Company Formation

Freelance: what does it mean?

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Finding jobs can be really stressful these days. Not that there are no jobs but most of them will not pay for your qualifications. Even those that have jobs are leaving them to seek greener pastures in the freelancing world. What then is this freelancing and how does it work? Can anybody freelance? Are there skills required to be a freelancer? Is it legal to be a freelancer in the UK? How do freelancers pay taxes? All these and more are the questions that will be summarily answered in this article. We hope that you get enlightened enough to jump on the freelancing moving train.

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Answer adeosun
Oct 31, 22 · min read
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Who is a freelancer? Definition

A freelancer is an individual who uses his skill to provide goods and services for clients with no direct supervision from anybody. The reason for stating here that there is no supervision per se is that only the clients get to verify whether they get their money’s worth or not. There is no boss to answer to.

Even if you get jobs from third-party platforms, they only play the role of intermediary and do not influence the terms of the jobs you take. Those platforms can mediate if there is a conflict too. The bottom line is that a freelancer is more or less a sole trader or a self-employed individual who can choose to do remote or onsite job type.

It is important to note here that a freelancer can choose to freelance for other companies on contract basis. So, instead of working for just one company, he can work for as many as he can, performing similar roles in all of them. 

When the work becomes overwhelming, he can choose to employ other people to work with him and thus birth a small business or company.

Freelancing is a good way to establish a business on your own without necessary having a starting capital. When you start that way, it is easy to upscale to the level of a limited liability company.

How does the freelancing business work?

Do you know that you can freelance your skills as a handyman? Freelancing does not have to be online or done on the internet. In fact, freelancing probably started with handy jobs with farmers and cowboys who move from one farm settlement and ranches to the other to look for jobs.

These days though, most freelancing is done online. While the jobs themselves may not involve online activities, the agreements and payments are brokered online; usually through third-party platforms like Fiverr, Upwork, etc. These are some examples but there are many others. Sometimes, the jobs come by referrals too.

Virtually every skill type can be freelanced. Doctors have been reported to freelance as consultants online during surgery. Lawyers provide law advice to people and get paid. Even accountants do account services for small businesses and firms online.

What this implies is that you only need to find what you are good at and find a niche to fit into.

Being bilingual is an advantage when you teach languages to people online too. Musicians help singers and choirs score songs into musical notes. The possibilities are endless.

Why a virtual office address is a good idea for a freelancer?

Once you have decided to be a freelancer, one good way to distinguish yourself is by doing everything that gives you a professional outlook. From obtaining a dedicated telephone address to an email domain and office address, many things give professionalism to your business.

Obtaining a virtual address, for example in the heart of London, will give you the following benefits

  • The prestige of being located in a prime area gives legitimacy to your business.
  • An opportunity to be listed among businesses in a prime area when people search for your business type online.
  • You have privacy since you get to keep your home address away from the public, even if you work from home.
  • You only receive mail that is relevant since the virtual office address provider will handle all your mail.
  • The virtual office address provider can also provide you with a dedicated telephone number, a secretary to handle all your business calls, a dedicated email domain, and sometimes make available meeting rooms to accommodate your occasional onsite meetings.
  • Ultimately, you can even be able to get some clients that will not ordinarily transact business with you if you were using a residential address instead.

What are the benefits of freelancing?

Freelancing has a lot of benefits that are making it more and more attractive to people.

  1. It affords you the chance to work at any time of the day.
  2. You can decide whether you want to work alone or build a team.
  3. All the profits from the business are yours after tax.
  4. You get to control when you work and when you take a holiday or break.
  5. As a freelancer, your sole responsibility is to your client and nobody else. You don’t have to answer to any boss.
  6. You can have more time to spend on personal things.
  7. You can choose where and how you work without a censor. You can choose to work out of a coffee shop or in the comfort of your home.

How do freelancers pay taxes to the UK government?

First, you may be wondering if you need to pay taxes as a freelancer. The answer is an affirmative yes. Since freelancers are legally considered sole traders in the UK, they are required to pay tax as soon as they start to earn up to £1000 per year.

The platform to pay tax for freelancers is through registering for Self-Assessment with the HMRC and registration is free. If you employ other people to work with you, you have to register for the PAYE scheme to pay tax on each of them. Once you start earning up to £85,000 annually, your business is required to register for VAT with HMRC, although you can voluntarily register even if you don’t earn up to that yet.

What are the disadvantages of freelancing?

One major disadvantage of freelancing is that it is a form of business that does not outlast the founder. There is no assurance of longevity of the business if there has been no testament to inheritance by a family member, relative, or friend.

Due to the rising competition for jobs, there is constant pressure to distinguish yourself in your trade as well as outcompete others for jobs. As such, cash flow may be very inconsistent and not enough to sustain your lifestyle.

Building a consistent client list can be very slow and frustrating too for freelancers.


If you are not sure you can do what it takes to be successful as a freelancer, it may be advisable to start it as a side hustle with a salary or wage-paying job to go with it. This way, if there is a slow period for freelance jobs, you still have hope of getting money somehow.

However, to be a good freelancer, all you need to do is make yourself unique in the services you provide and people will seek you out.

How to become a freelancer?

Here are the important steps to know when starting a freelance business:
HowTo step image

1. Identify a skill you can sell.

You may think your skill is obscure but if you look closely, there is already a niche for it. Even if you do not presently have one, you can take online courses to develop a skill.

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