Starting Your Own Design Practice: Balancing Creative Freedom with Business Foundations

Launching your own design practice—and embracing the creative freedom that comes with it—is exhilarating. But let’s be honest: the business side can quickly become overwhelming. Between preparing client proposals and delivering exceptional work, who has time to navigate S-Corps, quarterly taxes, or business banking?

During a recent Freelance Office Hours session with Marissa Achanzar and the team at Collective, we unpacked the essentials every freelance designer should know. Whether you’re a UX designer going solo, a design leader building an agency, or a product designer ready to formalize your side hustle, here’s what stood out.

Start Simple, Scale Smart: Choosing Your Business Structure

The good news: you don’t need to overcomplicate things on day one.

If you’re just starting out, a sole proprietorship is perfectly sufficient. It’s the default structure for most freelancers, requires minimal paperwork, and allows you to focus on what truly matters—building your client base and refining your craft.

As your business grows, particularly once you’re earning around $60K+ annually, it’s worth exploring an LLC or S-Corp election. The potential tax savings at that level can be significant—often translating into thousands of dollars back in your pocket. However, the added complexity (payroll setup, extra filings, and accounting costs) rarely makes sense before you reach that threshold.

Think of it like your design process: start with the MVP, then iterate based on real data.

The Tax Reality Check Every Designer Needs

Let’s address the elephant in the room: self-employment tax.

When you work for yourself, you’re responsible for both the employer and employee portions of Social Security and Medicare taxes—a combined 15.3%, in addition to your regular income tax.

The practical move? Set aside 25–30% of every payment for taxes. Yes, it may sting initially, but it’s far better than scrambling when quarterly payments come due—or facing a large bill at year-end.

Open a separate savings account specifically for tax funds. Each time a client pays you, immediately transfer your tax percentage. Treat that money as if it was never yours—because technically, it isn’t.

The One Practice That Will Save Your Sanity

Here’s the simplest, most impactful advice from the session: separate your business and personal finances from day one.

Open a dedicated business checking account and use it exclusively for:

• Client payments and deposits

• Business expenses (software, equipment, professional development)

• Contractor or employee payments (if applicable)

This small step pays off in three key ways:

• Legal protection: Separation strengthens liability protection if you form an LLC.

• Professional credibility: Business accounts signal legitimacy to clients and partners.

• Financial clarity: You’ll actually understand your business’s profitability, not just your personal cash flow.

Think of it as creating a design system for your finances—a bit of structure upfront prevents chaos later.

You’re Already Ahead of the Game

One of the most encouraging takeaways from Marissa’s session was this: simply being curious about these topics means you’re already on the right track. No question is too small when it comes to protecting and sustaining your creative business.

Whether you’re a content designer launching a studio, a design researcher building a consultancy, or a freelancer ready to formalize your practice, remember—every successful design leader started exactly where you are now.

Ready to Dive Deeper?

If you missed the session, Collective’s Self-Employment Primer is an excellent starting point. The guide walks through everything from business structure to tax deductions—written specifically for creative professionals making the leap to self-employment.

Disclaimer: This content is for general informational purposes only and should not be construed as legal, tax, or financial advice. Each designer’s situation is unique; consult with a qualified attorney or tax professional for guidance tailored to your circumstances.