How to Start an LLC as a Freelancer

What is a freelance LLC?

A freelance LLC is a limited liability company set up by a person running a freelance business. The LLC works like any other LLC, providing protection for freelancers’ personal assets, offering certain potential tax savings, and other similar benefits. 

Freelance LLCs are typically single-member LLCs, meaning they only have one person associated with the company. 

How does an LLC protect freelancers from client liability?

LLCs protect freelancers by shielding their personal assets from liability if a client sues the business or if the business defaults on loans. This means your personal property, like your home, car, collectibles, savings accounts, and other valuables, typically can’t be used to settle your debt or to pay a lawsuit settlement. 

Without an LLC, clients could pursue your personal assets if they sue you, and creditors could use your personal assets to settle outstanding debts.

How to form a single-member LLC as a freelancer

Here are the steps you’ll need to follow to form an LLC for your freelance work.

1. Choose a name for your freelance LLC

You’ll need to choose a name for your LLC before you can move forward in the process. You can use your name as a starting point, like “Jane Smith, LLC,” or go with something more creative or representative of your business. The choice is yours. If you’re not sure where to start, a business name generator can give you inspiration. 

Keep in mind that you may also need to file for a doing business as (DBA) registration if you choose to use a name that you don’t use in your business. 

2. Appoint a registered agent

When you form a freelance LLC, you’ll need to appoint a registered agent to receive legal documents on your behalf. In some states, you can act as your own registered agent. However, if you act as your own registered agent, your business’ contact information, like your phone number and address, will be public, even if you work from home. Choosing someone else as a registered agent could help you maintain your privacy.

This is especially helpful if you’re working as a digital nomad and don’t have a central office. You’ll need someone to be available to receive legal documents and notices, even if you’re working halfway across the globe.

3. Figure out your management structure

If you’re freelancing on your own, you’ll likely want to choose a member-managed LLC. This type of management structure lets you be in control of your business’ operations and decision-making efforts. But if you don’t want to be in control of everything or just want to focus on doing your job, you can choose to form a manager-managed LLC. 

Under a manager-managed LLC, a third party handles the decision-making and oversees the day-to-day operations. The manager doesn’t have to be a member of the LLC and doesn’t need to have an ownership interest in the business.

This could end up being an added expense for your freelance business. You’ll need to bring in someone you trust to manage the day-to-day operations of your LLC while you continue to provide the services your clients love. 

4. Draft your operating agreement

Operating agreements explain how you’ll run your business and are required in some states. At a minimum, you’ll want to include information about:

• Your business’ structure
• Who has an ownership interest in the LLC
• How you’ll divide the profits (if dividing among more than one person)
• Your business’ financial guidelines
• Your operational guidelines

If you’re running the LLC on your own as a freelancer, you can typically use a simple operating agreement template as a starting point. 

5. File your articles of organization

Filing your articles of organization registers your LLC with the state. This document provides the state with key information about your freelance LLC, including:

• Your LLC’s name
• Your LLC’s address (this can be your home)
• The purpose of your freelance LLC
• The management structure you chose
• The registered agent’s name and contact information
• Your signature

You’ll need to pay a fee when you file your articles of organization. This varies by state but typically falls between $50 and $200. 

6. Get an employer identification number

Your LLC is a distinct and separate legal entity. While you can use your Social Security number to file taxes for your LLC if you’re running it on your own, doing so could put your identity at risk. Instead, you may want to get an employer identification number (EIN). This number lets you file taxes with the IRS for your LLC without using your personal Social Security number. You can do this for free through the IRS’ website. If you choose LegalZoom’s Pro or Premium LLC formation package, we’ll handle this step for you. 

You’ll also want to open a dedicated business bank account once you have your EIN. This helps you separate your business’ finances from your personal finances, which can make filing taxes easier. 

7. Get the necessary business licenses and permits

Depending on the type of freelance work you do, you may need to apply for certain business licenses and permits. These depend on your state and your industry’s requirements. Do some research and see if you need anything specific for your LLC.