You've decided you're going to make money freelance writing, so it's time to start treating it like any other business. That doesn't mean it can't be fun any more - it just means you're going to have to start thinking about business registration.
...And taxes. Your taxes will be filed depending on the type of business ownership you claim, so it's worth a little research.
There are a few different forms of business ownership:
- Sole Proprietorships
- Limited Liability Companies (LLCs).
Freelance writers as sole proprietors are most common. As a sole proprietor, you're liable for any business debts, and your personal assets are free game - there's no separation between business and personal if someone takes you to court. However, you're in complete control (and do you really expect to be taken to court?) and you can file all your freelance writing business taxes on your personal tax return.
Partnerships are for people who, well, work as partners. Like sole proprietorships, there's no separation between business and personal when it comes to assets. However, if there is more than one of you freelance writing and you're tackling things as a team, you might need the legal jargon to establish business practices and divide debt.
Got shareholders (or want shareholders)? If you're just starting out as a freelance writer, you most likely can't be a corporation; however, if you're running a writing factory and have a bunch of people churning out content, you ought to be. Corporations are separate from the people who own them (think Enron, Halliburton and KMart) so when they get sued/go under/collapse, the owners and their personal assets generally remain untouched.
Limited Liability Companies (LLCs) are far more complicated. You can operate as an LLC for a certain amount of time, depending on your business assets and they've got more than one owner. It's not likely that you'll need to register as an LLC as a freelance writer, but you can find more information on it at the Small Business Administration's website.
Once you've decided what kind of racket you're running, you might have to:
- Register your freelance writing business with the state you live in
- Register your freelance writing business with the federal government
Register your business with the federal government: If you need an Employer Identification Number (you will unless you register your freelance writing business as a sole proprietor), you'll have to apply and receive one from the federal government.
Once you've gotten this pain out of the way, you can get back to what you wanted to do all along: start freelance writing for money!
What startup business tips do you have? Are there any shortcuts for state or federal licensing you've come across? Share your tips here, and please feel free to include a link to your own blog or website!