Many freelancers and solopreneurs are sole proprietors: one-man operations. If you pass on, there's no more business. Although some states do allow people to conduct business under their legal name without having to file anything, it's highly recommended to file for an LLC. However, if you are conducting business under a name other than you legal name, you could be breaking the law by not filing for an LLC.
It's actually much easier than many people think, and in most states, you could probably file online and have your name secured in just a few minutes. Since it's such a simple process, do not go through the trouble of hiring a lawyer to file an LLC for you. Filing on your own will cost anywhere from $50 to $800, and that's just for the filing fee, which differs from state to state. If you were to hire a lawyer, it would easily be several hundred dollars on top of the filing fee because you would have to pay for the lawyers time.
Whatever your case may be, if you are a sole proprietor, a freelancer or solopreneur running your own operation, you really ought to file an LLC. Here are a few reasons why, beyond the fact that it is so easy and cheap:
- It separates you from the business - Yes, as a one-man operation, you are the business. But, there are things that belong to the business that don't belong to you, such as product inventory, or technology such as a laptop and printer. If someone wants to sue you, for whatever reason, they can sue for everything you own if you don't have an LLC for the business. This means that by operating under your legal name, all your personal assets could be sued for in a lawsuit, such as your car or your home. However, if you have the LLC, and someone wants to sue the business, then they can only sue the LLC and its assets. Although this may be a rare case for freelancers and solopreneurs, it's better to be safe than sorry.
- You Can Be Taken More Seriously by Clients - It's easy for shady and awful clients to take advantage of an individual freelancer or solopreneur. They know you're just one person who can't do much if they don't pay their invoices. However, that's much tougher for them to do simply because you look bigger as an LLC. As an LLC, you could easily have a lawyer on staff to get these shady clients, or could have much more resources as your disposal than the client. Even if you are still a one-man operation, an LLC doesn't make it so obvious.
- It Helps in Taking Your Business Seriously - One of the biggest pitfalls for freelancers is that they treat their service, whatever it may be, as a hobby instead of an actual business. By filing an LLC, you know that you are in business, and that