Legal 101 For Freelancers - 5 Things To Protect Your Business

July 26, 2021

To so many, working as a freelancer sounds pretty great and flexible. You get to set the rules, schedule your time, choose your work and clients, and get paid without hassle. But that's all the rosy part of it. 

While, of course, freelancing is indeed great and flexible, things can get messy very quickly. A wrong contract, better put, an improperly done contract could bankrupt your freelancing business in a twinkle. 

Hence, as you grow in your freelance career, it becomes more critical that you consider and understand the legal aspects of running your business! Issues like taxes, insurance, privacy protection, and lots more are essential to your business's success. 

However, for what it is worth, becoming a freelancer can be a rewarding career option. Here are a few things you need to know about legally protecting yourself as a freelancer as you embark on the journey. 


Registering your business and trademarking is the first step in protecting yourself and your business. For example, in the United States, you can do a trademark and name search to see whether anyone else has trademarked a particular business name. Registering your business name authorizes you to operate your business under that name in the state, and it guarantees no other business can use your name in your state. And when choosing a business structure, you have to determine whether you'd like to register as a sole proprietor or incorporated business. 

To put it simply, in a sole proprietorship, you are the owner of the business, and as such, you're personally liable for the business. In an incorporated business, however, your business is a separate entity from you, the owner. Your assets and liabilities are independent of those of your business. Meaning you are not liable for corporate debts. 

Also, while you can register your business in any state in the country, it's cheaper and more preferable to do it in your state of residence. 


Generally for freelancers, setting up a website is important to promoting their businesses and building a massive online presence. However, apart from the aesthetics and content on the website, you, as a freelancer, need to make sure you also have legal protection statements in place. 

Not only does this protect your business legally, but it also confers some level of professionalism in your business. It gives your potential clients a convincing first-time impression that you know what you're doing and not just out to scam them. 

First, you need a privacy statement if your website will be collecting any personal data of visitors. You must have a privacy statement on your website letting your visitors know what info you collect, how you collect it, and what you do with that info. 

The next is a terms and conditions (also known as terms of use) statement, which informs your site visitors about the "rules" of your site, including what kind of behavior is/isn't permissible. This also includes essential info such as a copyright statement, etc. 


A contract is an agreement between two parties. While you can give an oral contract, a written contract is more reliable and tenable should there be issues along the line. Having a solid contract in place saves both parties a lot of unnecessary disagreement, and it gives peace of mind since you discuss all the details upfront. 

A contract does not guarantee that nothing bad will happen or that you will get paid (always a big concern!), but they can certainly help you avoid issues and resolve disputes easily. 

The content of your contract differs from work to work and sometimes from client to client. But here are the basics that should be included in the contract. 

● Scope of work

● Timeframe

● Deadlines

● Payment terms

● Ownership

● Changes, edits, and drafts

● Changes to the contract

● Termination

● Legal disclaimers and terms


The issue of money can be very sensitive and easy to muddle up. Ensure you are tracking expenses and income appropriately. This comes in handy when you have to prepare your taxes and also helps you take advantage of appropriate reductions for your business. 

The IRS allows deductions for losses and expenses that are "reasonable and necessary" to your business. For example, the cost of software programs, advertising costs, web hosting fees, educational fees, and lots more are some deductions you can enjoy. And, of course, this varies from state to state, as well as business to business. 

Lunafi can help you get rid of your freelance finance headaches because it makes finances easy for​ freelancers. Get a real-time estimation of your tax savings and taxes owed far before the tax season arrives. Manage your business and personal finances in one place and uncover your hidden expenses with possible write-offs personalized to your profession.

For questions around taxes, you should consult with a professional in your state. 


Insurance, just like Taxes, requires a great deal of professionalism to grasp the nitty-gritty fully. There are many insurance brokers and different options for you as a freelancer. 

Although the type of work you do will determine the type of coverage you need, the important types of insurance policy you, as a freelancer, should have include;

● Professional Liability Insurance (a.k.a. Errors and Omissions insurance)

● General Liability Insurance

● Commercial Property Insurance

● Cyber Liability Insurance

These policies cover a wide range of freelancing businesses. Moreso, informing your potential clients about your insurance can give you an "edge over your competitors. Sit with an insurance expert and come up with the best insurance policy for your business.  

Want to hear more? Listen to the whole conversation on Spotify.

Based on a conversation with Kelli from @lawyerkelli_

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