Freedom, wide opportunities, flexibility is quite a common perception related to freelancing. Well we don’t deny that freelancers do not enjoy such entrepreneurship pleasures but like every business they too need to understand the significance of legal matters. Whether you are a newbie or planning to initiate your freelancing business, it is indispensable to acquire official documents to keep your company safe from legal issues. Even if you possess top class skills, you will be pulled down if you get stuck in some lawful issues.
To keep yourself out of such issues and keep your business safe, you need to be aware of all the necessary legalities. Indeed, freelancing is also kind of a business, thus you cannot overlook the legal part.
Business license:
There are some freelance jobs where business license or permits are mandatory. As a responsible entrepreneur, you must be well aware with the permit and license requirements for your business. The requirements for the business license predominantly depend upon the location of the freelancers. You can check on the website for the license requirements as per your country, city or state.
Some of the freelance professions like plumbers, accountants, contractors mandatorily require business license or permit to show their proficiency. However professions like writer, designer, developer might not require license on compulsory basis but it would be better for demonstrating professionalism.
Business registration:
Starting your business as a freelancer or sole proprietor is perfectly legal but if you can follow some light paperwork, it would be beneficial for your freelance carrier from the legal aspect. You can register your freelance business under sole-proprietorship, partnership (in case working with partner/partners), Limited Liability Corporation or C Corporation. Most of the freelancers register themselves under C Corporation. Under C Corporation, income is taxed at corporate level and again is taxed when allocated to the owners. It also protects the business legally.
According to some state or city regulation, registration of any business is crucial or else the business owner would be fined or prohibited. You need to check with your concerned administration before starting the business. Business registration will certainly protect your business against any legal action.
Project contract:
After getting license and registering your freelance business, it is time to focus on project contract. Freelancers are quite friendly professionals, they instantly agree to work over a handshake or email conversation. However this nature is not going to work if your business gets trapped in some court case. Usually the necessity of project contract for freelancers boils down to need to secure your business from legal issues.
Your project contract should comprise of project details, client or his business name, work offered, additional work and responsibilities, deadline if any, fees, taxes, billing details etc. Make sure that you include as much information as possible, so that it becomes impossible get caught in any litigation. Also bear this in mind that a contract will become contract only when the two parties, business owner and client will sign on the document.
Invoice:
When you are in business, how can you forget your lifeblood? Your livelihood and business both are solely depended on your income. An effective invoice is your prime key for payment. Invoice not only gets you paid faster but also serves as a legal document for payment. It acts as an evidence for both client as well as the business. Your invoice should contain details about you, your client and payment. Also include payment due date and late payment charges, if any.
Non-disclosure Agreement:
Not all freelancers would require the non-disclosure agreement however this document will be helpful to secure the information exchanged between you and your client. Sometimes the customer has to provide financial information to carry out the business transaction, Non-disclosure Agreement or confidentiality agreement would be necessary for such businesses.
You should certainly be professional but you should also find ways to secure your business. Doing business is quite risky, if you want to curb down the risk at least to some level then be all set with the legal documents.
