How much money do I need to start a business as a freelancer?

Written by on June 12, 2018

If you want to start a business as a freelancer, you will ask yourself a pretty basic question: How much money do I need to get started?
The answer is as basic as the question: It depends.

It depends…

  • … on what your business is about.
  • … on which equipment you need.
  • … on where you live.
  • … on the size of your business.

If you plan to start as a freelancer, you don’t have to worry about the size of your business part in the beginning. Moreover, you should define the main idea of your business and how you plan to make money.
After that, you should be able to adapt some simple questions to evaluate some numbers.

  1. What kind of company do I need?
  2. In which country do I live?
  3. Do I need machines or software to start?
  4. Do I need insurances?
  5. Do I need licenses and/or permissions?

These questions should already help you to get a first feeling in which direction it will go. I will now explain all of these questions in depth, to make it easier to handle the numbers.

1. What kind of company do I need? 
It is important to know what company model you want to start with. If you start as a freelancer, you can normally go for an individual plan. This is perfect for the beginning because you don’t need a lot of capital to start working. Due to the fact that I’m from Germany, I had to pay for my individual plan roundabout 34€ to get started. If you are not sure what fits your needs, you can google for it or ask a tax consultant (Nice to know: A lot of tax consultants order the first meeting for free).

2. In which country do I live?
This question basically relates to the first question. In some countries it is free to create a business, in some, you have to pay a good amount of money to get started. If you live in a country that makes it hard for you to start a company, you have always the possibility to start it in a different country as well (But make sure that it is reasonable).

3. Do I need machines or software to start?
It really depends on what you want to do. If you want to work as a Web Developer, you don’t need that much to start. Actually, you can get a lot of products for free. If you want to start something physical like a carpenter, you probably need machines to get started. Of course you can rent them to avoid bigger costs in the beginning, but as you grow, you should go for your own ones. Alternatives are finding investors, make connections and partnerships with other carpenters to share machines.

4. Do I need insurances?
I would always recommend an insurance, especially if you work with critical stuff. If you get sued, it can get super expensive in a short amount of time. Honestly, I have to say, that I didn’t have an insurance for covering company based topics in the beginning (And as you can see I’m still alive). The reason for that is, that I didn’t want to spend money on that in the beginning, because my earnings were too less for that. After I earned a more stable amount of money, I started to set up some insurances. To set them up, you can just go to some professionals for evaluating the necessity (Always compare to multiple professionals)

5. Do I need licenses and/or permissions? 
If you want to start as a Web Developer, there are not that many licenses you have to take care of from the beginning. But if you want to start for example a Video business and you want to make videos with drones, you probably have to buy yourself some permissions to get started. If you are not sure about that, you can ask some other professionals in this area or just google it.

Conclusion
If you want to start a business as a freelancer, you should always spend more time in research than in creating the company itself. Ask friends, other professionals, set up posts in Facebook groups or on other platforms and get in touch with as many persons as possible. The more you research the less stress you will have later.


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