Every freelancer starts from 0 clients. Every business starts from $0 revenue. From 0 to something is probably the biggest step a starting freelancer could take. And everyone needs to take it to get the business going. I made this page about the freelancing FAQ, i.e. the most common freelancing questions and answers, to clarify the biggest uncertainties of new freelancers.
This FAQ is divided into two sections. The general freelancing section covers:
- What is freelancing?
- What things are required for freelancing?
- Do freelancers need to register a company?
- Can you freelance as a beginner? Can you freelance with no experience?
- Is freelancing easy for students?
- How to find my first client?
- How do freelancers get paid?
- What is the biggest challenge faced by freelancers?
- Do freelancers pay taxes?
Upwork-specific questions include:
- What is Upwork?
- Is Upwork a good platform?
- How to create an Upwork account?
- How to write an Upwork profile?
- How to write an Upwork cover letter? How to write Upwork proposals?
- How does fixed-price contract work on Upwork?
- How do hourly contracts work on Upwork?
- When will I get paid on Upwork?
- Are all Upwork jobs legit?
- Does Upwork have any payment protection?
Freelancing FAQ: Common questions
Freelancing is the hottest thing ever since COVID-19 hit us. Here is what you must know before you jump in! Here is a list of freelancer questions and answers, not a boring freelance guide book but a practical guide to getting started in a brief FAQ format.
To me, freelancing is a lifestyle.
1. What is freelancing?
Freelancing means that you work as an independent business rather than as an employee of a company owned by someone else. Freelancers are self-employed one-person businesses that are often hired for short-term work for bigger companies or agencies. Some freelancers work for individuals as tutors, teachers, or coaches of some sort.
Freelancers are typically paid project by project and do not enjoy the benefits of normal employees. Freelancers have to manage their own insurances, retirement plans, vacations, and taxes on top of the day-to-day business operation.
Independent contractors are similar to freelancers but typically work on long-term contracts rather than short-term gigs.
2. What things are required for freelancing?
The core of freelancing is your own skill that creates great results for your clients. Without skills, freelancing is an inevitable race to the bottom because the only selling point would be a lower price than what other freelancers without specific skills can offer. This leads to working for peanuts or even for free.
The other important factor is time management, a highly efficient personal work process, and project management skills. Without the ability to promise realistic deadlines for clients and to deliver as promised, freelancing can become a nightmare and a bad career choice.
Next comes the ability to tolerate uncertainty. Particularly when starting up, before having a reputation that does your marketing and a clear sales process for landing projects, jobs tend to come randomly and income is unstable.
On top of the above, there are a number of practical things needed, such as a website for showcasing your skills and prior work (e.g. portfolio), a professional profile preferably on multiple sites to create a good online presence and reputation, and a way to calculate your earnings and costs (accounting) so that you can file your taxes right.
(As a personal note, additionally, I need coconuts. I couldn’t possibly freelance without my coconuts.)
3. Do freelancers need to register a company?
Whether or not freelancers are required to register a company depends on the legislation of each country and perhaps the residence status of the person. However, it is recommended to register a company to keep the business finances and private finances apart. For this reason, many freelancers set up a simple Sole Proprietorship or some other lightweight company form.
A practical reason for separating personal and business finances is accounting. When all business expenses and income are visible in one bank statement, accounting is much easier and faster than when trying to find and categorize all business-related transactions from the statements of your personal bank account.
Some freelancers set up a Limited Liability Company (LLC) or a similar structure, or even a Private Limited company (LTD) to separate the legal responsibilities of the individual (the names of the company types differ between countries, but the structures are nearly identical). For most freelancers, a simple company form is adequate even if it does not provide any separation of the legal responsibilities. Few freelancers end up in lawsuits with their clients especially if the two are located in different countries. The cost of filing a lawsuit in another country is likely to be higher than the benefits of winning it for the client.
It is also possible to register and manage companies in other countries than where you reside, which can be a big advantage for digital nomads who prefer to change their physical location frequently. Services such as FirstBase and StartGlobal allow you to set up a business in the United States as a foreigner without the need of being physically in the country.
4. Can you freelance as a beginner? Can you freelance with no experience?
Yes, of course! However, building your skillset alongside your business is extremely challenging. But it can be done! The fastest way to get started is to work with a senior freelancer as an apprentice of sorts. Also lightweight mentoring can help to avoid the typical pitfalls at the beginning which allows you to reach notable income sooner than if going completely solo.
Beginners with no experience often face issues in finding suitable clients, particularly if the work is mainly done online. Many people exploit the need of young freelancers to have their first notable projects finished and offer very low pay or ask them to work for free to prove themselves.
A practical way to start as a freelancer with no experience is to specify a very niche service that is not highly competed and has a very short learning curve (some months only). Getting the starting point right with minimal expertise allows you to grow the skillset over the years so that you can reach higher earnings eventually.
5. Is freelancing easy for students?
It is easy to start freelancing as a student but it is difficult to get notable income from it. This is because every client will know that the freelancer is not yet a professional and will not trust significant tasks to be executed by students. Therefore, almost all student freelancers get simple lowly paid assignments that could be handed to just about anyone else.
The world is loaded with such small gigs that are easy to find on freelance sites like Fiverr, Freelancer, Guru, or Upwork. However, there are millions of other students on those sites which makes getting the first couple of gigs on a freelance platform a Mission Impossible for most. It takes a lot of effort to learn business basics and professional communication, and master a marketable skill that convinces the first clients.
6. How to find my first client?
To get your first clients, you have to make at least a simple business plan first: who are you after as clients, what can you offer to them, and what is a suitable price for your services? Once this is clear, you should decide whether or not you should start locally in your hometown or go online and face the global competition. Going online or offline defines what approach you must take.
Starting offline, most freelancers ask for their ex-employers, friends, and contacts for small parts of their work to be their first gigs to build up an initial portfolio to be shown to truly new clients. This approach can lead to getting a couple of projects quite easily as you have built trust with the people you already know from your prior career. Working with local clients can be easier than working in the global markets in many ways, but it is also bound to the local rates that may become a bottleneck for growth sooner or later depending on the freelancer’s level of expertise.
Starting online, the key is to define a very specific niche offering that has very little competition so that the number of attempts (proposals, gig description iterations, etc.) before getting the first paid project remains reasonable. Many freelancers, even experienced ones, tire themselves because of not finding a specific enough niche which leads to constant competition with too many other freelancers with similar skillsets.
7. How do freelancers get paid?
Freelancers get paid according to their expertise. The higher the expertise and its impact on the client’s business, the better the pay. Depending on the contract, freelancers usually get paid by the hour or by a fixed price agreed with the client. Successful freelancers charge a 25-50% advance fee before the work starts to guarantee commitment from the client. Some charge the whole work upfront. Starting freelancers who lack reputation and social proof may not be able to ask for advance payments.
All freelance work should be done under a signed contract that defines the duties and deliverables of the freelancer as well as the obligations of the client to make payments (the amount, the payment schedule, and the payment method). Without having a signed contract, the freelancer risks not getting paid. In some cases, a purchase order may suffice for making a written agreement on the business terms.
Those working on freelance sites have to charge according to the contract types available on each site. For instance, on Fiverr, clients purchase gigs that are paid to the platform’s escrow account and released to the freelancer upon delivery. Upwork offers fixed-price contracts as well as hourly-paid projects that are tracked with a desktop app in addition to the Fiverr-like Project Catalog.
Regarding payment methods, most freelancers use global payment platforms such as Paypal, Payoneer, Stripe, etc. together with online banking services.
8. What is the biggest challenge faced by freelancers?
Most freelancers, particularly the ones starting up, experience the search for good clients being the biggest challenge. Many spend even more than half of their time on the client hunt which means they have quite a big problem in their marketing, branding, and sales.
To make sure you don’t spend all of your time searching for clients, you will need to build your reputation fast. Those working in the IRL local circles tend to invest their time in networking with people in the target industry, giving talks at events, etc. which makes their potential clients see them regularly which helps in creating perceived expertise. Online freelancers tend to spend their efforts on creating stunning profiles and creating a strong online presence. In both cases, every freelancer should have at least some level of personal branding so that the client hunt doesn’t take most of the work hours.
9. Do freelancers pay taxes?
Yes, freelancers need to pay taxes just like everyone else. You need to declare your income that is subject to the tax in your country of residence. It is a good idea to estimate your taxes and put aside a suitable sum every month to avoid surprises when the tax filing deadline comes. Those with more formal company structures, e.g. LLC and LTD owners, also need to take care of all taxes applicable to the company type.
In countries where tax filing is complicated, it is a good idea to hire a local tax consultant at least for the first year to get everything going on the right track from the start. Incorrect tax filing or delays in doing it usually result in fines.
Upwork freelancer FAQ: Get started on the global freelance site
Upwork is probably the most obvious place for new freelancers to consider when starting up. These are the things you should know before you sign up!
Dr. Mike’s Job Feed page on Upwork.
10. What is Upwork?
Upwork is one of the oldest freelancing websites started as Elance in 1998 and oDesk in 2003. The two merged into Elance-oDesk in 2013 and the newly-merged platform was rebranded to become the modern-da Upwork in 2015.
Like all freelance sites, the core of Upwork is its ability to connect freelancers and clients and charge a platform fee for all projects done via the site. The fee is separated into freelancer-side fees and client-side fees.
Freelancers create profiles and send proposals to jobs posted by the clients. Clients can also invite freelancers to each job. Alternatively, clients can buy packaged gigs described by freelancers just like on Fiverr.
11. Is Upwork a good platform?
Upwork can be a very good platform for those freelancers who know how to use it efficiently for building their professional reputations. The best freelancers on Upwork are in high demand, charge hundreds of dollars per hour, and get to pick their clients after getting numerous invitations.
Those who do not invest their time in learning how the platform works, and how to attract clients with minimal effort, lose all that time without gaining anything. About half of the new freelancers who join Upwork do not make a single dollar because they cannot get through the global competition. There are millions of freelancers on Upwork.
For clients, Upwork can be a very good platform as it offers freelancers of all skill levels to choose from, and in general, the terms of the platform favor those who pay, i.e. the clients.
12. How to create an Upwork account?
Account creation is not complicated on Upwork. The sign-up process is guided all the way up to getting the profile 100% completed. What is important to note before signing up is that Upwork does not accept every new freelancer. If the field you are targeting has very few opportunities available, your application may be denied. It is therefore mandatory to use the job search function to verify that there are jobs available that you could try to send proposals to before you sign up as a freelancer.
It is possible to update, change, and retarget the profile that has been denied, but the process may take more time in that case.
13. How to write an Upwork profile?
Upwork profiles need to have an attractive title and the first couple of sentences of the profile text that make clients click them open on the list of proposals. Keywords need to match well with the job posts you send proposals to.
The profile text should not be full of cliché expressions everyone else uses too to make a unique impression in the client’s mind. It should tell a story about who you are and how your skills and knowledge help your clients, i.e. contain a clearly expressed value proposition.
It is possible to rewrite your profile to appear as a perfect match for the first job you send your proposal to which is one of the most effective hacks when you are starting up on Upwork.
14. How to write an Upwork cover letter? How to write Upwork proposals?
Proposal-writing is one of the most important skills you must acquire to have a chance of landing jobs on Upwork. The proposals and profiles go hand in hand and must give a consistent message. It is crucial to learn how to read between the lines and understand the true need of each client in every job post separately. Therefore, the use of cover letter templates is not a winning approach.
Additionally, you must be aware of how the first lines you write appear to the client and how good or bad an impression you manage to make with them. If the first impression is not great, some other freelancer is likely to get the job.
In the case of larger projects worth tens of thousands, it is worth writing very specific proposals before accepting the offer the client sends you to keep expectations clear in the client’s mind and limitations to the scope listed in a document.
The proposals that don’t get accepted include some of these classic mistakes:
- An obvious mismatch with the job
- There are signs that the freelancer hasn’t actually read the job post (e.g. not addressing the client correctly, using jargon, not proposing the right kind of solution)
- Listing all possible results the freelancer has ever made
- Listing all possible skills the freelancer has
- Highlighting the number of years of experience only
- Having a mismatch between the length of the proposal and the length of the job description
- Having an obvious mismatch in the content
- Begging or other unprofessional behavior
15. How does fixed-price contract work on Upwork?
After your proposal has been accepted and you have been interviewed by the client, you need to clarify the exact scope of the work, budget, and revision policy. You must update your proposal to have the milestones and their respective budgets reflect what was discussed.
Based on the revised proposal, the client then sends you an offer. Clients do this by making a payment to Upwork’s escrow account for the first milestone or the whole project all at once.
The offer from the client shows clearly on your My Jobs page. Once you have accepted the offer and you have a contract on the My Jobs page in the Active Contracts list, you can start working on the project. At this moment, the client has paid Upwork and is waiting to release the payment to you once the work has been completed.
Once you have done the work and submitted it by pressing the Submit Work button, you will receive the money to your Upwork account after which there is a short security period before you can withdraw the money to your bank, Payoneer, or PayPal account. This is called Fixed-Price Protection.
It is important to use the Submit Work function correctly because that is the only way the protection applies. Some freelancers send their work as attachment files to the normal messages. In those cases, should the client vanish, the money in the escrow would not be transferred to the freelancer. With Fixed-Price Protection and the correct use of the Submit Work function, the money is released from the escrow to the freelancer after 14 days from the submission even if the client does not respond.
Never start a project without an active contract! Do not start a project with a smaller amount being paid to the escrow than what you agreed with the client before the offer was sent! Some clients use this as a trick to get work done cheaply. You would only get the money paid to the escrow, not the full amount agreed upon.
Once the work is finished, the project should be closed by the client, after which both can leave feedback for each other in a double-blind manner. The project can be closed by the freelancer too, but the review would not appear in the freelancer profile.
In a summary, fixed-price projects on Upwork follow this process:
- The client posts a job
- The freelancer sends the proposal to the job post
- The client shortlists candidates and interviews them
- The freelancer revises the proposal based on the discussion with the client
- The client pays for the first milestone (or the whole work) to the escrow
- The freelancer does the work and submits it using the Submit Work button
- The client inspects the results (and possibly asks for revisions which causes the freelancer to resubmit the work)
- The client accepts the milestone and releases the money from the escrow
- Steps 5-8 are repeated until there are no more milestones
- The client closes the project
- The client and the freelancer leave feedback for each other
- The freelancer waits until the funds are available to be withdrawn to the bank/PayPayl/Payoneer account
16. How do hourly contracts work on Upwork?
Hourly contracts are simple for both clients and freelancers. Once the proposal has been accepted and the freelancer is called for an interview, the client can send an hourly-paid offer for the project which has a cap on hours per week that the freelancer can bill.
The freelancers can work and log the hours manually, but the only way to qualify for Payment Protection is to use the Upwork Desktop App to track the work hours. As the app tracks mouse and keyboard activity levels and takes screenshots after random periods of time, only work that requires a keyboard and mouse can be tracked with it. For instance, drawing by hand without a computer cannot be tracked with the desktop app.
In a summary, hourly-paid projects on Upwork follow this process:
- The client posts a job
- The freelancer sends the proposal to the job post
- The client shortlists candidates and interviews them
- (Optionally, the freelancer can revise the hourly rate and the weekly limit of hours after discussing it with the client)
- When the freelancer starts working, the project should be selected and time tracking started using the Upwork Desktop App
- When the freelancer stops working, the time tracking should be stopped using the Upwork Desktop App
- Steps 5-6 are repeated until all the work is completed and the freelancer waits 1½ weeks until the funds for each week are available to be withdrawn to the bank/PayPayl/Payoneer account
- The client closes the project
- The client and the freelancer leave feedback for each other
17. When will I get paid on Upwork?
In the case of fixed-price projects, you can access the funds 5 days after the client has accepted the milestone (or after 14 of the submission of the work in case the client is unresponsive) and withdraw them to your bank/Paypal/Payoneer account. You can see the progress of the funds being transferred to you on the Reports – Overview page:
- Work in progress: Shows the amount funded by the client currently in the escrow
- In review: The amount that was submitted for the client to review
- Pending: The amount pending on the 5-day security period to end
- Available: The amount that you can withdraw immediately
In the case of hourly-paid projects, the payment schedule defines when you can access the funds paid by the client:
- “Week 1 — You log time using the Upwork desktop app and Work Diary”
- “Week 2 — Your clients receive their invoices on Monday and are given until Friday to review the work”
- “Week 3 — Your earnings become available on the following Wednesday”
You can access the hourly-paid funds 1½ weeks after the end of the week on Sunday UTC and withdraw them to your bank/Paypal/Payoneer account.
Both types of payments appear on the Reports – Overview page according to the current status.
18. Are all Upwork jobs legit?
No. Some jobs are scams that are easy to detect and some are very elaborate scams. Most jobs, though, are fortunately legitimate jobs posted by ordinary people such as small business owners or corporate managers who only want to get their projects done by reputed professionals.
Some jobs are posted by people who do not want to spend a single extra dollar. These are the type of people we call Shoppers who are extremely hard to please and tend to put freelancers at risk of getting a bad review or a horrible-looking track record that only shows low-paid jobs.
19. Does Upwork have any payment protection?
Technically, yes, but practically, it depends. Payment Protection only works when you do everything according to the recommended process.
If you have a fixed-price contract and you send results as attachment files in a normal message, and the client chooses to vanish, you will not get paid. If you have an hourly contract and you don’t track your work hours with the Upwork Desktop App, there is no guarantee that you get paid at the end of the week.
Additionally, clients can request refunds or launch a dispute if the work is not done by the freelancer. Clients should not ask for refunds if they “don’t like the work” and there is evidence in the system that the freelancer has completed the work requested.