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Freelance Product Designer Startup Costs

Postby MattyK » February 2nd, 2018, 2:12 pm


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Product designer here in the States. Planning to start a freelance business. CAD modeling and photo rendering mainly, working out of my home. Just me for now, but open to taking on employees or contractors in a couple years or so. If/when I get more work than I can handle.

Forecasted the first year's expenses:

- Trademark the business name $800-$1500
- Accountant $1500
- Legal (contracts, etc) $1500
- Any business licenses (not sure if needed or not) ~$200?
- Creating LLC ~$200+
- Website $1500
- Logo & Business cards $300-$400
- CRM system $0-$1200/yr
- Computer hardware & software ~$3000 (this is a given)
- plus marketing costs - $ unknown
- plus anything else not identified - $ unknown

I was surprised to see the total is around $10,000 USD, and could be even more than that.
Is that reasonable - what you'd expect to pay to become a freelancer?

Appreciate anyone's experience and feedback with this. Thanks

Re: Freelance Product Designer Startup Costs

Postby iab » February 2nd, 2018, 2:24 pm


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- Trademark the business name - Skip
- Accountant - Skip
- Legal (contracts, etc) - Skip
- Any business licenses (not sure if needed or not) -Skip
- Creating LLC - How much risk will you have?
- Website - SquareSpace - $150
- Logo & Business cards - $50
- CRM system - Skip
- Computer hardware & software ~$3000 (this is a given)


Total = $3200

You are overthinking it.

Re: Freelance Product Designer Startup Costs

Postby jpickard » February 2nd, 2018, 3:04 pm


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If you are freelancing in the US in a legal way you will have to start a business. That means getting a EIN and whatever tax # the state/city you live in requires.
Any legit company you are freelancing for will report that they are paying you and will be expected to pay taxs on that money.
You will be forced to become a sole proprietor or LLC. Might as well set it up now.

Getting an account can help you figure out how to keep track of income/expenses and what can be written off. Many work by the hour so the better you are at keeping track of info the cheaper it will be for you. Maybe $500.

Re: Freelance Product Designer Startup Costs

Postby AVClub » February 2nd, 2018, 3:12 pm


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I think what iab said makes sense. Might be worth creating an LLC just because, but may not be necessary. I really agree with using something like Squarespace and often question if there's really any point for most to create a 100% new website. Unless your website is the product, I just don't see the point.

iab wrote:- Trademark the business name - Skip
- Accountant - Skip
- Legal (contracts, etc) - Skip
- Any business licenses (not sure if needed or not) -Skip
- Creating LLC - How much risk will you have?
- Website - SquareSpace - $150
- Logo & Business cards - $50
- CRM system - Skip
- Computer hardware & software ~$3000 (this is a given)


Total = $3200

You are overthinking it.

Re: Freelance Product Designer Startup Costs

Postby Cyberdemon » February 2nd, 2018, 3:21 pm

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Agreed, you do not need any of that.

You will have travel expenses to try and gather sales, whatever your basic needs are for computers and materials (markers, etc) and that should be about it.

Keep track of all your expenses yourself and you don't need an accountant you can file all of these through Turbo tax.

For contracts, there is a lot of good advice already out there on the internet for boiler plate contracts. You can add additional addendum's in as you see fit. Unless you are signing massive contracts (which you won't be as a one man shop) you don't need counsel.

Re: Freelance Product Designer Startup Costs

Postby Cyberdemon » February 2nd, 2018, 3:37 pm

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jpickard wrote:If you are freelancing in the US in a legal way you will have to start a business. That means getting a EIN and whatever tax # the state/city you live in requires.
Any legit company you are freelancing for will report that they are paying you and will be expected to pay taxs on that money.
You will be forced to become a sole proprietor or LLC. Might as well set it up now.

Getting an account can help you figure out how to keep track of income/expenses and what can be written off. Many work by the hour so the better you are at keeping track of info the cheaper it will be for you. Maybe $500.


That is false info - if you are a citizen your SSN is your tax ID and anyone paying you can send you a 1099 for you to file with your personal taxes. You only need an EIN if you are going to be hiring employees.

You do not need to do anything to be a sole proprietor otherwise. The main reason for setting up an LLC is liabilities. In the event you were to be personally sued for something (unlikely in the designer space) then your LLC can hold the assets vs you being at risk yourself.

In a decade of freelancing here in NY I only pay $250-300 for my personal, wifes, and freelance taxes.

Re: Freelance Product Designer Startup Costs

Postby MattyK » February 2nd, 2018, 4:07 pm


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iab wrote:- Trademark the business name - Skip
- Accountant - Skip
- Legal (contracts, etc) - Skip
- Any business licenses (not sure if needed or not) -Skip
- Creating LLC - How much risk will you have?
- Website - SquareSpace - $150
- Logo & Business cards - $50
- CRM system - Skip
- Computer hardware & software ~$3000 (this is a given)


Total = $3200

You are overthinking it.



Thansk iab and others. Appreciate your minimalist approach. Especially since I'm starting completely from scratch - no revenue and no leads yet. So important to keep costs low the first year. When I have more cash flow, can contemplate outsourcing some things.

I will do an LLC, just for that protection. Cost should be minimal.

I will use the boiler plates to get create my contracts - good idea. Though I may run them by an attorney to make sure my work is legit, and I haven't left anything out.

Trademark - why do you guys suggest not trademarking the business name? I intend to build a following of sorts, and would like that protected. Perhaps I can trademark it myself to save some cash.

I should note - I also intend to develop my own products, blog, etc under this brand.

Re: Freelance Product Designer Startup Costs

Postby MattyK » February 2nd, 2018, 4:43 pm


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It's such a challenge this day and age to find a business name that's short, relevant, catchy, and isn't taken already. And has things like domain name, twitter handles, etc available. When I do find it I'd like to know it's protected - that someone else can't start using it, or register themselves and black mail me somehow.

(I let one domain name lapse once, and someone else grabbed it and are charging $1800 for it now...)

But that's just me. I'm overly cautious. Curious what you all think.

Thanks

Re: Freelance Product Designer Startup Costs

Postby Cyberdemon » February 2nd, 2018, 5:35 pm

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Honestly as a one man freelancer I'm going to call you "MattyK" not "AwesomeDesignCo". I always find the thinly veiled illusion of individuals posing as corporations a bit dishonest. "AwesomeDesignCo is an award winning agency with expertise in every field imaginable". I see it a lot and I'm not sure they ever think they are fooling anyone.

Trademark protection is generally only as good as the legal team you have backing it up. Again, as a freelancer you'll most likely be applying for gigs as an individual so it's not a huge deal. Register "MattyK.design" as a domain name and go from there. Once you have enough customers you need to worry about your marketing presence you'll be years down the road.

Re: Freelance Product Designer Startup Costs

Postby MilkyWilky » February 3rd, 2018, 3:46 pm


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Cyberdemon wrote:Honestly as a one man freelancer I'm going to call you "MattyK" not "AwesomeDesignCo". I always find the thinly veiled illusion of individuals posing as corporations a bit dishonest. "AwesomeDesignCo is an award winning agency with expertise in every field imaginable". I see it a lot and I'm not sure they ever think they are fooling anyone.

Trademark protection is generally only as good as the legal team you have backing it up. Again, as a freelancer you'll most likely be applying for gigs as an individual so it's not a huge deal. Register "MattyK.design" as a domain name and go from there. Once you have enough customers you need to worry about your marketing presence you'll be years down the road.


And here I was checking the availability on 'Multiple People LLC'

You could always look into freelancing accounting software like Freshbooks, and take that to an accountant around tax time.
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@milkywilky

Re: Freelance Product Designer Startup Costs

Postby yo » February 3rd, 2018, 7:50 pm

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I think it depends what your goals are.

I freelanced for years, as a little side thing, for fun, and to keep the portfolio diverse. Almost all of my work was word of mouth. I did this with an EIN. It doesn't cost much in money or effort and it prevents your SSN from being all over the place. (of course now I have LifeLock so it is kind of a moot point).

Once I left the security of a full time gig, I set up my studio with the intention to grow, so this is what I did:

- Trademark the business name $800-$1500

my personal name, this was with intention to form a studio around my expertise/experience

- Accountant $1500

I did hire a very good accountant that costs about this much. He is more of a complete financial services provider, so I do taxes through him, he helped me get all the insurance I need (life, personal disability, umbrella coverage, this stuff is important and expensive, but if your right arm in an accident, you want to have disability coverage). He helped me get 401k's and SEP IRAs in place. He also can run payrolls for me, and when he does my taxes he runs them multiple different ways and is able to do things that TurboTax can't. One of my best friends is a designer at TurboTax. The accountants basically use a professional version of TurboTax that allows them to run things multiple ways and make exceptions with reasons. It is worth it and the he basically pays for himself.

- Legal (contracts, etc) $1500

I hired a lawyer who mainly works with athletes on contracts and endorsements to put together my standardized contracts, master services agreements, NDA's and contracts for subcontractors as well as file my LLC. Having worked at larger firms, and on the corporate side, I've seen the benefit of having contracts multiple times. If anything it just puts everything in black and white right up front. I will do this, at these times, and you will pay me that at these times. It forces some disciplined thinking up front. When people are afraid of signing contracts, that is a red flag.

- Any business licenses (not sure if needed or not) ~$200?

Had the same lawyer handled that at the same time

- Creating LLC ~$200+

Had the same lawyer handled that at the same time. This is important not only for liability, but also for taxes. By filing an LLC you can file your taxes as an S Corp, then run payroll to yourself (and once you get employees, to them too)

- Website $1500

Made mine myself. I used Everweb, because when I made it Squarespace and Wix were very new and I din't quite trust them. When I eventually get around to redoing it I'll like use Squarespace or Wix. Just hasn't been a priority as I've been booked a quarter out for the last year and most of my business comes from word of mouth.

- Logo & Business cards $300-$400

Do it yourself, print on moo.com

- CRM system $0-$1200/yr

Why?

- Computer hardware & software ~$3000 (this is a given)

This might be more, depends on your needs. I tend to really like my gear, so I spent a bit more than this.

- plus marketing costs - $ unknown

Haven't needed, but eventually I'll probably step up to something here.

- plus anything else not identified - $ unknown

There are always other costs. Traveling to tradeshows/conferences, your car, and don't forget to make a budget for your living expenses and a rainy day fund. Sometimes the hot water heater goes or something.

Re: Freelance Product Designer Startup Costs

Postby MK19 » February 4th, 2018, 6:05 am


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$3,200 for hardware AND software? What CAD packages are you using? Adobe suite is £600 a year in the UK.

Re: Freelance Product Designer Startup Costs

Postby Cyberdemon » February 5th, 2018, 9:11 am

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Software and hardware will vary wildly depending on your needs, but it's always better to start small and work your way up as the business needs it. In the US Creative cloud is the same ($600/yr), most CAD packages will set you back between $1-3k (Rhino->Creo), Keyshot or similar rendering software will probably throw you back $2k.

Then you can easily spend $10k+ on hardware if you decide you need a hardcore 8 core workstation for rendering, 4K monitor, 27" Cintiq, iPad Pro, Macbook for travel, etc. Most designers will still have a computer that got them through college.

Software in the US used to enjoy a multi-year tax depreciation write-off as well, but with the latest tax laws it may be hard to make use of that unless you're spending a lot of money.

Re: Freelance Product Designer Startup Costs

Postby rkuchinsky » February 5th, 2018, 9:56 am

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I've been through all this 11 years ago when I started my own Studio. I'd agree with most of the comments thus far.

Keep it lean to start up, and don't overthink the legal/accounting. No need trademark your business. Keeping it a sole proprietorship can be an accounting benefit depending on how much you plan to write off and/or take in. The opposite can also be true. Wouldn't hurt to get some initial accounting advice.

Accounting should be able to be handled by DIY software (I'm in Canada so not sure exact US requirements which may be more complicated).

Contracts you can get online, no need to go through a lawyer. A contract is only as good as the relationship and/or the legal to back it up, so why spend $2000 on a contract unless you plan to also spend $10000 on a lawyer if someone breaks it. Better to pick the clients wisely than rely on legal especially I would imagine in the US where everyone can sue everyone for no reason. I've never needed a lawyer to enforce a contract and I've been doing this for 11 years. Different if perhaps you are getting into an equity play or royalty situation.

Put some money towards marketing. Good (MOO is great) business cards, though physical business cards these days seem to be rare... Good print mini portfolio or leave behind/mailer. Some travel for trade shows, and/or business development. Definitely a good (squarespace highly recommended) website.

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Re: Freelance Product Designer Startup Costs

Postby MattyK » February 6th, 2018, 12:22 pm


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Cyberdemon wrote:Honestly as a one man freelancer I'm going to call you "MattyK" not "AwesomeDesignCo". I always find the thinly veiled illusion of individuals posing as corporations a bit dishonest. "AwesomeDesignCo is an award winning agency with expertise in every field imaginable". I see it a lot and I'm not sure they ever think they are fooling anyone.

Trademark protection is generally only as good as the legal team you have backing it up. Again, as a freelancer you'll most likely be applying for gigs as an individual so it's not a huge deal. Register "MattyK.design" as a domain name and go from there.


Cyberdemon wrote:Once you have enough customers you need to worry about your marketing presence you'll be years down the road.



Very good points. Thank you.

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