How to Legally Start a Freelance Business

Did you know that over 59 million Americans have started to work for themselves thanks to the growing gig economy? What might have seemed like a far-off dream in the past is now an achievable reality.

If you are wondering how to legally start a freelance business, keep reading to find out all you need to know.

Why Become a Freelancer?

The obvious reason to become a freelancer is to work for yourself doing something you love. But there are many other reasons to become a freelancer.

More companies are turning to freelancers to fill a need for qualified talent. Small businesses all the way up to giant corporations are making it a regular habit to find web developers, copywriters, photographers, consultants, and more to complete tasks for them.

It is a win-win situation. Freelancers get to enjoy a steady workflow and ample opportunities. Companies get access to high-quality work without dealing with employee taxes, insurance, and other things associated with having employees.

Freelancing Is Still Hard Work

You will have to put in some effort upfront when it comes to legally starting a freelance business and finding your own work. And after you get going you will have to manage all aspects of your business.

You will need to find a balance between tackling day-to-day operations, completing the freelance work you are getting paid for, and making sure you are abiding by any local, state, or federal laws.

One way to make this easier on yourself is to hire a freelancer to help you out. You can use other people’s talents to take care of tasks like graphic design or social media management.

How to Legally Start a Freelance Business

You will need to organize your business according to the services you provide. One of the first things you need to do when you find out how to become a freelancer is decide what type of business structure to use.

Knowing this information helps you to apply for the appropriate business licenses and set yourself up as the proper type of business entity.

You can choose to have a sole proprietorship, limited liability company, or corporation. It is a great idea to get some legal advice before making any decisions, as each structure will have significant implications.
For example, a sole proprietor shares assets and debts with their company. This means you are legally liable for anything that may occur as a result of your business.

An LLC provides some asset protection, as your assets are separate from the business. So if you default on a loan or get sued your assets can’t be touched.

Register With the IRS

After you get your business license you will need to get an employer identification number from the IRS. This is what you will use to pay income taxes.

To get this you will need a social security number.

Get a State Business License

Once you have your EIN you can apply for your state business license.

You will define your business entity name, address, and pay registration fees. You can use the IRS portal to do all of this at once.

Do a search before filing to make sure no businesses with your name already exist.

Your state might have additional laws and regulations for setting up a business. Check your state website for any other specific information.

Start Your Own Freelance Business

It may seem a bit daunting, but getting started is the hardest part. Once you find out how to legally start a freelance business you can use your skills to create the life you dream of.

Make sure you check our blog for other helpful legal articles along the way.