Guides · 7 min read · updated November 4, 2026

Going freelance: setting up, day rate, contracts and money admin

A plain checklist for the first month: registering, pricing a day, agreeing terms in writing and keeping records.

Key points

Work out your day rate from the days you can actually bill, not from 260 weekdays.
Put every job in writing before you start: scope, price, revisions, deposit, payment date, cancellation.
Register with your tax office early and keep a separate bank account from day one.
Tax rules differ by country. The UK examples here come from GOV.UK and need translating if you live elsewhere.

Set your day rate from real numbers

Most beginners divide a salary by 260 and quote that. It is too low, because you cannot bill every weekday. You also do admin, pitching, learning and chasing payments, and nobody pays you for those hours.

Use this formula: (pay you want + business costs + tax set-aside) ÷ days you can bill = day rate.

Here is a worked illustration. These figures are invented to show the method; replace them with yours, in your own currency.

Wanted income before tax: 48,000
Software, equipment, insurance, accounting: 4,000
Total to earn: 52,000
Weekdays in a year: 260. Subtract 10 public holidays, 25 days off and 5 sick days. That leaves 220.
If 60% of those days are billed (the rest is pitching and admin): 132 billable days.
52,000 ÷ 132 is about 394 per day.

Now sanity check it against the market. Ask two or three peers what they charge for similar work, look at any published rate guides for your discipline, and check whether the number is in a believable range. If it is higher than the market for your experience, you can still use it as your target and adjust by project: charge more for rush jobs, large companies and full usage rights, and less for small non-profits you want to support.

Quote projects as a fixed fee when the scope is clear. Convert it back to days to check it: "This will take about 6 days, so 6 x 394 = 2,364." If you finish in 4, the client still got the outcome they paid for.

Agree terms in writing

A one-page agreement protects both sides. It does not need to read like a law firm wrote it. The Graphic Artists Guild's letter of agreement is a good model. It covers fees, usage rights, revisions, cancellation and payment terms before work starts. Its sample wording includes a cancellation fee of 50% of the final fee if the job is stopped before completion, and 100% if the art is finished.

Include at least:

What you are making and what you are not (for example, "three logo directions, two rounds of revisions on one direction").
Price and deposit. A common arrangement is a deposit before you start. Ask for it.
Payment date. "Payment is due within 14 days of invoice."
Late payment. Say what happens (see the invoicing guide).
Rights. Who owns the work, and when ownership passes: usually when the final invoice is paid.
Cancellation and extra work. "Work outside this scope is billed at 394 per day."

In some places the law backs you up. In New York State, for instance, the Freelance Isn't Free Act requires a written contract for freelance work of $800 or more, and payment within 30 days of completion if the contract does not say otherwise. Check whether your own country or region has something similar.

Register and keep the money organised

In the UK, you generally register as a sole trader through Self Assessment if your self-employed income goes over £1,000 in a tax year (6 April to 5 April). Check the dates on GOV.UK because deadlines are specific. VAT registration becomes compulsory when your taxable turnover goes over £90,000, according to GOV.UK, though you can register earlier.

If you are elsewhere, search for "register as freelancer" plus your country on the official government site. Many countries have a simplified status for small self-employed workers.

Habits that save you in tax season, wherever you live:

Open a separate bank account for the business, even if it is the same bank.
Move a fixed share of every payment (many people use 25 to 30%, but ask an accountant for your case) into a savings pot for tax.
Save every invoice and receipt in a folder, named by date.
Record income and expenses once a week. A spreadsheet is enough.
Get insurance quotes if your clients ask for professional indemnity.

Working with international clients

If you are paid in a currency that is not yours, decide in advance who pays the conversion and transfer fees, and say so in the contract. Quote in the client's currency if you can, then check what you will actually receive after conversion. For tax purposes, note the exchange rate on the day you are paid.

Do this today

Calculate your day rate using the formula above. Take 30 minutes and put the numbers in a spreadsheet.
Download the Graphic Artists Guild letter of agreement, or write your own one-pager covering scope, price, deposit, due date, revisions and cancellation.
Open a separate bank account, or at least a separate saving pot for tax.
Find the official page for registering as self-employed in your country and note the deadline in your calendar.
Create a folder called "Invoices and receipts" with a sub-folder for the current month.

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