Do I Need an LLC for My Freelance Writing Business?

Starting a limited liability company (LLC) for your freelance writing business can provide several benefits.

Most importantly, an LLC structure offers limited liability to its owners, which can protect their personal assets from lawsuits and creditors.

For a freelance writing business, lawsuits can arise from things like not completing an article for a client by their publishing deadline, negligently including factual errors in a client’s speech, and an employee injuring themselves on your premises.

LLCs are also affordable, highly flexible (from a tax point-of-view), and can make your freelance writing business seem more credible.

Recommended: Use Northwest to form an LLC for $29 (plus state fees).

Should I Start an LLC for My Freelance Writer Business?

LLCs are a simple and inexpensive way to protect your personal assets and save money on taxes.

You should start an LLC when there's any risk involved in your business and/or when your business could benefit from tax options and increased credibility.

LLC Benefits for a Freelance Writer

By starting an LLC for your freelance writing business, you can:

Protect your savings, car, and house with limited liability protection
Have more tax benefits and options
Increase your business’s credibility

Limited Liability Protection

LLCs provide limited liability protection. This means your personal assets (e.g., car, house, bank account) are protected in the event your business is sued or if it defaults on a debt.

Freelance writers will benefit from liability protection because of the risk of being sued for libel, trademark infringement, errors and omissions, and more.

Example 1: A freelance writing business is hired by a magazine to write an article, but the article is not delivered on time and the magazine misses its publishing deadline. Following this, the magazine sues the business for damages. Limited liability protection will ensure that the owner's personal assets are protected if the business is found to be liable for the missed deadline.

Example 2: A freelance writing business is hired by a book publisher to write a book, but the business fails to deliver a completed manuscript on the agreed-upon deadline, and as a result, the publisher sues the business for damages. Limited liability protection will help to safeguard the owner's personal assets if the business is found to be liable.

Example 3: A freelance writing business is hired by a client to write a speech, but the speech contains errors and the client's reputation is damaged. As a result, the client sues the business for damages. Limited liability protection will help to protect the owner's personal assets from any compensation associated with the lawsuit.

An LLC will also protect your personal assets in the event of commercial bankruptcy or loan default.

To maintain your LLC's limited liability protection, you must maintain your LLC's corporate veil.

LLC Tax Benefits and Options for a Freelance Writer

LLCs, by default, are taxed as a pass-through entity, just like a sole proprietorship or partnership. This means that the business's net income passes through to the owner's individual tax return.

The business’s net income is then subject to income taxes (based on the owner's tax bracket) and self-employment taxes.

Sole proprietorships and partnerships are taxed in a similar way to LLCs, but they do not offer limited liability protection or other tax options.

S Corp Option for LLCs

An S corporation (S corp) is an IRS tax status that an LLC can elect. S corp status allows business owners to be treated as employees of the business (for tax purposes).

S corp tax status can reduce self-employment taxes and will allow business owners to contribute pre-tax dollars to 401k or health insurance premiums.

The S corp status requires that the business pay the employee-owner(s) a reasonable salary for the work they perform.

In addition, the business might need to spend more on accounting, bookkeeping, and payroll services. To offset these costs, you'd need to be saving about $2,000 a year on taxes.

We estimate that if a freelance writer can pay themselves a reasonable salary and at least $10,000 in distributions each year, they could benefit from S corp status.

You can start an S corp when you form your LLC. Our How to Start an S Corp guide will lead you through the process.

Credibility and Consumer Trust

Freelance writers rely on consumer trust. Credibility plays a key role in creating and maintaining any business.

Businesses gain consumer trust simply by forming an LLC.

A growing business can also benefit from the credibility of an LLC when applying for small business loans, grants, and credit.

Northwest will start an LLC for you for just $29 (plus state fees).

Get Started

How to Form an LLC

Forming an LLC is easy. There are two options for forming your LLC:

You can hire a dependable LLC formation service to set up your LLC for a small fee
Or, you can choose your state from the list below to start an LLC yourself

Select Your State

For most new business owners, the best state to form an LLC in is the state where you live and where you plan to conduct your business.

Do LLCs Need Insurance?

All businesses need insurance to protect their business assets — even LLCs. This is because limited liability protection from being an LLC protects your personal assets, not your business assets.

Insurance can help a freelance writing business mitigate financial risks associated with legal liability for errors or omissions in written work, as well as cover the business for damages or injuries that may occur on the premises.

Common Situations Business Insurance May Cover for a Freelance Writing Business

Example 1: As you give a potential client a tour of your office, he slips and falls while turning a corner, breaks an arm, and demands you pay for his medical care. General liability insurance would cover his medical expenses and, if he sues, any damages awarded in the lawsuit.

Example 2: A competitor claims you libeled her business in your latest marketing campaign. While you disagree with the claim, you know you need a strong legal defense to protect your company. General liability insurance would cover your legal fees and any required settlement.

Example 3: While unloading a shipment of paper and other supplies, a delivery driver trips over some broken pavement by your front entrance, breaks a wrist in the resulting fall, and decides to sue your company. General liability insurance would pay for his medical bills and, in the event of a lawsuit, your legal defense.

Other Types of Coverage Freelance Writing Businesses Need

While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all freelance writing businesses should obtain:

Professional Liability Insurance

While you strive to deliver high-quality writing services, there’s always a chance one of your clients might claim your professional services caused harm to their business. If a client sues your business, claiming you made a mistake or failed to perform, professional liability insurance would cover your legal fees and any required settlement.

Commercial Property Insurance

You made a major investment to create a professional business space where you can welcome new clients. In the event of a fire, theft, or natural disaster, commercial property insurance would cover the cost of repairing or replacing your business-related property. This includes structural damage to your office as well as your equipment and supplies.

Workers’ Compensation Insurance

If you have any employees, most states will require you to carry workers’ compensation insurance for both part-time and full-time workers. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a workplace accident.

Commercial Umbrella Insurance

While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.

Should I Start an LLC FAQ

Choosing the right business structure depends on your business’s unique circumstances and needs. However, unless your business is very low risk (like a hobby), an LLC is likely the better option.

Visit our LLC vs. Sole Proprietorship guide to learn more.

At a minimum, you’ll need general liability insurance and possibly professional liability insurance.

Read our Freelance Writing Business Insurance article for more info.

To start a freelance writing business, you will need a few basic things: a computer, a high-speed internet connection, a desk, and possibly a printer. A laptop may cost around $1,500, while internet service averages around $50/month.

Visit our How to Start a Freelance Writing Business guide to learn more about the costs of starting and maintaining this business.

Some ongoing costs for freelance writing businesses include internet expenses, computer maintenance, and fees for online freelancing platform membership.

Learn more about running a freelance writing business.

A freelance writing business charges clients for their writing skills either per word, per project, or per hour.

Learn more about starting a freelance writing business.

Freelance writers produce content for many types of platforms and publications, particularly magazines and websites. A freelance writer can work from almost any location with an internet connection. In addition, hours are extremely flexible.

Freelance writing businesses are not known for their high profits. However, freelance writers can make a living if they maintain a steady workload.

Learn more about starting a freelance writing business.