The term "freelancer" represents different types of working situations. In general, it means a person who doesn't work in standard employment arrangements. An independent contractor, a part-time worker, someone on call and temporary workers can all be freelancers. According to the Public Broadcast Service (PBS), approximately 42 million people in the United States are independent workers. This makes up 30 percent of the workforce. Depending on the type of work performed and location, a freelancer may need a business license.
Any job can be performed as a freelancer. A roofer, electrician or investment broker can perform an assignment and be classified as a freelancer. For some professions, the requirement for a business license is more straightforward. A person who practices law must have the legal license required in that state to practice. If the attorney has a consultant business, she will likely need a business license.
If you are a graphic designer or a technical writer, you may not be required to have a business license. Likewise, if you make extra money by being a dog walker for the neighborhood, if you detail cars for people or if you perform other services that aren't considered professional, you may not have to have a license.
If you advertise under a specific business name, you will need a license; if you work under your own name, your state may not require a license. However, even if the business name has your name in it, you will need a license. For example, if you have a bookkeeping business under the name of Thomas Jones Bookkeeping, you will need a license.
Depending on where you live, you may be required to have a license to conduct business. A particular city, county or state government may have regulations for business licensing. Check with the local county clerk's office or business planner to determine your legal responsibility.
If you are in doubt about whether you need a business license, you should probably obtain one. Fees vary, though generally a business license can be obtained for $30 to $50 as of 2010. However, if you receive a fine for operating a business without a license, the fines can be many hundreds of dollars and may carry misdemeanor charges. The local government may also not allow you to perform the business anymore.
If you do not have a business license or perform your freelance work part time, it does not mean that you don't owe taxes. Taxes are due for any activity where someone else pays you to perform a service. You can file under your own name, but you must file. Consult with a tax professional for specific details on what type of records you should keep and for information on paying your taxes.
Freelancers have issues such as finding health insurance that is affordable and unemployment benefits, as well as licensing questions, that traditional workers do not face. The Freelancers Union is a source for learning about the issues and a forum for connecting with other freelancers.
Debbie McRill went from managing a Texas Department of Criminal Justice office to working for Compaq and Hewlett-Packard as a technical writer and project manager in 1997. Debbie has also owned her own businesses and understands both corporate and small business challenges. Her background includes Six Sigma training, and an Information Development career with journalism and creative writing as her passion.