Many people want to know how to become a freelance writer. I did too, which is why I set up my own LLC to start my freelance copywriting journey. After about three weeks things are going well, but there have been a few surprises along the way that I wanted to share. Read on for more on the steps required to set you your own LLC and become a freelance copywriter.

Transitioning to freelancing

I was part of a mass layoff at my previous employer. The layoff meeting was at 9 a.m. and by 9:10 my computer was bricked and I was a former employee. After giving myself a few minutes to process what had just happened, I quickly got to work. By Noon I was at FedEx shipping all my work equipment back to headquarters. By 1 p.m. I was updating my resume, portfolio website, and my LinkedIn profile. By the end of the day I was ready to start looking for my next career opportunity.

I had an idea of what types of position to apply for, but I also realized that I had some new skills that could be used for freelancing. The next day a former colleague who knew I got laid off called me and asked if I wanted to write a few articles for him. I said yes and was off and running as a freelance copywriter.

I have been writing articles and content for many years as a part of my job, so it was fairly easy to come up with original content on a topic I knew a lot about. He Venmoed me $50 per article, which was a fair price for my time, and the transaction was complete. But the experience really got me thinking about how to make becoming a freelancer a reality.

Setting up an LLC

To position myself as a bona fide freelancer, I needed to think (relatively) big. How could I prove that I have the experience and expertise a potential employer is willing to pay for? An LLC immediately came to mind as a way to separate myself from the competition. A client might be more willing to partner with a company instead of just paying someone as an independent contractor. Plus having an official website and email address shows I’m serious about this endeavor.

So I got to work. First step, texting my lawyer friend who reluctantly gives me free legal advice from time to time. No legal issues, he said. The only factors to consider are related to taxes and accounting. So I emailed my accountant. He suggested creating a single-member LLC so that my business taxes can be filed with my personal taxes. Sounds good so far.

Next stop, Google. What is the right keyword for creating an LLC? Not surprisingly, there are whole bunch of businesses out there competing for those LLC-related words so they can try and create an LLC for you. But I wanted to learn about the process and not spend any extra money, so I went for it on my own. Here are the steps I took to create my own LLC.

Step One – Figure out a name

The first step is a simple but important one. What did I want to name my LLC? I wanted my last name in the LLC, but what else? After workshopping some ideas with my wife and son, I settled on Dahlstrom Solutions LLC. Copywriting provides a type of solution to a client who needs content and my last name is Dahlstrom, so I thought it was broad enough but also fit my mission.

Once you figure out your name, you should buy the domain name as soon as possible. Luckily for me Dahlstrom is an unusual last name, but you might have to get creative with your domain if you have a more common name like Smith or Johnson.

Pro tip: Buy the domain name from the same company you will use to host your website. I bought my domain name from Squarespace Domains but then set up a WordPress site, which caused some unncessary hassle when I had to transfer the domain. If you want a WordPress site, buy your domain name through WordPress Domains. Keeping everything together is much easier.

Step Two – File with State agencies

The first thing I did was create an account with the office of the Washington State Secretary of State Corporations and Charities Division. After filling out a bunch of forms using my new business name and paying a $200 filing fee, things were getting real. Every state has a different process, but the process of creating an LLC always starts at the state level.

My application was approved about a week later, complete with a sweet looking Certificate of Formation. After that, I had to sign up with the Washington State Department of Revenue so they can collect taxes on my future revenue. Everyone gets their cut.

Step Three – File with Federal agencies

There are two federal agencies that need to be notified when anyone starts an LLC. The Department of Treasury makes sense because IRS issues Employer Identification Number (EIN), which is required even for companies that don’t have any employees. It only takes a few minutes to get an employer identification number and doesn’t cost anything, though you do have to pay federal taxes on your revenue.

Pro Tip: Save the EIN letter generated by the IRS after your application is approved. Save it in a file that you remember. Luckily for me I printed out my EIN approval letter right away, but I learned the hard way after I couldn’t find it on my computer that the IRS does not keep the approval letters on file anywhere, so if you don’t save it you can’t access it later.

The other federal agency interested in newly created LLCs is the Financial Crimes Enforcement Network (FinCEN). FinCEN is in charge of investigating financial crimes, so they want information on every LLC in the country. Luckily, it’s very easy to create a FinCEN ID and fill out the required Beneficial Ownership Information reports. Plus there is a thorough help section with guidance materials and more.

Step Four – Open a business checking account

My LLC now has a name and is registered with all the relevant state and federal authorities. Now I need a checking account so that clients can pay me using bank transfers instead of just PayPal or Venmo.

Pro Tip: The best way to set up a business checking account is to talk to your current financial institution. When you earn revenue through your LLC, you can’t use your business debit card to spend the funds on non-business expenses. You need to transfer the funds to your personal account first, which is called an “owner’s draw.” The easiest way to do that is to have your business account and your personal account at the same financial institution.

I am a member of the United States Senate Federal Credit Union, so I spoke with someone there and got everything set up. They sent me a huge form to fill out online, most of which was straight-forward. But there were two things that almost tripped me up.

Step 4B – Creating an operating agreement

The credit union asked me to upload a copy of my operating agreement to my application file. A what now? I thought I had jumped through all the hoops, but this one was a surprise. Why do I need an operating agreement? I already agree to operate with myself as a single-member LLC, but you know that credit unions have lots of compliance requirements. After some Googling, I settled on eForms, which created a simple LLC Operating Agreement for me after I answered a few questions. A lawyer can create an operating agreement for you or you can use one of the many online options. It doesn’t have to be notorized or anything, so whatever template you want to use can work when signing up for a business checking account.

Step Five – Get to work!

I hope this recap of all the steps I went through to set up my own LLC was helpful to you. My advice to anyone thinking about setting up their own LLC is to go for it! For about $500 you can get a business license, a registered domain, your own professional email address, and a year of hosting on WordPress to manage your own website. The ability to partner with clients as a business instead of an individual instantly adds professional credibility and gives you an advantage over the competition.