Should You Call Yourself a CEO or Stick with "Freelancer"?

How To Start A Freelance or A Creative Business

Before you decide whether to form a business entity, it’s essential to understand your starting point. Most freelancers begin as sole proprietors, which means you and your business are legally the same entity. Typically, the setup is simple, as there are no registration fees or annual paperwork. However, operating as a sole proprietor means you’re personally responsible for any debts or legal issues that arise.

Transitioning to a formal business entity can seem overwhelming, but it’s often the natural next step when your work grows. If you’re asking yourself if you should make your company an official business entity, you’re already thinking like a business owner. If you’re considering starting an LLC for your side hustle, read on to understand the pros and cons.

Pros and Cons of LLCs for Creatives

Many freelancers and creatives consider forming a Limited Liability Company (LLC). An LLC is a separate legal entity that protects your personal assets, like your house or savings, from business debts or lawsuits.

Pros of forming an LLC may include:

• Liability protection. An LLC separates your personal assets from your business. If something goes wrong, your personal savings, home, or other belongings are safer.

• Professional image. Operating as “Jane Doe Creative LLC” may sound more established and less amateurish than “Jane Doe, Freelancer.”

• Tax flexibility. LLCs can offer tax advantages, depending on how you choose to structure the company.

Cons of forming an LLC may include:

• Initial costs. Filing fees to set up an LLC can be a financial burden.

• Ongoing paperwork. Annual reports and fees vary by state. Navigating the required documents for continued compliance adds to your to-do list.

• Not always necessary. If you’re just starting and earning a small income, the benefits might not yet outweigh the costs.

While an LLC isn’t for everyone, it can make sense if you want to protect yourself legally, work with bigger clients, or build a stronger brand.

How Forming an Entity Can Level Up Your Brand

Your freelance business isn’t just about the work you create—it’s about how you market yourself. Forming a business entity can elevate your brand in several ways:

• Increased credibility. Clients may feel more confident in the appearance of hiring a business rather than a sole individual.

• Opportunities for growth. A formal business structure can make it easier to secure loans, attract partnerships, or even hire help. It gives you the legal framework that many clients and institutions look for.

• Clear identity: Operating as a CEO of your company sets you apart from competitors and shows you take your work seriously.

By treating your creative work as a business, you signal to clients and collaborators that you’re in this for the long haul.

Step-by-Step: Transitioning from Freelancer to Business Owner

If you’re ready to take the plunge, here’s how to start transforming your freelance business into an official business entity:

• Research your state’s requirements. Each state has different rules and fees for forming an LLC. 

• Choose a name. Pick a name that reflects your work and isn’t already in use. Many states offer an online database to check name availability. Don’t forget to trademark your business name. 

• File formation documents. Submit the required forms, like Articles of Organization, and pay any fees.

• Obtain an EIN. An Employer Identification Number (EIN) is like a Social Security number for your business. You can get one free from the IRS.

• Open a business bank account. Separate your personal and business finances to simplify taxes and bookkeeping.

• Consider additional protections. Depending on your work, you might need liability insurance or specific licenses.

Each step is manageable, though some may take extra time and thought to fully understand. Bizee can help you navigate the details to ensure everything is done right and to streamline the process.

When Is the Right Time to Form a Business Entity?

The right time to form a business entity depends on your goals and where you are in your freelance career. If you’re earning significant income, working with large clients, or taking on risky projects, forming a business entity makes sense. On the other hand, if you’re in the early stages, it’s likely okay to wait.

Here are a few signs that it might be time to form a business entity:

• You want to protect personal assets

• Clients or collaborators expect a professional structure

• You’re ready to scale your work into a bigger operation

• If any of these apply to you, it could be a sign that your business is ready for growth and formalization

Take Charge of Your Creative Career—Your Way

Deciding whether to stay a freelancer or step into the role of CEO is a personal choice, but it’s one you don’t have to make alone. Bizee is here to guide you through every step of forming and growing your freelance business. If you’re serious about your creative career, forming a business entity can help you level up and take it to new heights. Think of it as an investment in your future—you’re not just a freelancer. You’re a creative entrepreneur building something bigger. Contact us today to learn how we can help you achieve your goals and take charge of your creative career—your way.