When many people start freelance writing they are all excited about the different opportunities. Whether the goal is to just earn a little extra spending money, or to turn their passion for writing into a career, they often don’t think about things like taxes and licenses. Once you start making money, however, you need to take a little bit of time to get that annoying side of freelance writing taken care of.
So, the question is, do freelancers need a business license? Unfortunately, this can’t be answered with a simple yes or no. There are many factors that go into this type of thing. Disclaimer #1: To start with, let me say that I’m not a lawyer, and I don’t even play one on TV. If you want to be 100% sure you’re doing everything properly, go see a local attorney in your area. What I’ll do for you here, however, is provide some general information and guidance based on my own experience.
Disclaimer #2. I don’t have a business license. I’m actually writing this because I’m working through the process of getting one, and figured other people might be wondering the same things I was. Enough with the disclaimers! On to the real content!
From what I’ve found, freelance writers do not need a business license to operate their company in any of the 50 states, or in any countries that I read about (though that is limited). You do, of course, have to pay taxes on your earnings though. So, if it is not a requirement to get a business license, why is it something you might want to consider?
Reasons why you might WANT a Business License
The following are the reasons that I have for why I want to have a business license for my freelance writing. Some are more important to me than others, but I’m listing them all since I’m sure everyone will have their own set of reasons:
- Builds Confidence – When you can say I’m a professional freelance writer with my own business, it really strokes your ego a bit. There is no denying that you’re doing something right if you have your own business and you’re successful at it.
- Adds Legitimacy – I’ve been freelance writing for almost four years now, and made quite a bit of money doing it. Even with that, however, when you tell friends, family or others about it, they almost always assume it is just a stupid hobby. When you’ve got your own business, however, it adds a sense of legitimacy.
- Comforts Customers – Many customers are worried about getting ripped off online (after all, everything on the internet is a scam, right?). Having your business license can give many customers a sense of comfort that they are working with a pro. They will properly assume that you’re not going to put your business at risk to rip them off for a $50 article (or even a $5000 series of articles).
- Tax Benefits – I haven’t personally done this yet, but from everything I’ve read, it is a lot easier to get tax benefits from the business when you have a license. For example, I do the vast majority of my work in my office at home. If I have a business license, I can write off a percentage of the mortgage, electric, computer costs, office equipment and everything else in there as a business expense. While technically you can without a business license too, I’ve heard is it more difficult and less likely to get approved.
- Litigation Protection – This one isn’t too important for most freelance writers, but it is still something. If your business gets sued, they can’t take your personal assets. So, if you happen to get hired to write something that is considered defamation of character or something, I guess this could come in handy.
- Better safe than Sorry – A business license for me is going to cost under $50. Not too bad. If you assume that you don’t need one, and you’re wrong, it can come with hundreds or even thousands of dollars in fines and penalties. Yikes!
- You can have a Sweet Title – Hey, you’re a legitimate business owner now! Want to be CEO of your company? DONE. Want to be “President and Big Man in Charge,” hey..there’s nothing stopping you. You can be as crazy or as traditional as you’d like, but don’t hold back! You’re working hard, you deserve that title on your business card (oh, and you should get a business card even if it’s just for fun).
I’m sure there are other advantages to having a business license for your freelance company. If you can think of any, please post them in the comments below. Also, if you have a business license, let us know! I’m interested in hearing other people’s experiences.