We've talked about deciding between making your writing into a business or not before. It's a decision you have to make based on many factors. Let's take a look at a few of those reasons, and get you thinking about taking your writing to the next step.
Freelance Business Factor- Clients Request
My main factor in starting my own freelance business from my freelance writing was that I actually had a client tell me that they preferred dealing with companies over individual writers. Since I wanted the work from this particular company, that was enough for me to get on board with forming an LLC. Although I didn't get many details as to their "why", I have some slight conjecture. It's possible that larger companies might prefer to deal with businesses because they see them as more stable and "in it" for the long term. They may also expect that you're carrying certain freelance insurance such as indemnity insurance or professional liability insurance that they prefer. Whatever their preference, if you want that work from larger companies, it might make sense to explore freelance business formation.
Freelance Business Factor- Income Level
A reader recently asked me if I had formed my LLC because I'd reached a certain income level. Although that wasn't truly the reason (see above), it certainly made sense to me. There is some space (and it's probably different with each one of us) where a certain numerical amount says that it's time to move on to the next level. Where is that for you? Only you can decide.
Freelance Business Factor- Business Taxes
Only your own accountant can tell you if you'll save taxes in forming an LLC. However, I know that I felt much more comfortable in writing off business expenses (thereby reducing my tax responsibility) when my personal money and business money was well-separated. I did this by forming an LLC, getting an EIN, and opening a business bank account.I've detailed establishing a freelance business here.
Freelance Business Factor- Permanency
With all the layoffs and unemployment lately, I've noted a lot more of you who are freelancing in between jobs. I've always advocated for freelancing as a solid career choice in and of itself. The rest of you, who have chosen specifically to freelance (like me) may want to make that permanency stand out to potential clients. Having a business front is one way to do that.
Freelance Business Factor- Respect!
I cannot begin to count how many stories I've heard detailing various levels of lack of respect from readers. Sometimes its minor, such as a nosy neighbor "dropping by," whereas sometimes its major, such as a family member who doesn't see your business as, well, a business. Forming a business front could help to alleviate this issue.
Freelance Business Factor- Hiring Others
You may have to hire others once your business gets off the ground. For example, you might hire a web designer, or a transcriptionist. Do you really want these people on your personal family payroll? No, you want them to be contractors of your business, not of you! Once you start hiring people, and entering into contracts with them, you want that contract to be hanging over your business- not hanging over your head! What would happen should you not be able to pay those subcontractors? What if your client went bankrupt? You'd (personally) be on the hook to pay those subcontractors. Would you want to have to sell a personal asset to pay them? No. You'd want your business to be responsible for such things- not your family!
Convinced? Founding your business can be easy, depending on the state. You'll first want to explore the different kinds of companies you can form (I personally found an LLC to be the easiest). You'll then want to separate your monies by establishing a business bank account. Then, start thinking of branding and marketing for your new identity. Ready to begin? A longer and more detailed article on forming your freelance business is available here. Best of luck!
