Thinking about going freelance? Maybe you’ve got visions of financial freedom, creative freedom, logical freedom, or something else dancing in your head. Or maybe you like the idea of freelancing in theory but you’re stuck on that whole “starting a business” thing.

Becoming a freelancer is starting a business, but it doesn’t necessarily mean you’re bound by all the typical rules that come with being a “small business owner.” Do you need to rent space? Probably not. Do you need to raise funding? Probably not. Do you have to quit your job and put in 100 hours a week for two years to get it off the ground? Definitely not. (Unless you’re doing something wrong….)

The truth is, there’s surprisingly little required to start your freelance business. The bare-bones minimum boils down to:

• The hardware and software to do the job
• A way to talk to clients (for example, email)
• A website and/or online portfolio
• A place to work

That’s a drastic over-simplification, but essentially that’s the must-have list. It takes a little bit of coordination to start a legit freelance design business, but there’s not nearly as much to it as you might think.

First, the basics

What I call the “tangibles” — the physical (and sometimes digital) “stuff” you need to start a viable, professional business — amount to everything you need to execute the job, look professional while doing it, and not get into trouble with the government (which is unlikely, but the more of this you do, the better a position you’ll be in, should anything go completely awry).

These are the very-basics you’ll need if you want a chance at success:

• A computer that works well enough to keep you from going crazy.
• The software you need to do the job — especially any illustration/photo editing software, and probably a subscription to your photo stock service(s) of choice.
• A website (which is what you do for a living, after all) with a portfolio that shows your depth and breadth of skills.
• A place to do your work — whether it’s a home office, a favorite coffee shop, or your couch, know where you plan to get the work done.
• A way to manage your clients and projects (at its most basic, this might look like a spreadsheet, a to-do list, and calendar reminders).
• A way to interact with your clients — frequently this boils down to email, Skype, and maybe a phone number.

Then, the need-to-haves if you really want to do it right

There are some business documents and related visual elements you’d be smart to have in place, including:

• Stationery and other marketing materials, including business cards and letterhead (even if it’s a template in a word processor that you print as needed).
• At least one contract template that you can then adjust for each client.
• Distinctive branding, including a logo, appearing on your site(s) and marketing materials.

There are some financial structures to consider, too:

Contracts 101

Contracts really are the key to setting yourself — and your clients — up for success. Working through the contract-writing process gives both parties the chance to set their expectations a...

• Invoicing system, whether it’s as basic as a spreadsheet and an invoice template you send to each client (a system I used for the first 4 years of freelancing), or as slick as a subscription-based invoicing service like FreshBooks or Intuit.
• A separate checking account and credit card to make and receive payments (not necessarily labeled “business accounts” — just separate from your personal accounts).
• A mechanism for setting aside a percentage of your income (usually 30% is a safe number) to pay your quarterly income taxes.
• Your getting-started budget and your target income level (CNN Money says you need to make your salary plus 33% to maintain your current standard of living).
• Your bottom-out timeline (if you don’t make a certain amount of income within a specific time frame, you will readjust your full-time freelance timeline or go back into the workplace).
• A rate sheet listing all the services you’ll offer and how they’re priced.

A little more about that rate sheet: this is a private document you’ll have on hand to refer to when you’re responding to inquiries. On my rate sheet, I list three rates with each service — my “friend” rate, my base/minimum rate, and my “stretch” rate that I quote as my official rate, but really I’m willing to go lower to land a gig. I keep a hard copy of mine taped to the wall next to my computer so I can refer to it effortlessly while speaking with a client.

Photo credit to Markus Spiske.

Taking it a step further (and REALLY covering your behind)

If you really want to “do this right” and/or make sure every base is covered before striking out on your own, these are the things you’ll want to consider having in place:

• A written business plan — a great asset for differentiating your freelance work as “work” and not “hobby,” in the unlikely event that the IRS comes calling.
• A structured marketing plan, showing your daily, weekly, monthly, and quarterly tasks and marketing goals for building and sustaining your client base (aka sales cycle).
• An EIN, which is free and simple to obtain and can replace your social security number on all those W9s you fill out.
• A PO Box to receive mail and list as your business address instead of your home address, which can provide privacy and lend credibility.
• Register your new business with your county and/or state, depending on your local laws.

As your business grows, you’ll find that your needs change. Hiring an account, setting up an LLC, having an attorney on file, obtaining project management software, establishing a retirement account, and other small business structures will essentially make themselves known when it’s time to move in that direction, but the vast majority of freelancers don’t need these things when they’re just starting out. (That said, it never hurts to have conversations with lawyers, accountants, and financial advisors.)

What’s the biggest hurdle you’ve faced when first starting to think about freelancing?