As a freelancer, you may have thought about starting your own business to take your career to the next level.

One of the most important decisions you will make is choosing the right legal structure.

A limited liability company (LLC) is a popular option, and for good reason.

If you’re running your freelance business as a sole proprietor—you’ll know if you’re taking payments under your SSN—you’re the only one in the spotlight when things go wrong.

That’s why we’re partnered with ZenBusiness – they’re a PBC (Public Benefit Corporation), which means giving back to small businesses is written into their bylaws.

The all-in-one ZenBusiness platform enables you to start a business online and offers useful solutions and resources to help small businesses.

Zen Business

Essentially, ZenBusiness allows you to focus on your work without having to worry about keeping up with state filings and the renewal of your LLC.

In this article, we’ll explore the benefits of an LLC for freelancers, including how to form one, how to protect it, and what business expense savings it provides.

We’ll also take a closer look at recent legislation in California, specifically AB5, and how it affects the self-employed. First, let’s define what an LLC is.

An LLC is a legal entity that offers personal liability protection to its owners, known as “members.”

This means that the member’s personal property is separated from the business property.

If the business is sued or owes debts, the member’s assets are not at risk. To form an LLC, you will need to follow a few simple steps.

First, choose your business name and make sure it’s not already in use. Then submit the statutes to your state’s secretary of state.

This document describes the basic details of your business, such as the name and address of your LLC and the names of the members.

Once your articles of incorporation are approved, you will need to create an operating agreement.

This document describes the ownership and management structure of your LLC, as well as the rules and regulations that govern your business.

While an operating agreement is not required in all states, it is a good idea to have one to avoid potential conflicts between members in the future.

The personal liability protection offered by an LLC is one of its most significant advantages.

As a self-employed person, you may be liable for any mistakes or accidents that occur in the course of your work.

Assets

If you operate as a sole proprietor or partnership, your personal assets are at risk in the event of a lawsuit. However, if you form an LLC, your personal assets are protected.

Consider a personal trainer who acts as a sole proprietor. If a client is injured during training, they can sue the trainer for medical expenses and other damages.

The financial and legal impact on a personal trainer would be severe for two reasons:

First, while the amount of money may not hurt a large corporation too much, the average personal trainer is likely to take a big hit.

And second, personal property is potentially on the line for sole proprietors or separate individuals.

In addition, an LLC can also protect your business assets.

Unless you do business under an LLC and lose a lawsuit, everything from your personal checking account to your home can be fair game – If your LLC is sued, only the business assets are at risk.

This protection is essential, especially if your business involves a high level of risk, such as providing professional services or manufacturing and selling products.

Americans are doing more freelance work than ever before. According to a recent survey by Upwork, 59 million Americans have freelanced during 2020 and COVID-19.

Many of these part-time freelancers say they want to continue working on freelance or independent contractor projects in the future.

Upwork’s survey, “Freelance Forward 2020,” also found that US freelancers increased their earnings by 22 percent in the past year.

58 percent of professionals who started working from home during COVID-19 are now considering freelancing, and it appears that freelancers deal with it.

The stress and challenges of the pandemic better than other workers.

Freelancers are reporting a lower incidence of COVID-19 negatively impacting their financial health and overall well-being.

Sources: blog.freelancersunion.org | incfile.com