering many benefits to the contractor. But, how do you know whether this option is right for you?

To help every contractor make the right decision for them, in this guide, Umbrella Supermarket explains when not to use an umbrella company.


The truth about HMRC approved Umbrella Companies

There are tons of benefits to using an umbrella company, which is why they have become such a popular option for contractors in recent years.

After all, an umbrella company takes away the stress and hassle of operating through a limited company whilst offering contractors a range of advantages, such as statutory rights, paying them a salary, deducting correct tax levels and National Insurance, and taking care of tasks like expense processing and invoicing.

However, as more and more contractors opt to use the services of an umbrella company, more providers have started to claim that they are HMRC approved.

To bust the myths around HMRC approved umbrella companies and get straight to the facts, in today's guide Umbrella Supermarket look at whether HMRC approved umbrella companies really exist, so you know exactly where you stand.

umbrella company costs

How Much are Umbrella Company Costs?

If you're considering making the leap to contracting, you will understandably want to know how much you will have to pay in umbrella company costs. After all, this amount comes directly out of the contractor’s pocket, so it’s important to be clued up on how much you should expect to pay.

To help contractors, in this guide Umbrella Supermarket answer the all-important question of how umbrella companies cost in 2021.


Choose Between PAYE or Umbrella

How to Choose Between PAYE or Umbrella

Every contractor faces the decision between PAYE or umbrella, but how do you know which is the best option for you?

After all, PAYE and umbrella both have key differences, meaning contractors should do their research to find the best path for them.

Thankfully, Umbrella Supermarket is here to help. In this guide, we take a look at PAYE vs. umbrella, explaining what you should know before making the all-important decision.

date rates vs hourly rates

Should contractors choose hourly or daily rates?

There are many decisions a contractor must make in their career. One important one is whether to charge daily rates or hourly rates.

Each option has its own pros and cons and will have a different impact on contractors.

Therefore, it’s important that every contractor does their research to find out which option is best for them.

In this guide, Umbrella Supermarket looks at hourly rate vs daily rate and the benefits and drawbacks of each, to help every contractor find the best route forward for them.


public sector private sector contractors

How to choose between public sector vs. private sector for contractors

Every contractor must make the decision about whether to work in the public sector vs private sector.

Operating in the public or private sector can have a big impact on the contractor’s career, including on what types of contracts they will work on, who they will work with to whether they will fall under IR35.

This is especially true since changes to IR35 legislation were rolled out in April this year which have had a significant impact on private sector contractors.

If you are debating between contracting in the public sector vs private sector, Umbrella Supermarket are here to help. In this guide, we outline the key differences between the public and private sectors and what effects this will have on contractors.

contractor options

Complete Guide to Contractor Options

Contracting has become an increasingly popular way of working in recent years. If you have decided that the time is right to begin your contracting career, one of the first questions you will ask yourself is how you will operate.

How they operate is one of the main decisions contractors must take which will have a big impact on your day-to-day contracting life.

After all, there are a number of ways you can work, including through an umbrella company or by being self-employed.

In this guide we look at umbrella company contracting vs self-employed contracting and the main advantages and disadvantages of each, to help you make the right decision.


Statutory payments

Statutory payments for contractors explained

Contractors can choose to work on a self-employed basis through their own limited company, or through an umbrella company as an employee of the provider.

Thousands of contractors choose the umbrella route. After all, there is a range of benefits to operating under an umbrella company, including receiving statutory rights.

If you are considering becoming an umbrella contractor in 2021 and want to know more about statutory payments for umbrella contractors, Umbrella Supermarket has put together this handy guide outlining everything there is to know.

comparing umbrella companies

What To Look Out For When Comparing Umbrella Companies

Working through an umbrella company has become an increasingly popular option for contractors in the UK.

An umbrella company makes contracting easy and hassle-free for contractors, saving them headaches on everything from tax, payroll, insurance to dreaded IR35.

However, with are so many umbrella companies out there, choosing the perfect one for you is no easy task.

To help, Umbrella Supermarket have put together this handy on what to consider when comparing umbrella companies, so you can find the best one in 2021.