How to register as self-employed in the US (2026 guide)

Step-by-step

1

Decide between sole proprietor and LLC

Two paths for most US freelancers. Sole proprietor: no formal federal registration, file taxes on Schedule C as part of your personal return, simple and free to start, but no personal liability protection. LLC: formal state registration ($50–$500 depending on state), file annual reports, choose tax treatment (default is pass-through like sole prop, but you can elect S-Corp later), provides personal liability protection. Start as sole proprietor if you're under $40k revenue and risk-tolerant; move to LLC once revenue and exposure grow.

2

Pick a business name and check availability

If you're using your own legal name (e.g., 'Jane Smith') for your sole proprietorship, you don't need to register a business name. If you want a trade name (e.g., 'Smith Design Studio'), most states require a 'Doing Business As' (DBA) filing — typically $25–$100 at your county clerk's office. Check name availability via your state's Secretary of State website. For LLCs, the LLC name registration replaces the DBA.

3

Get an EIN (free, takes 5 minutes)

An EIN (Employer Identification Number) is the IRS equivalent of an SSN for businesses. Free at irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online — takes 5 minutes online. Why bother as a sole proprietor with no employees? You can use the EIN instead of your SSN on client invoices and tax forms (W-9), keeping your SSN private. Also required if you'll open a business bank account or eventually become an LLC.

4

Register with your state (varies)

Each state has different rules. Some states (Texas, Florida) require sole proprietors to register if using a DBA but otherwise treat self-employed income like personal income. Others (California, New York) require additional registrations or business licences depending on industry. Check your state's Secretary of State website AND your city/county business licensing requirements. Some cities require a local business licence ($30–$200/year) even for solo home-based businesses.

5

Understand your tax obligations

Self-employed people pay: income tax on profit (income minus deductible expenses), self-employment tax (15.3% — Social Security and Medicare contributions split between employer and employee, but you pay both as self-employed), and potentially state income tax. Critical: you pay quarterly estimated taxes (April, June, September, January) — not just at year-end. The IRS penalises underpayment via quarterly safe harbour rules. Standard advice: save 25–30% of income for taxes and use QuickBooks Solopreneur or similar to estimate quarterlies.

6

Open a separate business bank account

Not legally required for sole proprietors (you can use your personal account), but practically essential. Keeps business and personal transactions clean for tax purposes, simplifies year-end accounts, signals professionalism. For LLCs, a separate account is REQUIRED to maintain the liability protection — mixing personal and LLC funds 'pierces the corporate veil' and exposes you personally. Good options: Bluevine, Mercury, Novo, or business accounts at major banks (Chase, Bank of America, Wells Fargo).

7

Plan for your first tax season

If you started self-employment partway through the year, you'll file Schedule C with your personal 1040 by April 15 the following year. Track every business expense from day one (deducting them legitimately can reduce your tax bill significantly). Common deductions: home office, mileage, equipment, software subscriptions, professional services. Use Wave (free) or QuickBooks Solopreneur ($20/mo) to track from day one. An accountant for your first year ($200–$500) is worth it to understand your specific deductions.

Common questions