the Simple Dollar has put together a guide for freelancers — everything you need to know including:
The Ultimate Freelancer’s Guide
Part 1: Freelancing Basics
Part 2: Setting Up Shop
Part 3: Building Your Brand
Part 4: Finding Freelance Jobs
Part 5: Setting Your Rate
Part 6: Getting Paid
Part 7: Managing Your Freelance Financials
Business Structure and Registration
While you can continue to report your freelance work as additional income on your personal taxes, you should formally establish a business if you’re planning to build a long-term freelance career.
A registered business can shield you from personal liability and provide tax advantages. Less tangible (but equally important), a registered business builds legitimacy, so your clients forget you’re working from home in your pajamas.
Before you register your business, you’ll need to choose the business structure that best suits your operation. For most, the two most relevant structures are a sole proprietorship (SP) and limited liability company (LLC).
An SP is simpler and requires the least amount of tax paperwork. With an SP, you don’t need a separate business tax return. It’s best for freelancers who take on projects intermittently.
Full-time freelancers contracted by larger companies should consider an LLC, which, while more expensive and paperwork-heavy than an SP, protects a business owner’s personal assets from debt or legal liabilities. Once you determine the most feasible business structure, the next step is to register your business. Formal registration ensures that you won’t get sued down the line for filching another business’s name.
Incorporating an LLC has the joint benefit of also registering your business name at the same time. You’ll need to contact your Secretary of State office to obtain an Articles of Organization form and pay a fee, which can vary state to state, when you file.
It’s common for sole proprietors to create a fictitious business name called a DBA (doing business as). This title allows businesses to operate as something other than the proprietor’s first and last name, giving you the legal imprimatur to open a business bank account, which will help you separate your expenses. You can usually register a DBA by contacting your county clerk. Again, requirements and fees vary by state. Check out this Small Business Administration document for state-by-state requirements.