For many freelancers, the most challenging hurdle in starting their own operation is the freelance business legality. People think it’s complex or expensive to legally set up a corporation when in fact, it’s the opposite.

All you need to become incorporated is your computer. Technology has helped bridge the gap between business owners and legal requirements. You only need to be prepared to do some research on your own.

Yes, some attorneys will charge thousands of dollars to draft your corporate documents and agreements. That’s when you need to find a new attorney.

How to Do It Yourself

In a matter of minutes, you can file to become a corporation. Here’s how:

  • Pull up your Secretary of State website
  • Check the validity of the company name you want to use
  • Punch in your contact information
  • Name yourself the registered agent and 100% owner of the company
  • Hit “checkout” button and pay the filing fee

You’re done. Launching an Employee Identification Number wizard on the website takes even less time, helping you secure an EIN for your business.

The website of your Secretary of State features multiple resources for entrepreneurs, as does any small business incubator that you can find across the nation. These community-based tools are invaluable in helping you navigate through the legal requirements associated with starting a business.

Before getting started, you’ll want to decide what type of corporation is right for you. Here are the most frequently used entities by small business:

  • Sole proprietor
  • S-corp
  • C-corp
  • LLC

While setting up a corporation is easy, there are a few things you will have to research that may be unique to your state. Many requirements vary by state so there may be different rules to follow depending on where you live.

LLCs and S-corps

LLCs and S-corps can deduct pre-tax expenses, including advertising, travel, car expenses and more that can help lessen the tax burden.

Here are the basics of an LLC:

  • A single-member LLC reports business activity on his or her personal tax return
  • Most LLC forms are short and easy to understand
  • LLC owners are required to pay self-employment tax, divvied up into quarterly payments to the IRS

And here are the basics of the S-corp, which is named after subsection S of Chapter 1 of the Internal Revenue Code.

  • Pays its employees a ‘reasonable’ salary and covers payroll expenses
  • Any remaining profits can then be distributed to the owners as dividends
  • The benefit is that dividends are taxed at a lower rate than income

Again, check the website of your Secretary of State to get started and reach out to its support staff for any questions.

You’ll be marketplace ready in no time.

Melissa Cooper

Melissa Cooper

J. Melissa Cooper is an expert in the human resources field, with over a decade of experience and a Masters of Science in Human Resource Management from New York University, as well as a Senior Professional in Human Resources (SPHR) designation. She started her own business as a one-woman shop in 2009. Five years later she was managing 400 freelancers.

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