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How To Start an LLC For Freelance Writers
With their expertise and creativity, freelance writers play a crucial role in the ever-evolving landscape of content creation. Some specialize in particular niches or topics. On the other hand, some write about a wide range of topics. They then get paid to publish these articles or write-ups on different platforms—sometimes even with their names.
By establishing your own freelance writer company, you can attract a wide range of clients, including magazines, websites, books, and blogs, who are seeking quality content. So, if you enjoy writing and are good at it, you can start a pretty lucrative venture. Instead of registering as a sole proprietor as most freelancers do, however, we recommend you go on ahead and form an LLC.
Definition
What Is An LLC?
An LLC, short for Limited Liability Company, brings together the advantages of different business structures. For example, forming an LLC is simpler compared to setting up a corporation. It also offers better protection compared to a sole proprietorship. It also gives you several advantages, including the freedom to choose how to be taxed and the ability to decide how your business will run. More importantly, it protects your personal assets from being seized if your company gets sued and loses in court.
Advantages
What Are The Advantages of A Freelance Writer LLC?
LLCs offer other advantages aside from the ones mentioned above. Let’s look at the benefits you enjoy by registering your business as an LLC:
A separate entity
As a freelance writer LLC, you provide your writing services under your company’s name instead of your personal name. This distinction offers an added level of protection, ensuring that clients’ complaints or legal issues are directed toward your company rather than targeting you individually. This separation between your personal and business identity safeguards your personal assets in case of any disputes or liabilities arising from your writing services, however unlikely.
Added credibility
As a freelance writer, your credibility is everything. It’s what gets you your next job, sustains your income, and builds your rapport with other members of the community. By offering your services under a registered business entity, you gain an immediate boost to your credibility, regardless of whether you’re new to the industry. The official approval you receive from your Secretary of State adds legitimacy to your services and instills trust in potential clients.
Fewer paperwork to form and maintain
While LLCs require a bit more paperwork than a sole proprietorship, they won’t require a lot of documentation and reporting as corporations do. Furthermore, you will do most of the paperwork for your LLC while it is still being formed. While there may be some additional administrative tasks, such as obtaining an employer identification number (EIN) from the IRS or complying with any state-specific requirements, the overall paperwork is very manageable, making it an appealing business structure choice for many freelancers.
Boosts your resume
As a freelance writer, your resume is affected by the lack of clients hiring you for your services. The gaps caused by these can make your resume look bad. By operating under an LLC, your resume will show that you’re hired even if there’s no client that avails of your services. You may not have some revenue for a time, but your resume won’t have unsightly unemployment gaps.
Potential tax savings
Unlike some other business structures, an LLC allows you to choose how you want to be taxed. By default, a single-member LLC is treated as a disregarded entity for tax purposes, meaning the business’s income and expenses are reported on the owner’s personal tax return. This avoids the need for separate tax filings for the business. You can also tax it as an S-Corp, which we’ll discuss more of this below.
Disadvantages
What Are The Disadvantages of A Freelance Writer LLC?
All that said, LLCs also have some disadvantages. These can be avoided with proper planning, however. For instance, starting an LLC might be costly because of the paperwork, the registered agent you need to hire, and its upkeep. Another is the fact that, as the owner of your own LLC, you will have to spend time on administrative duties to maintain it, such as documentation and annual reporting. This takes away some of the time you can spend writing for your clients.
Lastly, failure to understand how LLCs are taxed can lead to confusion. This, in turn, could lead to delays in filing taxes, which results in penalties.
LLC Formation
How To Create A Freelance Writer LLC
Setting up your own freelance writer LLC is straightforward. In fact, here’s all you need to do to get it up and running fast:
- Choose your niche
- Create a portfolio
- Know your target market
- Choose a name for your business
- Hire a registered agent
- File an Article of Organization
Choose your niche
As a freelance writer, you can write about anything or specialize in something, such as tech, health, academics, or even news writing. Selecting a specific niche helps you narrow down your clients and establish your own brand. Or you can offer general writing services and receive writing jobs for various topics.
Create a portfolio
A portfolio will serve as proof of your writing skills. You can compile copies of your previously published works or write new articles that show your best writing. Then, you can create a website where you can show this portfolio to potential clients. This is necessary to convince them that your company suits the job.
Know your target market
Next, you should look into the people who could become your potential clients. Start by considering who could benefit from your services. These could be small businesses, big companies, or individuals looking for writers. Narrow potential clients down according to your preferred niche.
Choose a name for your business
Your freelance writer LLC name must be unique and not be used by other businesses in your state. It should communicate your services to your target clients. Your business name should also be easy to remember so clients can quickly look your company up if they need your services.
Hire a registered agent
A registered agent is like a legal representative for your company. They act as the go-between, receiving important legal documents on behalf of your business. It’s their responsibility to ensure that you receive these documents in a timely manner. The only requirement is that they must be located in the same state where your company is registered. You can also appoint yourself as your business’s registered agent.
File an Article of Organization
Next, file an Article of Organization. This is the one document that you need to have your freelance writer LLC registered in your state. It contains details about your LLC’s members, its purpose for existence, and how it will function as a business. You can find blank forms for this in your Secretary of State’s office.
LLC Taxes
How Are Freelance Writer LLCs Taxed?
The IRS will tax your freelance writer LLC like a sole proprietorship by default. Your LLC will earn revenue which will be passed through to you as your income. When it’s time to file your taxes, you report this income on your individual tax return. The business itself doesn’t have to pay taxes separately. You will also have to pay Medicare and Social Service contributions individually, as you are your own employer.
Plus, if your state requires it, you must also pay a franchise tax for your LLC. This annual fee is used to renew your business registration in your state.
Costs
What Are The Costs Of Starting A Freelance Writer LLC?
Before starting your own freelance writer LLC, you need to spend on the following:
Filing fees
Filing your Articles of Organization will cost you between $50 and $800, depending on the state where you register your business. If you hire someone to file the document, expect to pay more for the service. This way, you can stay focused on your writing projects and have peace of mind knowing that your legalities are being taken care of.
Registered agent
As mentioned, you can actually take on the tasks of a registered agent to save money. Hiring one, however, helps save time, which is more important than being able to write what your clients want. An agent’s rate varies with their organization, but be ready to pay $100 to $300. Plus, registered agents will always ensure that your business fully complies with all the necessary requirements.
Publishing costs
When forming your LLC, some states may require you to publish notices about your new business in local newspapers. Publishing costs vary by newspaper, so make sure to ask several companies to find the best deals for you.
While it might seem costly, opening an LLC for your freelance writing business allows you to enjoy certain benefits. These include the credibility of having an established business entity instead of offering your services using your name. Plus, forming an LLC protects personal assets, ensuring that your personal belongings remain safe even if your business faces legal issues. These benefits alone make investing in the formation of your LLC worth the effort!
Comparisons
Is LLC The Best Entity For Me?
Maybe, LLC isn’t the right entity for you. Maybe it is a C-Corp. Only way to find out is to directly compare them all.
LLC vs Corporation (C-Corp)
Sole proprietorships and Limited Liability Companies (LLCs) are two of the most common business entities for individuals and small businesses. Learn what differentiates the two today.
LLC vs S-Corp
Not sure what business structure to choose? Learn about the key differences between LLC and S-Corp today.