How to set up a freelance writing businessIn my recent post “From Nurse to Writer in 3 Easy Steps,” I talked a little bit about “getting the factory up and running.” Today, I want to talk about exactly how to do that — and why your success as a freelance writer depends upon tending to the business details.

Freelance writing is a business; treat it as such

You would not say to yourself, “I think I’ll become a restauranteur. But I’m not sure if I can really make a living at that. So I’ll open a small restaurant under my own name, just to test the waters. I won’t bother getting any of the appropriate permits or licenses because – deep down – I’m pretty sure this won’t pan out. I won’t advertise my restaurant. I’ll just see if people wander in. And then I’ll offer them something and see if they’re willing to actually pay for it. If it turns out enough people do buy my menu items, then I’ll brand my restaurant with a business name, and I’ll obtain the permits I need and stuff – once I’ve made a little money and can afford to do that.”

Really, you wouldn’t do that would you?

But you’d be surprised how many people start freelancing with that very mindset. Those people are hedging against failure. How can you possibly succeed if you honestly anticipate failing? I’m telling you to start with an attitude that anticipates success.

The bare-bones model of a freelance writing start-up

Let’s get down to the details. You will need to make a certain cash investment in your freelance writing business in order to have any hope of succeeding. On the plus side, the start-up costs of a freelance business are far lower than for many other types of businesses. You definitely can start your business for less than $5,000. But just know up-front, you’ll need to throw some cash at this thing to make it work.

Before you ever start soliciting work, get all these pieces of the business in place:

Business name

Do not use your given name as your business name. From a legal standpoint, it could be risky (see “Business entity type,” below). But the main reason you want to create a proper business name involves branding.

Do you know what corporate branding is? It’s using a business name and associated assets (logo, color scheme, and so on) to create a public identity that is consistent across all media. Coca-cola, Disney and McDonald’s all have highly defined brands. Your brand should convey the image you want to project to prospective clients.

When you’re just starting out, you may not have any idea who your prospective clients are. That’s OK. Any brand identity that looks and sounds professional will do.

Martin Zwilling wrote a great article called “10 Ways to Come Up with a Killer Name for your Company.” I suggest you read it to help you as you start your branding quest.

Before you set your heart on any particular name, make sure it’s available as a dot-com domain. If it is, register it immediately. It will cost you maybe $10. Sure, there are a zillion web extensions available now, from .guru to .sex. But .com still reigns. Try to score one for your business.

Are you thinking I’m a hypocrite about now? After all, my website is ElizabethHanes.com. Doesn’t that go against the very advice I just gave you?

Well, yes and no. I’ve been writing for about 20 years. If you check Archive.org‘s WayBack Machine, you’ll find some version of ElizabethHanes.com has existed since 2001! Boy, is that site ugly. (I’ve had some gorgeous websites over the years, too.) I’ve spent a lot of time developing the brand “Elizabeth Hanes.”

However, that’s not the name of my legal entity. My business name is Inkslinger Communications LLC. See — I’m not so hypocritical, after all.

Business entity type

Do not use do business as a sole proprietor under your legal name, even though it’s the easiest, fastest way to get started. Many writers do this, and I believe in this litigious era they’re playing with fire. If someone sues you (even frivolously) for plagiarism or malpractice (if you’re writing health articles), will you fret knowing you could lose your house in the lawsuit? Well, you could if you don’t have a legal structure in place to protect your personal assets.

Note for nurses: Your professional malpractice insurance will not protect you against claims that arise from your writing activities. Freelance writing is not considered “the practice of nursing” by any of the nurse liability insurance companies I know of.

I’m not an attorney, and you might consider speaking with one before setting up your business entity. That said, I’m a fan of the Limited Liability Company (LLC) because it’s easy to set up yourself to begin with, and then when you do make some money you can always have an attorney draw up something more specific to your situation. Other writers set up as S-Corporations, and that’s fine too. The structure you select will have tax ramifications, so read up on the differences between these two. I prefer the flexibility of the LLC.

I set up my LLC using LegalZoom, and I’ve subsequently had it vetted by my accountant who thinks it’s OK.  LegalZoom charges $99 to generate LLC paperwork specific to your state’s requirement. You’ll then need to file the paperwork with your state’s secretary of state. State filing fees vary greatly, from perhaps $75 to over $750. Check your state’s secretary of state website for filing fee information.

Federal tax ID number, AKA “EIN”

Once you’ve chosen a business name and created the appropriate legal paperwork, you need to obtain an Internal Revenue Service tax identification number, also known as an ’employer identification number.’ This number represents the golden ticket to doing business in the United States. You can apply for an EIN online at the IRS website. The EIN should be obtained under your business name. Sometimes you need to have an EIN in hand before you can file for a state tax ID number, so make getting an EIN your first priority. There’s no charge to obtain one.

State, county, local tax ID numbers and/or business licenses

The laws for doing business as a solopreneur vary widely from place to place. You will need to research exactly what forms and fees are required in your area. Generally speaking, start at the state level, then work your way down to county (parish, whatever), and lastly local. Most of these entities have websites with all the info you need. If in doubt, see if there’s a local SCORE chapter in your area. These retired executives will be happy to answer your questions.

Come back tomorrow for Part 2!

We’ve covered about half of the tasks you need to accomplish before you hang a freelance shingle. Tomorrow, I’ll talk about why you need two business bank accounts, and I’ll give you the bottom line in cash money you need to invest for a good start on your new career. (Hint: It’s not as much as you might think!)

If you’re enjoying RN2Writer so far, please share the blog with your friends! And don’t forget to post questions and observations in the comments section. I’ll devote at least one post near the end of the month to answering your questions.

Until next time!

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Image courtesy Philip Taylor.