Starting a Freelance Business While You’re Employed
In many cases, you can do freelance work while you’re employed, and it can be a good way to see if freelancing is right for you. But, it’s also important to check your employment contract, get the go-ahead from your boss, and make sure your freelancing doesn’t affect your regular work.
Giving up your day job and jumping straight into full-time freelancing can be scary. For many of us, becoming a freelancer while we still have the security of a permanent job is a much better idea. But, it’s not always that simple.
Your employer may have rules and guidelines about you doing other work, including freelancing. Before offering freelance services, you need to know if you can be a freelancer and an employee at the same time. If you can, there are several other challenges you’ll need to figure out.
We’ve got you covered. From checking your employment contract and getting permission, to keeping your manager happy and carving out time for freelancing, here’s what you need to know.
How do I know if I can freelance when I’m employed?
Read through your employment contract and understand any restrictions.
Prepare for a meeting with your boss so you can reassure them and share your reasons for doing freelance work.
Meet with your manager to get permission and discuss how you will meet your regular job commitments.
Get approval in writing for carrying out freelance work.
Make sure you continue to do excellent work as an employee.
What else do I need to know about being a freelancer and employee at the same time?
A full-time job provides several advantages for freelancing, especially not being completely reliant on freelance earnings.
You will need to manage the expectations of your freelance clients if you’re not always available.
Balancing your time and energy between a permanent job, a freelance business, personal commitments, and leisure time can be challenging.
Freelancing will affect the type and amount of taxes you pay.
We’ll cover all of these areas.
Read through your employment contract and employee handbook to see if there are any restrictions on doing work outside your regular job.
How do I check my employment contract to see if I can freelance?
Get a copy of the specific employment contract that you signed and look through the latest version of your employee handbook. Read through the entire contract and the employee handbook and look for wording that states:
Whether you can do other work outside of your job role.
The ownership of any intellectual property or creative work that you produce while you’re employed—whether during or outside work hours.
Confidentiality and non-disclosure agreements.
Non-compete and non-solicitation terms.
Whether you need to disclose any outside work to your employer.
What happens if you use company equipment or supplies to do any work outside your job responsibilities.
Let’s dig into these contractual restrictions in more detail.
Restrictions that prevent you from doing any other work apart from your specific, employed job role
Your employment contract or handbook should state any conditions you need to meet if you want to do other work—for example, only allowing you to carry out such work at specific times, in certain locations, or in fields unrelated to your current employment.
Some contracts will stop you from doing any additional work that would limit your ability to do your main job. The most strict contracts might even forbid you from doing any other work at all while you’re with your current employer.
Contracts that state creative work or other intellectual property belongs to your employer
Some contracts state that any work you do or intellectual property you produce automatically becomes the property of your employer. This may apply for the entire duration of your employment.
These clauses can be wide-ranging, even affecting work you do outside your regular, employed hours. This can also mean that you are not allowed to use any intellectual property you’ve created to benefit anyone else, including freelance clients.
Non-compete clauses stopping you from taking on work in your employer’s industry
Some companies will put non-compete clauses in employment contracts to avoid a conflict of interest. These typically mean that you cannot do any work for their competitors, or in a similar industry or sector to your employer. For example, if you’re employed as a journalist, your contract may specifically prevent you from doing other work in news media.
Non-solicitation and non-dealing clauses preventing you from working with your employer’s clients
Employers may not want you to work for their current clients, and sometimes their previous clients. This is known as “non-solicitation.”
Non-Disclosure Agreements limiting the information you can share
Non-disclosure agreements (NDA) mean that you are not allowed to share any confidential information about your work, employer, company assets, information, trade secrets, or other facets of your employment with other people. This will include other freelancers and freelance clients.
Doing freelance work during company time or using company assets
Even if it’s not explicitly stated in your contract, using company time, equipment, software, or supplies to do your freelance work is going to be against the rules. Additionally, any work that you produce using any of these assets is very likely to be designated as company property.
Requiring you to disclose any outside work to your employer
Some contracts may not prevent you from taking on additional work, so long as you let your employer know.
Employment contracts and handbooks may contain none, some, or all of these restrictions, and will use various wording to set them out. If you’re not sure about any specific wording in your contract, get in touch with your HR department to clarify what the wording means.
Check your employment contract before you start freelancing.
When should I check my employment contract for freelancing restrictions?
Read through your contract before you decide to start freelancing. If you’re already a freelancer and find out it’s not allowed, you may be forced to stop selling freelance services immediately. Alternatively, you could be in breach of your contract and be fired. In some cases, you may even be sued in addition to losing your job.
Do I need to seek permission from my boss or HR to do freelance work?
The legal requirement for you to get permission depends on the wording of your employment contract. If there are specific restrictions in your contract, then you should always get written permission to carry out freelancing work. Even if there aren’t particular restrictions, it’s always a good idea to get permission anyway—it makes sure your manager knows what’s going on, so there are no surprises.
The best way to do this is to meet with your manager to chat about your options.
Make notes and prepare for a meeting with your boss where you'll discuss freelance work.
How do I prepare for a meeting with my boss to discuss freelancing?
Before attending a meeting with your manager, you’ll need to work on your approach. Consider each of the following areas and make notes:
Copy down any wording or clauses in your contract or handbook about taking on additional work.
Decide how you want to bring each one up in the discussion, and explain how you will meet them.
Think about how you will separate freelancing from your regular role to ensure your freelance work doesn’t impact your job performance.
List your reasons for seeking out freelance work—it may be to earn some extra money, develop new skills, try out self-employment, or something else.
Figure out the type of freelancing you want to do and the broad areas you want to work in.
Look at how starting a freelance role could benefit your regular job—getting different experiences, figuring out how to run a business, expanding your expertise, etc.
What should I talk about in the meeting?
The meeting is your best chance to make a good case for taking on freelance work:
Explain to your manager your desire to start freelancing and why you want to do it.
Discuss the type of freelancing you want to do and the areas you’ll be working in.
Go through any specific clauses in your contract or handbook and check that you can start freelancing without breaching your contract.
Deal with any concerns about non-compete, non-solicitation, non-disclosure, intellectual property, and conflicts of interest.
Be prepared for your manager to say “No” to your request to freelance, particularly if doing so would breach any of your contract terms.
Communicate that your existing role is still your priority and that you will continue to perform to the same standards.
Reassure your boss that taking on freelance work will not impact your job performance.
Emphasize that all of the freelance work you do will be outside company hours, will not use company equipment, and will not be performed on company property.
Explain how freelancing will provide you with skills, expertise, and experience that will benefit your job role, the team, and the business.
Ask for formal permission to take on freelance work.
If you don’t get permission, find out if that’s a hard “No” or whether you can change anything that would allow you to do other work. If not, then you’ll need to give up on freelancing for now, or look for another job.
Get written confirmation that your employer will allow you to do freelance work.
Should I get written confirmation and permission that I can freelance while employed?
Always get written permission, specifically:
Request an email or letter from both your manager and HR that you have permission to pursue a freelance role.
Do not rely on a handshake, verbal agreement, or understanding.
If there are terms in your contract that disallow freelancing, be sure that the written approval releases you from those terms.
What are the advantages of having a permanent job while I freelance?
Although working a day job and freelancing at the same time will be tiring, it also provides some big benefits:
You will have regular money coming in from your current employment. This will reduce your financial stress and means you’re not completely reliant on unpredictable freelance earnings.
You can increase your bank balance and savings through your freelance business income.
You will understand the pressures and challenges of running your own freelance business.
You'll be improving your freelance business skills and can learn as you go.
You can start building a portfolio that will attract more freelance clients.
You can test different pricing strategies to see what your clients are willing to pay.
You can try out various freelance niches to see which one is right for you.
You will get an idea of the taxes you will need to pay as a freelancer.
If freelancing isn't for you, then you can give it up without hurting your regular career.
Freelancing may also provide you with more fulfillment and reward than your full-time work.
How can I show my employer that freelancing isn’t impacting my job performance?
It’s important to stay on top of things:
Carefully review your roles, responsibilities, objectives, and deadlines, and continue to meet them.
Make sure you can still get enough sleep alongside your freelance commitments so that you’re rested and ready for work.
Regularly discuss your performance with your manager and check they’re happy with your work.
Keep clear boundaries between your regular employment and your freelance work.
Do not carry out freelance work during company hours or while on company premises. Remember that your IT department can monitor your activities on company equipment.
Do not use any company equipment, software, supplies, or anything else to do freelance work.
Do I need to tell my freelance clients that I have a regular job?
Here’s when you might notify your freelance clients about your employment:
You may want to manage client expectations by notifying them about your availability, particularly during the hours you are employed.
Be upfront and honest about your work situation if you’re not available or their work might be delayed.
This will help to avoid client frustrations and negative word of mouth in the future.
What difficulties might I have while freelancing and doing a regular job?
Your biggest challenge will be finding enough time for both employment and freelancing:
Doing a full-time job and freelancing on the side takes a lot of energy and time.
You will need to balance your schedule so you can fit in your employment, freelancing, and existing commitments.
Your work and life balance may suffer, and you will need to reduce how much time you spend on leisure activities and seeing friends.
Working on freelance projects can be tiring and limit how much you can sleep.
As you grow your freelance business, you must manage your schedule more carefully so you can meet client commitments. This may mean you have to turn away work.
If your client list keeps increasing, you might be able to reduce your employed hours or leave your job to become a full-time freelancer.
How will freelancing while employed affect my taxes?
You will need to pay tax on your regular salary or wages and on your freelance earnings:
If you are working a regular job and making money through selling freelance services, then you will pay additional tax on your freelance income.
Your total freelance profits will be added to your salary to calculate your total amount for income tax. In the US, this will be federal and state income tax.
This may mean that some of your earnings are taxed in a higher tax band.
You will also need to pay self-employment tax on your freelance earnings.
You should pay estimated taxes throughout the year or you may face fines, penalties, and a big tax bill at the end of the year.
Speak to an accountant to understand how and when you will need to pay taxes.
When should I give up my permanent job to focus on freelancing?
As you grow your freelance business, it might be time to give up your employed job altogether:
You might want to increase your freelancing work in phases—consider reducing your hours and moving to part-time in your regular job.
Do try out freelancing for a few months and see if you enjoy it before deciding to quit your job.
Make sure you have plenty of savings before you quit and become a full-time freelancer. It’s a good idea to have six months of expenses in the bank.
Only switch to full-time freelancing when you’re confident you can earn as much as you would from your regular paycheck.
See our freelance guides on related topics
Business Requirements: Helping you get the foundations in place to run a successful venture.
I am not a qualified professional and I do not provide tax, legal, accounting, or similar advice. These guides are provided for informational purposes only. Always consult with a qualified professional on your unique circumstances. You can find more information in my disclaimer.
By Paul Maplesden