February 1, 2008
Many times, would be freelancers read about all the startup stuff they need to do before they market and service customers. Business licenses, corporate structures, business cards, etc…
But, focusing on the administrative portion will often stall your ultimate goal—profit. And you’ll be needlessly spending money that can used in other, more effective, ways like marketing.
The following is a list of my seven things not to do before starting your freelance business.
Don’t setup a corporation
Incorporating your business won’t do you much good. In fact, it will cause you headaches by requiring you to file more tax forms and keep more records. Most small businesses are sole proprietorships and they’re happily earning money.
Don’t get a separate business checking account
I know, this is heresy. The IRS says you should have a separate bank account. Your accountant says you should have a separate account (another don’t do). Most business bank accounts charge excessive fees and don’t offer any more benefits than your personal account such as a higher interest rate.
Your clients won’t see you as being unprofessional because they have to write you a check for your personal account. And most clients will be more than willing to pay you electronically (which they should be able to).
Don’t pay an accountant
Most accountants charge $100+ per hour for advice that you just don’t need—a high price to pay for a bookkeeper.
You can get your taxes done at a local tax service for one third the cost of an accountant. If you absolutely must have someone take care of your books, hire a freelance bookkeeper at $25 per hour or less.
Don’t pay an attorney
Attorneys fall under the same category as accountants. You just don’t need them. You’ll spend a lot of money for advice that doesn’t apply at all.
It’s nice to have a relationship with an attorney just in case. But, you can learn most of what you need to know with books or online resources.
Don’t apply for a business license
I’m not advocating that you skirt necessary licenses and permits. If you don’t have a business name, and you plan on using your own name (which I recommend), then most localitites don’t require you to have a business license. Again, just another needless expense of time and money.
Once you start generating revenue, then go out and get yourself a license if it makes you feel better.
Don’t pay to get a logo designed
Whether you’re planning to be a freelance graphic designer or not, don’t spend more than a few hours coming up with a logo. Even if you don’t have design skills, you can buy a cheap software program or, better yet, just use your own name.
This is the step that tripped me up most often. I would spend hundreds of hours coming up with different logos. Just use your own name, find a good font and go with it.
Don’t write a business plan
Having a plan is not the same as having a business plan. A business plan will take a lot of time to write and most of it will change the minute you open for business.
The point is to not spend time on activities that really don’t make a difference in your bottom line.
Of course, if you’re like me, you may like to participate in these efforts because you’re afraid to market yourself and you’re making excuses.
If you’re going to spend time doing something, learn how to sell yourself. Because selling is the only thing you need to be doing.