So you’ve decided to take the plunge and become a freelance writer?
Good for you!
This article contains steps on how to register your freelance writing business — because you want to run it as a business. We’ll also give you a few other suggestions you might want to consider as you begin on this exciting journey.
How to register your freelance writing business
There’s a lot to think about when you’re setting up your own business, so it’s vital to get the basics right. You’ll most likely be spending a lot of time searching for websites that pay writers. And that can be great to get you started with finding clients. However, front and center should be sorting out the legalities of your business.
The legal framework varies from country to country, but there are some similarities in the process across different regions. We’ll focus on the US in this article, but much of the information will apply to you wherever you are. So while you might want to double-check the legality of digital signature use if you’re in Canada or the current rules around VAT registration in the UK, for example, you should still find this article helpful.
So let’s get started with the six steps you need to follow to get your freelance writing business registered in 2022.
Which business structure should I use?
One of the first decisions you’ll be faced with is how to structure your business legally. Your decision will depend on a number of factors including the size and complexity of your organization. Most freelancers start out as sole proprietors.
This is the simplest business structure. Legally, the sole proprietor is synonymous with the business itself. This means that all business income is treated as personal income for tax purposes, and you will be liable for all debts and losses incurred by your business.
Sole proprietors fall into one of three categories:
1. Independent contractor – This is the most appropriate category for most freelance writers, at least to begin with. An independent contractor is self-employed and takes on work for their clients on a contractual basis. This means they have some control over how they work, but their clients may put some limited demands on their time.
2. Business owner – A business owner has more flexibility than an independent contractor in that they call all the shots themselves.
3. Franchisee – This applies to anyone running a business as a franchise and benefiting from support from a central franchisor in return for royalties. (Not really applicable but good to know)
To set up as a sole proprietor, you just need to notify your state. Legally, you will be doing business under your own name, but you can choose a DBA (“Doing Business As” name) if you want to trade under a different name, in which case you’ll need to register that as well. You’ll probably find that banks will require you to have a DBA before they’ll allow you to open a business bank account. So it’s worth doing.
In any case, thinking up the perfect DBA probably appeals to your creative side, right? Have fun with it!
Similar to a sole proprietorship, except more than one individual is named as the owner of the business and all are jointly liable for the business’s debts.
Limited Liability Company (LLC)
Around 35% of all businesses in the US are registered as LLCs. The principal benefit of structuring your business like this is that the company counts as a separate legal entity from the owner. This means that you will be taxed on the profits you make, but you won’t be personally liable for the business’s debts.
Having “LLC” on your digital business card can also project a pleasantly professional impression. Although we’d never suggest you choose this structure just for that reason, of course. Nevertheless, it can be useful for businesses that are growing a little too large for one individual to bear all liability.
You’ll register your LLC in the state where you are resident. To do so, you’ll need to pay filing fees and supply an operating agreement. Once you’re up and running, you’ll be required to pay annual fees and taxes and file company reports.
S-Corporations and C-Corporations
When you’re starting out as a freelance writer, neither of these is going to be your pick. However, you never know where your freelance journey will take you.
The S-Corporation is a structure available in the US that enables pass-through taxation. It also allows you to give employees equity as shareholders. It’s a way of taking advantage of the limited liability status of a corporation without having to pay tax twice.
C-corporations function as an individual entity in law and registering one is a multiple-step process.
Which should you choose?
If you’re just dipping your toe in the freelancer pool, we recommend going for sole proprietorship as this is a fairly easy and straightforward way to get started. But if you’re looking to grow your business then an LLC will provide you with liability protection and make it easier to expand.
2. Where should I register my business?
Once you’ve decided which type of business is best you need to decide where to register it. Most people will keep it simple and register it in the state where they live and this is probably the best bet.
Other states may offer lower fees but you’ll be conducting business in your home state, even if you’re working online. You’ll need to set up a Domestic LLC in your home state and then register your out-of-state LLC as a Foreign LLC.
It may appear cheaper on paper, but you could end up paying a lot more in fees and it’ll more than likely cause you a lot of headaches to get set up.
3. Register for taxes
After choosing your business type and registering it in your chosen location you next need to register for taxes. If you’re going with sole proprietorship, you can use your social security number but, if you’ve chosen an LLC you’ll need an employer identification number (EIN). You can apply for this online through the IRS website or by mail.
You’ll also need to choose a tax year which could be a calendar or fiscal year. We recommend talking to an accountant to make sure you get this sorted correctly.
4. Make sure you have the correct permits
These could include a DBA as we’ve mentioned before, copyrights, or trademarks. Check state regulations to ensure you’re covered.
5. Open a business bank account
To keep things simpler and to separate your personal finances from those of your business it’s important to open a business account. Make sure you take your EIN, social security number, and other legal documents when you head to the bank.
6. Look into business insurance
You’re almost ready to get started with your new freelancer business. But, before you start nailing the small details like establishing your social media presence or mastering your PandaDoc signature software, consider getting some insurance.
This will give you the peace of mind that you’re covered in the event something goes wrong. There are lots of different types out there but if you only choose one general liability insurance is a good allrounder. This type of insurance covers injuries and property damage. Another good option is professional liability insurance. This will cover your legal expenses if you are sued by a client or make a mistake.
Once you’ve followed these steps your business will be up and running!
Important elements of your freelance writing business
There are plenty of resources online where you can find tips for landing clients, so here, we’ll focus on just a few other areas you might find helpful.
If you’re working as a freelancer, the intellectual property rights attached to your work will often be owned by your client as part of your contract, which should be included in the terms and conditions. But if you write and market your own material for original sale, you will own the copyright. If you write fiction, you can sometimes even trademark original characters. Spend some time familiarizing yourself with the law in this area to make sure you get your due.
When it comes time to file taxes, don’t forget that you should take allowable expenses into consideration when calculating how much you owe. What counts as an allowable expense varies depending on where you live. However, it will usually include things like office expenses, business-related food, or licensing fees.
Make sure you really are a freelancer
Sounds simple, but it’s important to get this right. If the tax authorities in your area question your freelancer status, there could be a whole world of expensive trouble ahead. Double-check the rules where you live to ensure there’s no doubt about your status.
Just do it!
It might seem like there’s a lot to do. But just remember that once you’ve gone through the process of registering as a freelancer, you’re on your way to success. Good luck!
About the author
Yauhen is the Director of Demand Generation at PandaDoc, an all-in-one document management tool for almost all types of documents. He’s been a marketer for 10+ years, and for the last five years, he’s been entirely focused on the electronic signature, proposal, and document management markets. Yauhen has experience speaking at niche conferences where he enjoys sharing his expertise with other curious marketers. And in his spare time, he is an avid fisherman and takes nearly 20 fishing trips every year. He has also written for other domains such as Landbot.io and GloriaFood.