Starting a Freelance Agency – Complete Guide
Do you have a decent client base as a freelancer? Do you have a sufficient workload to keep you busy all year?
Then, the next best career move is to start delegating your workload. In short, it is time to start a freelance agency and build your dream team.
However, starting a freelance creative company is not an easy process. It takes time, dedication, and lots of sweat to make room for your agency in the market.
Freelancing is not a hobby or part-time job sector anymore. Instead, it is a well-established industry with a CAGR of 15.3% during 2019-2025.
But this doesn’t mean you cannot scale up and start your freelance agency. It is just that you need a proper plan and strategy to enter the market.
This guide will walk you through a step-by-step process to start your new freelance journey and set up your agency. So, let’s get started.
Things to Consider Before Setting Up an Agency
Before getting started with this guide, I will suggest you consider a few basic things, such as:
Do you have sufficient funds to pay your freelancers? Do you have funds to support your agency when you don’t get regular work?
Starting an agency is a big financial burden. You need some seed funding to get your business on the road.
There might come a situation when a client delays your payment, or you don’t have sufficient cash to support routine expenses. But, you still have to pay for the team to keep them working for you.
In that case, you need some financial backup to keep your agency floating. Therefore, before starting your starting agency, sort out your financial situation.
You already have confidence in your craft. But, you need confidence in your management and leadership skills to start an agency.
You need to step into the role of a leader. You have to take responsibility for your team’s work and give them equal opportunities to grow.
You are responsible for setting up a smooth communication flow between your team and clients.
Besides this, you must ensure that all your team members are on the same page.
So, ask yourself – do you have the confidence to lead a team and work on your craft at the same time? Can you delegate, manage and monitor your teammates’ work?
Being a freelancer, your mindset is different from being a business owner. Freelancers don’t have to answer anybody.
They can work whenever they want and at whatever rate they want. But, freelance agency owners must consider their team before making any decision.
They must remember that their actions and decisions will impact their entire team.
Therefore, agency owners must make bold and risky decisions to grow their businesses.
As Seth Godin said, “you’re either an entrepreneur or a freelancer. Which one are you?”
So, you have to enter into the mindset of an entrepreneur before starting your agency business.
How to Start Your Freelance Agency? Step-by-step Guide
Moving from freelancer to entrepreneur is not easy. It is a new area where you are not thinking about yourself.
You’re now a leader responsible for your team‘s actions and paychecks. Naturally, you need to create a proper checklist to start a freelance agency.
I have mentioned all the important steps to help you start a freelance business from scratch. So, follow these steps to dot.
Step 1. Decide your services
First, you have to decide what services you will offer to your agency clients.
The best strategy here is to offer the same services as you were offering as a freelancer. That’s because you are a master of your skill and already have a market base in your industry.
For example, your agency can provide copywriting services if you are a freelance copywriter.
However, you can narrow down your services to particular areas to establish your market.
For instance, you can provide copywriting services to B2B brands. This way, you can focus on a particular type of client base.
Also, you can better train your employees when you provide only selective services.
I suggest starting with a couple of services in the beginning. Then, once you get the hang of all the agency things, you can add up more services to your list.
Step 2. Define your legal status
If you plan to start a full-fledged agency, you better define your legal status.
For taxation and legal purposes, it is essential to set up a company under local and national laws. You should first check your local company law before giving a shape to your freelance agency.
In most cases, freelancers create limited liability companies.
Limited liability companies have a separate identity from their owners. This helps to protect your personal assets and liabilities.
There are separate rules in every state or nation to set up a limited ability company. However, the basic process to set up a limited liability organization is:
- From the Secretary of State’s website or office, get a copy of LLC articles of organization forms.
- Choose a name for your agency based on your state laws.
- Fill out your LLC form. You can take help if you don’t know how to fill out this form.
- Based on your state or local laws, you have to publish a notice in the newspaper stating that you are incorporating a new LLC.
- You have to submit your LLC form to the Secretary of State.
- Draft an operating agreement spelling out financial and management responsibilities for all your LLC members.
Besides this, you have to draft contracts and proposals for your individual clients and employees.
So, it is a good idea to hire a professional business legal consultant while setting up your agency. Since you already have so much on your plate, hiring a professional can reduce some of your workloads.
Step 3. Decide your business structure
After starting all the legal work, you have to decide the structure of your business organization.
In a traditional work setup, companies only have one option – set up a physical office in a particular location.
But, with all the digital tools, you now have the option to set up a remote freelance agency.
This means you can hire talent from anywhere around the globe and work with clients across borders.
The best thing is that you don’t have to pay office rent or set up basic office infrastructure to run your agency.
You can collaborate with freelancers from anywhere around the world and set up a remote office on the internet.
However, if you want to establish personal connections with your employees and clients, you can also build a hybrid agency.
In this setup, you can hire freelancers and on-site employees to give remote as well as physical access to your clients.
So, today you have several options to structure your company. Therefore, I suggest you take your time and select the best-suiting model for your company.
Step 4. Hire the best talent
People that work in your agency are the main reason behind your success and failure.
If your employees lack talent and passion, it is impossible for you to provide high-quality services to your clients.
Therefore, you should focus on hiring the best possible talent that you can to give a big push to your agency.
Having good people in the starting face is very important. You need self-competent and good people by your side to give an excellent start to your company.
Contrary to expert opinions, I will recommend you do not just hire experienced people in your agency.
You should also hire freshers and people coming from different cultures and environments. This way, you can provide a better creative spin to your clients.
You can offer something that no other agency is offering in your industry. Having a diverse talent base will give a competitive edge to your company. And you can come up with something unique and creative.
Plus, you can reduce your hiring cost as freshers’ salary is less than experienced employees.
Step 5. Gather your tools
Want to run a successful freelance agency? Then, automation is a must for you.
You cannot manage several tasks, team members, and clients without proper project management software.
Besides this, you need software for generating invoices and receiving payments from clients. You also need software to pay your freelancers on time.
If you pay your freelancers based on hours, you also need time tracking and project management software to generate invoices.
Now, no need to feel stressed about it. You don’t need to get different software to manage your freelance agency. With just one tool, you can easily manage your agency work.
Yes, Kosmo is the tool that can help you run your entire agency from a dashboard.
It is a freelance project management software. So, it is designed considering all the requirements of freelancers and creators.
The software has all the features to manage your projects, clients, and team members, such as:
- Generate invoices
- Set income goals
- Receive payments
- Time tracking
- Client management
- Project management, etc.
And the best part is that it is a free tool. If you only have two clients, you can use this software for free.
However, the paid version is also not too expensive. It costs $9 per month and $90 per year to manage unlimited clients with Kosmo.
Step 6. Go through tax rules
Once you settle your legal agency, you are no longer an individual taxpayer. You are a business identity, and you have to pay tax under the company name.
Therefore, if you don’t want to get in trouble with Uncle Sam, you should go through freelance agency taxation rules and regulations prevailing in your state or County.
Also, note down all the important tax dates and documents you need to run your agency.
If you are not good at taxes, it is better to hire a professional accountant. Today, you can find many great freelance accountants who can manage your agency account at affordable rates.
Step 7. Build your digital brand
The final step to starting a freelance agency is building your digital brand.
To attract more clients, you need to create a solid digital foundation for your business.
Especially if you have remote work set up, you need a good digital brand to invite freelancers and clients to work for/with you.
So, the first thing you need is a business website. It is the digital address of your business where clients can search for your services.
The website also works as a portfolio holder. You can upload your previous projects and assignments on your website to show your potential clients.
Moreover, you can publish your previous clients’ testimonials, reviews, and case studies to build your brand authority.
Also, we all know blogging is important to keep search engines active and rank your website at the top.
When you are building your digital business presence, don’t forget to set up a social media profile.
Social media marketing is the best place to promote your business and attract new clients. You can make people aware of your services with a regular social media presence.
So, depending upon your business sector, you should target the right social media platforms to create your business profiles.
Let’s Launch Your Freelance Agency Now!
There you go, people! You are now all ready to set up your freelance agency.
Just follow this step-by-step guide, and you can start your new agency in no time.
However, one thing that you should always remember while starting an agency is to think and behave like an entrepreneur.
You are no longer a freelancer. You are a leader and project manager. So, show confidence and get into the right headspace.
That’s it for now! And best of luck with your new venture.
Get Organized & Win More Clients
Kosmo has everything you need to run your freelancing business.