The Freelance Business Licenses You Need

Freelance business license requirements vary depending on where you live and what you do. Some freelancers won't need any type of permit at all, while others will require licenses from their city, state, or professional body. We'll explore the types of business licenses you might need and how to get them.

What are the main types of business licenses needed for freelance work?

Most freelance business licenses fall into one of four areas:

Local licenses to work in your city, county, or state.
Professional and occupational licenses to do certain types of freelance work.
Other types of permits and licenses.
Requirements for starting and running a business and paying taxes.

It's also worth looking into a couple of other areas. These are not formal business licenses, but they're still a good idea. These include:

An operating agreement for your business.
Insurance for your freelance business and career.

You will also have a legal requirement to report freelancing income and pay freelance taxes.

When should I apply for freelance business licenses?

You should apply for all the business licenses you need before you start selling freelance services. Otherwise, there may be penalties for providing your services without a license. You will also need to renew the relevant licenses, typically every year.

What happens if I freelance without a business license?

If you sell freelance services without the required license, then you may be in breach of city, county, or state bylaws, your profession's governing body, or even federal law. Penalties can include:

Paying a fine for the time periods when you did not hold a license.
Being suspended from being able to perform certain services, especially professional ones.
Other legal and financial issues, including significant penalties for tax-related issues.

It's always best to research license needs, stay up to date, and avoid breaching and rules or requirements.

What are local freelance licenses?

I run a freelance business in the city of Asheville, in North Carolina. My city does not require business licenses for freelancers working from home.

Some freelancers will need a business license or permit from your city or county, even if you're working from home. This license tells your local authority that you're providing business services.

Do I need a local business license?

The best way to find out if you need a city or county license is to check on the relevant websites. Visit the website for your city, municipality, county, and state, and search for "business licenses and permits."

You will find a list of the licenses you need, and how to apply for them. Simply download the forms, fill them in, and return them, together with a fee. You should get a letter or email back within a few days telling you that you're licensed.

If you can't find details on the relevant website, then get in touch with your local authority and ask. They will be able to tell you if there are any requirements for freelancers running their own businesses in the area where you want to sell services.

Many freelancers overlook the insurance coverage, but getting an addendum to your policy is often inexpensive, and can protect your business equipment and assets.

Are there other local restrictions that may prevent me from running a freelance business?

Yes, look into the following areas:

Check if local zoning regulations allow you to run a business out of your home.

If you are renting, check that your rental agreement allows you to run a business.
If you're in a Home Owner's Association or other community property group, check that the rules allow you to run a business from home.
Read through your renter's or homeowner's insurance policy to check that you're allowed to run a business from your home. You may need to expand your insurance coverage for business-related coverage.

How long do local freelance licenses last?

This depends on the specific license, but you will usually need to renew your local freelance license annually. Your local authority should write to you and provide instructions for renewal, although it's still a good idea to put a yearly reminder in your calendar.

Most freelancers in creative industries like writing, designing, or programming, probably do not need a professional business license.

What are professional and occupational freelance licenses?

Certain professionals must be licensed before they can offer services. If you're freelancing in one of those areas, that means you'll need a permit or license. These occupations may include:

Any type of healthcare or medical freelancing.
Giving investment or other financial advice.
Working as a qualified project manager.
Providing accounting or bookkeeping services.
Working as a counselor, therapist, or social worker.
Offering legal advice and services.
Practicing as an architect or engineer.
Selling property and other real estate.

This isn’t an exhaustive list. There are many other professions that may need to be licensed and certified by a national or state board, so check the rules for your occupation closely.

If you're doing freelance work in one of these fields, then you will need some type of business license to do your job legally. You may also need to register with the appropriate board or professional association and buy insurance coverage to protect you from malpractice claims. This varies widely depending on where you live and what profession or business you operate.

How long do professional and occupational freelance licenses last?

This varies depending on your freelance occupation and the specific license, but you should receive a renewal letter from your professional body before your license is due to expire.

The SBA is a great resource for many aspects of running a small business in the US.

What other types of permits and licenses might I need for a freelance business in the US?

The Small Business Administration (SBA) website does list some other types of licenses if you operate in the US. It's unlikely that you will need any of these licenses as a creative freelancer, but do take a look and see if any apply.

I’ve linked to the Incfile business license research package here. It’s one of the least expensive options available and provides a comprehensive report.

How do I find out exactly what freelance business licenses I need?

You have a few different options for learning about licenses and permits for your business:

You can do the research yourself. This guide provides some helpful starting areas for your investigations.
You can use a business license research service. These services will gather information about your business, you pay them a fee, and they will send you a report telling you the licenses you need.
You can use a business attorney to do the research for you. This is likely to be your most expensive option. An attorney will also help you apply for business licenses, although it will be much cheaper to apply yourself.

Do I need additional licenses for running my freelance business as a sole proprietor or partnership in the US?

If you're running your freelance business as a sole-proprietor or partnership, there are some other business license areas you can review:

If you're doing business under a different name to your own name, you should file a "Doing Business As (DBA)" form with your local or state government. You can find these forms on your local or state website.
If you're doing business under your own name, you do not generally need to file a DBA.
You will need to review the tax information we've laid out below, as you will need to pay estimated taxes.
If you're in a partnership, it's a good idea to create an operating agreement.
If you will be employing other people, you will need to get an Employer Identification Number from the IRS. These are free.

Although these areas are not strictly business licenses or permits, they’re still very important requirements that you need to meet.

Do I need additional licenses for running my freelance business as an LLC or corporation in the US?

Yes, if you're running a freelance LLC or corporation, you will have other business requirements you must meet. You will need to:

Create a unique name for your business and search the names of other businesses in your state to make sure it's not used by anyone else.
Register and form your business by filing Articles of Organization or Articles of Incorporation with your state's business formation agency. This will require a fee.
Get a Registered Agent in place. You can be your own Registered Agent.
File an annual or other periodic report with your Secretary of State or business formation agency. You will need to pay a fee when filing.
Get an Employer Identification Number from the IRS. Although these are not always needed for an LLC, the IRS recommends having one anyway.
Apply for and use a business bank account for all your freelance transactions.

Other types of businesses, like corporations and partnerships, have additional rules and requirements. You should speak to an accountant or business attorney to find out what you need to do.

Do I need an operating agreement for my freelance business?

If you're running your freelance business by yourself, you will not generally need an operating agreement, although it does help to clarify how you run your business. If you're running a business with one or more other people, an operating agreement is a great idea.

The operating agreement defines the relationship between the members of a freelance business. This includes how much each member has invested in the company, their ownership percentage, and their responsibilities and obligations towards the other members. An operating agreement can also help to protect everyone's stake in the freelance business by specifying how ownership, profits, and debts are disbursed if a freelance business is dissolved.

Do I need insurance for my freelance business?

If you're just running a freelance business for yourself, working from home, you probably don't need specialist business insurance. You should check that your renter's or homeowner's insurance policy covers your business activities and equipment, and get an addon if not.

Additionally, there are some circumstances where you might want to get additional insurance.

General liability insurance includes coverage against the costs of bodily harm, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.
Professional liability insurance protects you against financial harm caused by professional mistakes, missteps, negligence, and some other factors.
A business owner’s policy is a combination of all of the standard coverage choices. They may help you save money by simplifying the insurance purchasing process.

What are my freelance business requirements for reporting on and paying tax in the US?

You do have a legal requirement to report freelancing income and pay freelance taxes. This includes:

Recording your freelance income and expenses so you can calculate your freelance profits and earnings.
Putting aside enough money to pay estimated taxes on your freelance earnings four times a year.
Completing tax returns and reporting your freelance and other income to the IRS and your state's Department of Revenue.
Paying any remaining tax owed when you file your tax return.
Paying self-employment tax, federal income tax, and state income tax on your freelance earnings.
In some states, getting a sales tax permit, then charging and paying sales and use tax.
Your city or municipality may also charge you business property tax for personal property that you're using in your business.

Talk to an accountant about the taxes you will owe, how to pay them, the forms you will need to return, and the important tax dates.

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