20 Steps
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How to Work for Yourself
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If you've been laid off into the dismal job market, working for yourself may be
the best path out of the unemployment line. But the idea of self-employment
can also be daunting if you're used to a corporate job. Where will you find
health care? Can you deduct home office expenses on your taxes? How much
should you charge for your work? We break it down here with 20 steps to get
you from unemployed to self-employed, with links to in-depth articles on each
step.

Step 1: Vet Your Idea
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You may be able to do the same thing you did in your old job on a freelance
basis—Web designers or accountants, for example, can shift from working for
a single employer to serving many clients. But some professionals will need to
find new ways to market their job skills in the open market. Make sure you offer
something clients need.

Step 2: Get Motivated
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For those who have recently suffered the trauma of losing a job, the biggest
challenge of self-employment can be getting motivated to work without the
structure of a regular workplace. Build routines into your day to keep yourself
on track, meet others for coffee to stave off isolation, and start thinking of
yourself as a business owner, not an employee.

Step 3: Prepare a Business Plan
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Even if you dont need a formal business plan with benchmarks for growth, you
do need to know how much cash you have to bring in to cover expenses. Write
this down and be realistic about what you need to earn to make self-
employment sustainable.

Step 4: Create a Workspace
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Whether its a corner of your studio apartment, a basement office, or a local
coffee shop, find a place where you can work effectively. Consider attending
co-working events to meet other independent workers.

Step 5: Choose a Legal Structure
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Many freelancers work as sole proprietors, a default that saves you from
having to form a separate entity. But those who need to limit their personal
liability may want to form limited liability companies or S-corporations.

Step 6: Pick a Name
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Not every freelance business needs a name distinct from its owner. But
choosing a name can help you define your business and let others know that
you're serious about it.

Step 7: Get Health Insurance
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The insurance system isn't friendly to independent workers, but there are
options to get covered. If you cant get insurance through a spouses plan,
consider freelancers insurance, COBRA, or seeing if local business groups
offer plans for sole proprietors. Even if you buy a high-deductible "catastrophic"
health plan, you can avoid having a gap in coverage that could haunt you if
insurers later deny coverage for a pre-existing condition.

Step 8: Set Prices
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Determine what value your services will bring to clients, and set your rates accordingly.

Step 9: Get Online
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Most freelancers will want some kind of Web presence, even if its just a professional profile
on LinkedIn. Make sure people looking for you can reach you.

Step 10: Get Business Cards
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Yes, you need them, and not the leftover ones from your old job. Invest in
professionally printed business cards that show you're serious about your
business, or get a creative design if it suits your business.

Step 11: Build Your Network
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Without the resources of a company behind you, your freelance success will
hinge on the strength of your network. The connections that will help you thrive
as a freelancer may be different than those you needed corporate life. Meeting
with contacts informally will also keep you sane and break the monotony of
working alone.

Step 12: Choose a Credit Card and Bank
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Separate your business finances from your personal finances with dedicated
credit-card and bank accounts that you use for work alone. This will help you
keep track of business expenses you want to write off.

Step 13: Secure Financing
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Many freelancers will be able to bootstrap without outside funding. But if you
need to invest in equipment or other necessary expenses, you can look for
loans or credit lines from banks, microlenders, peer-to-peer loan sites, or loans
from friends and family.

Step 14: Sell Your Service
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Whether or not you were in sales before, you are now. Expect to spend as
much time selling your services as you do actually practicing them, especially
early on.

Step 15: Get Paid
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Make invoices, bill your clients promptly, and be diligent about collecting
payments. Be prepared to follow up on invoices to get paid, and factor the time
you spend tracking down payments into your pricing.

Step 16: Track Your Finances
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Consult an accountant and set up an system to track your revenue and
expenses. You can find free or cheap software online.

Step 17: Pay Taxes
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Prepare to make estimated tax payments to the IRS four times a year, and set
the money aside in a separate account. Remember that you have to pay the
employer's contribution to Social Security as well. Talk to an accountant about
what , like the deduction for a home office.

Step 18: Build Your Brand
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Understand what distinguishes your work, and create a brand that
communicates that to others. As a freelancer, everything you do reflects on
your personal brand.

Step 19: Use Outsourcing Sites
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List your services on freelance marketplaces like Elance, Guru.com, and
GetAFreelancer.com so clients looking for an extra set of hands can find you.

Step 20: Look Ahead
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Whether you want to parlay freelance work into a full-time job, expand your
venture and hire employees, or just sustain your self-employed lifestyle, know
where your business is going and make a plan to get it there.

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