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From Freelancer to Business Owner: A Step-by-Step Guide to Starting Your Own Company

Updated: Jul 12, 2023

As a freelancer, you may eventually find yourself wanting to take your work to the next level by starting your own company. But where do you start? In this blog post, we’ll break down the different business types (LLC, S corp, and C corp) and help you understand the benefits and responsibilities of each.


LLC (Limited Liability Company) An LLC is a popular choice for freelancers because it offers liability protection while still being easy to manage. As the name suggests, this type of business limits your personal liability if something goes wrong with your business. This means your personal assets (such as your house or car) are protected in case your business gets sued or faces financial troubles. Plus, an LLC is relatively easy and affordable to set up compared to other business types.

S Corp (S Corporation) An S corp is another popular choice for freelancers who want to limit their personal liability. The main difference between an LLC and an S corp is that an S corp is considered a separate entity for tax purposes. This means the business itself pays taxes on its profits, rather than the owner paying personal income taxes on the profits. This can result in tax savings for the business owner, but S corps have more requirements and regulations than LLCs. C Corp (C Corporation) A C corp is the most complex type of business, but it can offer some unique benefits for freelancers who are looking to grow their business significantly. A C corp is considered a separate entity from the owner, just like an S corp, but it can raise capital by issuing stocks. This means that if you’re looking to bring on investors or go public, a C corp might be the best choice for your business.

Remote work

Regardless of which business type you choose, there are a few responsibilities that all business owners must take on. These include:

  • Keeping detailed records of income and expenses

  • Paying estimated taxes on a quarterly basis

  • Registering for state and local taxes (such as sales tax)

  • Renewing any necessary licenses and permits

  • Filing annual reports with the state

When it comes to bookkeeping, using a reliable accounting software like QuickBooks or FreshBooks can make it much easier to keep track of expenses and revenue. Plus, you can work with a professional accountant to ensure that everything is accurate and up-to-date. Starting a business can be a daunting task, but by understanding the different business types and responsibilities, you can set yourself up for success as a freelancer.

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