How to become a freelancer: The complete guide

Thinking of becoming a freelancer? You’ve come to the perfect place. This article explains all of the main steps you need to take to launch and sustain a successful freelance career.

We also explain how you can manage your well-earned revenue once you're up and running using Wise Business - the account trusted by countless freelancers and global businesses to do everything from invoicing to handling domestic and international payments across 40+ currencies.

💡 Learn more about Wise Business

What is freelancing?

Freelancing is a type of work where you offer your services to several clients as an independent contractor rather than a full-time employee. Freelancers are typically paid on a project-by-project basis, without the commitments and benefits that come with permanent employment. 

Some freelancers choose to stay in their jobs while freelancing after work hours or on weekends. Others dive into it headfirst, managing multiple contracts simultaneously and turning freelancing into a full-fledged career.

Step 1: Define your niche

Choosing the right freelancing niche is one of the biggest decisions you'll make. If you've been working for a while, it's worth reflecting on your experiences and highlighting the skills you've acquired.

Questions to ask yourself before starting freelancing:

• Do I genuinely enjoy using this skill or offering this service?
• Is there a real demand for this skill?
• Who needs this skill, and where can I find them?
• What's my level of expertise, and do I need to upskill?
• What’s the ceiling for how much I can earn for this service? 

If you're starting from scratch, don't worry. You can learn valuable skills through online courses, mentorships, or short internships.

It's also perfectly fine to start by offering a few different services and specialising later on. Freelancing is a journey, and even the most established freelancers learn and adapt as they go.

Step 2: Register as self-employed for tax purposes

Now that you’re officially working for yourself, you’ll need to register as self-employed for tax purposes¹. You must register for Self Assessment by 5th October after the tax year ends if your freelance income exceeds £1,000 in that tax year (6 April to 5 April).

You can register online using your National Insurance Number. Once you've registered, HMRC will provide you with a Unique Taxpayer Reference (UTR) to file your first self-assessment tax return⁵.

The deadline to file your return differs depending on how you submit it:

• If you're filing by post with a paper form, the deadline is 31st October after the current tax year.
• If you're filing your return online, the deadline is 31st January after the current tax year.

Whether you file your return using a paper form or online, the deadline to pay your tax bill (after filing your return) is 31st January after the current tax year ends.

Scenario: You started offering freelance financial consultancy services on a monthly retainer in June 2025. You forecast earning £1,200 in that tax year (April 6th 2025 to April 5th 2026). You want to know when to file your return and when to pay your tax.

What this scenario means: Since your income exceeds £1,000, you need to register for Self Assessment by October 2026 (since the tax year ends in April 2026). You must then file your return either by the 31st of October 2026 (if you're posting a paper form) or the 31st of January 2027 (if you're filing your return online). After that, you need to pay the tax you owe by the 31st of January 2027.

As the name suggests, Self Assessment means filing all of your freelancer earnings yourself, using receipts and bank statements for a tax year that ended, so that you end up paying an accurate amount of tax³. 

The act of registering for Self Assessment essentially tells the HMRC that you’re operating as a sole trader². You might also have to register for VAT (value added tax) as a sole trader if you exceed the VAT threshold per year, so keep that in mind.

As a first-time freelancer, you can register for Self Assessment online with your National Insurance Number either online or through the post using a form called CWF1⁴. 

HMRC will then send you a 10-digit Unique Taxpayer Reference (UTR), which you'll need to file your tax return⁵.

Important things to note:

You only need to send a tax return for the tax years in which your freelance income was over the £1,000 trading allowance.

If you have a full-time job and you’re freelancing (self-employed) at the same time, your employer will calculate and pay the tax you owe for your full-time work for you (through PAYE). However, you’ll be responsible for filing a tax return for your freelance earnings separately via a Self Assessment.

If you're unsure of how to classify your employment status, use HMRC's Check Employment Status for Tax (CEST) tool⁶. After answering a few questions, the tool will suggest your employment status.

Your CEST result isn't final as it is based on your responses and may be changed depending on the HRMC's final assessment of your employment status.

Step 3: Set your prices

Setting the right prices is essential to nurturing your freelancing gig into a thriving and profitable business. You can choose to charge per project, per hour, or on a retainer, depending on what works best for you.

Start by doing your research. Find out what other freelancers with similar skills are charging. LinkedIn and Reddit communities are fantastic for this and can help you establish a benchmark so you don't price yourself too low or too high.

Once you know the price range you’ll charge, calculate your minimum rate. A good rule of thumb for this is to estimate your basic monthly living expenses, then add a 30% buffer to cover things like taxes, software subscriptions, and your well-earned downtime. 

Divide that total by the number of hours you can realistically work each month, and voila - you’ve got your minimum hourly rate. 

For example: If your basic monthly expenses are £2,500, then multiplying by 1.3 (which is the same as adding a 30% markup) leaves you with £3,250. If you plan to work 30 hours a week (including sick days, admin, pitching, networking, etc.), then that’s 120 hours a month, so your minimum hourly rate would be 3,250 ÷ 120  = 27.08 (£27).

This might seem like a fair chunk of money, but this is your livelihood and skills we’re talking about - so don’t be afraid to charge your worth. 

Freelancing is a business after all, and you’re providing solutions to clients. Ultimately, you should price your services on the value you deliver to your client's business, not just the hours you work.

Here are a few more tips to keep in mind:

Be wary of clients offering to pay in 'exposure'. While it can be a deliberate strategy to build your initial portfolio, ensure it's a short-term plan to leverage into paying work.

Avoid extreme pricing. Setting your rates too low can signal a lack of quality and confidence, while excessively high prices can deter clients.

Manage expectations. Begin with smaller, one-off tasks to manage scope before committing to long-term retainers.

Step 4: Find clients

Finding your first client as a freelancer can seem like an insurmountable task - but once you've landed the first, you start building your portfolio and it can get easier to get additional clients moving forward.

The first client can be hard to come by if you're in certain niches. But even though profitable niches tend to attract a lot of competition, it doesn't always mean they’re oversaturated. If anything, it's a sign there’s strong demand and real earning potential within your niche. 

The key is to treat finding clients as an ongoing project. Consistently pitching and applying for work will keep your pipeline full and your marketing skills sharp.

Here are our top tips on how to get clients as a freelancer:

Ask other freelancers in your network or niche where they find clients.

Open a LinkedIn account and update your profile to clearly reflect the services you offer, your experience, and who you help. Post regularly and engage with others in your industry to boost your visibility.

Visit the LinkedIn job board and search for related freelance roles. Note that many hiring managers on LinkedIn avoid paying for job ads and post directly on their feeds - so look them up and have a look at their recent posts on their profiles.

Follow freelance newsletters that curate lists of current freelance opportunities.

Attend industry events to network with prospects and fellow freelancers. If you can't make it to an in-person event, sign up for webinars and virtual networking events.

Step 5: Finalise your work terms

Before starting work for any client, make sure you have a written contract in place that both parties are happy with. Your contract should highlight the scope of work, deliverables, project timeline, and feedback mechanisms.

Your payment terms could be 50% upfront, part payment once you complete specific tasks, or full payment at the end of the project.

Whatever your agreement, make sure you use a reputable tool like Wise Business to receive and manage your client payments seamlessly.

Step 6: Invoice clients the right way

Invoices are ultimately requests for payment - so you always want to send timely, professional invoices that simplify things for both you and the client.

That means sending an invoice that includes the client's information, a description of the project, the agreed-upon price, your payment details, and the payment terms.

The easiest way to do this is by creating your very own custom professional invoice for free using the Wise Business invoicing tool.

It only takes a few clicks, you can get paid in , and everything’s in one place, making things so much easier to manage than doing it manually using a spreadsheet.

Step 7: Manage your money

Freelance income can sometimes feel like a rollercoaster, with some months being fantastic and others being quiet. Smart money management can help you navigate the quiet months with confidence.

Here are our top tips on managing your money as a freelancer:

Separate your personal and business accounts. This will help you to maintain clear records, track profitability, and accurately calculate your taxes. Wise Business lets you do all of this and more.

Operate on 75% of your income. That means setting aside about a quarter of what you earn every year to pay for working capital and settle your tax bill at the end of the year.

Create your emergency fund. Remember how we said freelancing can become a rollercoaster? In the low-income months, it’s imperative to have enough to cover your expenses. It’s advisable to set aside a fraction of what you pay yourself as a buffer for fluctuations in cash flow cycles. Ideally, you want enough to cover your expenses for at least 4-6 months.

Invest in your expertise. Upskill to improve your earning potential and attend relevant industry conferences to aid your professional growth.

Discover why countless freelancers use Wise Business

Ready to manage your freelance earnings like a pro? A Wise Business account helps automate a large part of all things related to invoicing, payments and money management - so you can spend more of your time delivering better results for your clients. 

What's more, Wise Business can help you get paid easily from clients wherever they are. Whether your earnings are in Euros, Dollars, or Pounds, you’ll always be charged the mid-market rate and never pay any hidden fees.

From fast payments and free custom invoices to payment links, card payments and accounting software integration, Wise Business is the choice for freelancers.

Get started with Wise Business 🚀

Sources:

1. Working for yourself - GOV.UK
2. Register as a sole trader - GOV.UK 
3. Self Assessment tax returns: Overview - GOV.UK 
4. Register for self-assessment if you are self-employed - GOV.UK  
5. Find your UTR number - GOV.UK 
6. Check employment status for tax - GOV.UK

Sources last checked on September 16th, 2025

Wise is authorised by the Financial Conduct Authority under the Electronic Money Regulations 2011, Firm Reference 900507, for the issuing of electronic money.