As a freelancer, it’s important to find out whether you need to register your business or get a business license. If you’re running your business without a license when you should have one, you can end up facing large fines. But do freelancers need a business license?
Do Freelancers in the UK Need to Register Their Business?
Freelancers working in the UK need to register their business. There are different ways to do this. It all depends on the type of business structure you’re setting up and your circumstances. If you’re a sole trader, you need to register with HMRC as self-employed for tax purposes. If you’re setting up a limited liability partnership, you’ll need to register the partnership with Companies House by filing an LP5 form signed by all the partners.
As a sole trader or partnership, you will also need to register as an employer if you take on employees. You need to register for VAT if your turnover exceeds £85,000. If you’re setting up a company, you’ll need to register with Companies House, as well as HMRC for corporation tax.
Do Freelancers in the UK Need a Business License?
Freelancers working in specific industries or engaging in certain activities need a business license to operate in the UK. These include:
- Driving instructors
- Childcare workers
- Hairdressers
- Tattoo artists
- Anyone providing credit or financial services
- Security guards
- Taxi drivers
There are also business licenses covering activities such as selling alcohol, playing recorded music in public, or processing customers’ personal data. To find out whether you need a business license, the UK Government website has a helpful license finder.
Local authorities and specific government bodies issue business licenses. The application fees and the cost of the license vary depending on the activity and local authority. So, make sure to check the details that are relevant to you. Prices range from tens of pounds to thousands, depending on the license.
Do Freelancers Have to Register as a Business in the US?
The rules around business registration for freelancers in the US vary between states. If you’re operating as a sole proprietorship or general partnership, you generally don’t need to register your business unless you’re using a business name other than your own. Freelancers operating as a Limited Liability Corporation (LLC), or another form of corporation, must register their business with their state authority.
At a federal level, you can also register for an Employer Identification Number, or EIN, with the IRS. This isn’t compulsory for sole proprietorships or general partnerships. It gives your business a unique tax number, separate from your social security number. This helps with opening business bank accounts and filing federal taxes.
Do Freelancers in the US Need a Business License?
Similarly, there are various licensing rules and regulations for freelancers at a federal and state level. Again, these depend on the business structure you use. The US Small Business Administration is a useful starting point for working out what licenses you may need for your freelancing business.
You’ll also need to check the Small Business Administration equivalent website for your state. Incorporated freelancers usually need to obtain a business license from their state authority. For relatively small-time freelancing gigs like graphic design, most states don’t require you to register for a business license.
Do I Need to Register a Business or get a Business License as a Freelancer in Australia?
If you’re a freelancer operating as a sole trader in Australia, you don’t need to specifically register your business. However, you do need to apply for an Australian Business Number (ABN) before you can charge clients. You can also choose to register your business name.
If your turnover is over A$75,000, you’ll need to register for Goods and Services Tax (GST). The Australian Business License and Information Service has a handy tool for finding out more about licenses, regulations, and other compliance measures relevant to your business.
What About in Canada?
The requirements for registering a business or getting a business license as a freelancer in Canada vary between provinces. Generally speaking, if you’re using your name as the business name and operating as a sole trader, it’s not necessary to register your business or to get a business license in Canada.
Like the U.S., not all freelancers in Canada need a business license. This depends on your field of work, as well as your location. A quick check on Canada’s official business permits and licenses site BizPal can give you a good idea if you need to register for a business license or not.
Do I Need a Business License as a Freelancer in Europe?
Freelancers working in Europe need to check the specific requirements of their country of residence, and the regulatory regimes can be complex. For example, in Germany, there is a list of specific occupations that can operate as freelancers. If you fit into one of these occupations, you don’t need to register with the Business Registration Authority. In Portugal, freelancers need to register, or ‘open an activity’, with the tax office to begin working.
What Are the Requirements in Asia?
It’s similarly complex in Asia. In Singapore for example, if you’re a freelancer and operating under your full name, you don’t have to register your business. However, many freelancers choose to do so to enhance the legitimacy of their business. Freelancers in certain industries, such as food preparation, do need to apply for a business license.
In India, you don’t need to register your business or get a business license, as long as you’re working as an individual and your annual income is less than 2,000,000 rupees (around £19,400).
What About in Africa?
Freelancers operating as sole traders in South Africa must register with the South African Revenue Service within 60 days of starting their business. In Kenya, freelancers must register their business via the Government’s eCitizen platform, regardless of what type of business structure they’re using. It varies by country, so always check with your local authority.
Do I Need to Register my Business as a Freelancer in South America?
It’s the same story for freelancers in South America. Freelancers in Brazil need to register their business either as an Individual Small Business Owner or as a self-employed worker. In Colombia, self-employed freelancers must register with the Tax and Revenue Department. They can also choose to register their business with the Chamber of Commerce.
Do You Need a Business License?
As you can see, business registration and licensing for freelancers varies greatly from country to country. The take-away message is to check with the relevant authority in your country of residence. This way, you can be sure you’ve done everything you need to comply with the local requirements.
This article was a collaborative effort from our writers Josh and Kate.