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Back Office 101: Setting up your freelance marketing business

Setting up your freelance marketing business properly can have massive financial and legal implications for you. We’ve put together this guide to help you quickly setup your back office infrastructure and get back to growing your business.

Step 1: Incorporate your business

While you can freelance without registering a business, we recommend forming a Limited Liability Company (LLC). LLCs limit your personal liability by moving debts and obligations to your company. 

Most businesses, including 60% of the Fortune 500, choose to incorporate in Delaware. Delaware law is business friendly and most lawyers and accountants are familiar with it. To incorporate your Delaware LLC, we recommend Stripe Atlas. They take care of the entire process for $500 including setting you up with a bank account. Before you submit your Stripe Atlas application, we recommend conducting a name search to find an available legal name. 

Alternatively, you could hire a lawyer to complete this process for you but costs will be higher. 

Step 2: Register with your city and state

Many cities and states require businesses operating within them to register with the state or local government. Stripe Atlas will not take care of this for you. There are several third-party sites that can take care of this for you, including Legalinc

Step 3: Setup bank accounts and credit cards

If you incorporate with Stripe Atlas, you will automatically have a business checking account created for you through Azlo. Before applying for any additional bank accounts or credit cards, you’ll need to wait until you receive your EIN number from Stripe Atlas. This can take 7-10 days. 

Assuming you decide to use Azlo as your business checking account, you should consider applying for a business credit card too. Credit cards defer your expenses for an extra month which brings them inline with your client’s payments. Just make sure to set up automatic payments from your checking account to avoid any late fees. 

At Growth Collective, we use the Capital One Spark Cash because it offers 2% cash back on all purchases. Some folks prefer Brex, but you’ll need to have ~$50,000 in your checking account to get approved. 

By default, every purchase that you make for your business should go directly on your business credit card or debit card. Comb through your personal expenses and look for business-related subscriptions to migrate over. Consider creating a business profile on Uber and Lyft to use for any business-related trips. 

Step 4: Track your expenses with Quickbooks

While startups are trying to disrupt this space, Quickbooks remains the go-to tool for managing your own books. It’s a familiar tool to accountants which will help you come tax season. 

Connect your cards and accounts to Quickbooks to pull in any business transactions. Schedule a time each month to review and classify your expenses. This process will become easier over time as you setup automated rules. 

If you’d prefer to have someone handle bookkeeping for you, Pilot and Bench are full-service options. You can also hire someone through Quickbooks. 

Step 5: Review tax implications with your CPA

There are tax benefits to forming an LLC for your freelancing business. Since LLCs are pass-through entities, you may be able to deduct up to 20% of your pass-through income. 

As an LLC, you can elect to have your company taxed as an S-Corp. This allows you to split your earnings between W-2 wages and K-1 distributions. On the distribution portion, you do not have to pay Social Security and Medicare taxes. 

To ensure you maximize these deductions, we recommend hiring a CPA in your state of residence. It will cost you more than Turbotax, but the tax advantages are worth it. 

Step 6: Begin paying yourself a reasonable salary

If you elect to be taxed as an S-Corp, you’ll need to start paying yourself a reasonable salary. Consult with your accountant before setting your salary as it will have tax implications. 

Gusto is a payroll tool that can automate the payroll process for you. It’s important to use a tool like Gusto so that you properly withhold payroll taxes. 

Step 7: Purchase liability insurance

Providing marketing services to a business carries inherent risk. All freelance marketers should invest in some type of professional liability insurance. Coverwallet is one of many comparison websites that can provide a quote immediately. 

We will continue to update this post over time. If you have recommendations or comments, please reach out to max@growthcollective.com.

Max Ade
Founder of Growth Collective
Former Company
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Max Ade
Founder of Growth Collective
Former company
About Author
Max is the founder and CEO of Growth Collective. He believes that a truly elite marketer can change a company’s entire trajectory. His goal is to identify the top marketers in the world and connect them directly with great companies. Previously, Max led a team at Google that worked with the fastest growing mobile app advertisers. Later, he used his knowledge of digital advertising to build a portfolio of successful consumer-facing startups.
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