When I started freelance writing a few years ago, I had no idea about all the “business” and “legalese” that may come attached to it when you begin to see some success. If I’m being completely honest, when I started freelance writing I had no idea people could make a full-blown career out of it, so I never thought about the day when you’d have to legally protect yourself and your business.
Fast forward a few years and I’ve gained some visibility, have a successful business and I’ve had to learn a thing or two about how to legally protect myself as a freelancer. From incorporating my business to insurance to taxes, I feel like I’ve gotten a crash course in business in just a few short years.
In this article, I’m going lay out some of the ways you can legally protect yourself as a freelancer. Just a quick note that I’m not an attorney, insurance agent or accountant. This has all been learned thanks to the help of professionals who’ve helped me get everything in order. With that being said, make sure to check in with the appropriate professionals to decide what works for you.
Incorporating your business.
One way to legally protect yourself as a freelancer is to incorporate your business. Incorporating your business is how you can separate yourself from your business in case the business gets sued or gets into some other form of hot water. It ensures that the business finances and your personal finances are separate. It also ensures that you and your business are two entirely different entities. In some cases, depending on how you decide to incorporate your business and where you operate, you can also get some tax benefits.
Make sure to consult with an attorney and an accountant when deciding when and how to incorporate your freelance business.
Get your taxes in order.
Most freelancers learn about taxes the hard way – by getting an unexpected bill. I remember when I first started freelancing I had no idea about quarterly taxes and found myself having to fork over some cash. Fortunately, I was able to scrape up the money.
Since then I’ve hired an accountant who also does my monthly bookkeeping. This allows me to plan for taxes throughout the year, ensure that I’m using tax avoidance strategies properly (Note: tax avoidance is legal, tax evasion is not.) and have peace of mind knowing that my finances are organized.
The tax man is not someone you want to mess with, so make sure you cover your behind in this department. You do not want to get yourself into a legal battle with the IRS. Just ask anyone who’s gotten caught doing something shady.
Liability insurance.
A recent event has got me thinking about liability insurance as a freelancer. I have a friend who runs a successful blog. In that blog, she very openly and honestly outed some scams in her industry backed by evidence. She is now being sued by the companies who run the scams. Because she didn’t have liability insurance, she’s now trying to figure out how to pay the insurmountable legal fees to fight this.
Since learning about this, I signed up for professional liability insurance for my consulting practice and I’m in the process of getting insurance my blog and my freelance work. Truth be told, this is not something we tend to think about, but it’s so important when you want to legally protect yourself.
As freelancers and business owners, we need liability insurance. One thing (though it’s not the only thing) liability insurance covers is “errors and omissions.” That means they will cover you if you accidentally made a mistake or omitted something in your work and someone is now suing you over it.
When shopping for liability insurance, make sure to consult a licensed professional who can guide you in choosing the best policy.
