Do Freelancers Need A Business License? (Fully Explained)

Freelancer signing a document, with the text "Do You Need A License?"

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.

In this article, I’ll discuss what a business license involves as a freelancer, and whether you need one in various parts of the world. The short answer is that freelancers don’t typically need a business license. However, this can vary depending on where you live and the kind of services you offer. Generally, digital freelancers don’t need a business license, but those offering physical services often do.

Note: This is for educational purposes only and does not constitute legal advice. As always, if you’re ever unsure about anything, consult a legal professional.

What Is A Business License?

Business licenses are official permits issued by government or other professional bodies that essentially dictate how certain aspects of your business can operate. Not everyone needs a business license, and in fact most freelancers don’t. This is usually true if you offer digital services, such as if you’re a freelance writer or freelance graphic designer.

However, there are a few types of business license to be aware of in case your specific services do warrant a business license.

Important Note: While you might not need a business license specifically, you will usually need to register as self-employed with your local tax authorities. This is HMRC in the UK and the IRS in the USA.

Business licenses are typically designed to protect anyone in your business and the public, usually in case accidents happen. That’s why they’re common for physical businesses, like shop owners, and less common for digital freelancers. But business licenses can also play other roles involving privacy protection and potentially financial purposes too.

The specifics of a business license vary depending on the kind of business looking to acquire one. There may be local level licenses you need to apply for, along with state, county, or national licenses.

How Do You Get A Business License As A Freelancer?

You’ll usually need to reach out to your local authorities if you think you need a freelancing business license. You may also need a business license from a specific governing body in your industry. This may be the case for those in the financial world for example.

How Much Does A Freelance Business License Cost?

Freelance business license costs can vary, but the typical range is around $30 to around $100. Some licenses may cost more, and some are cheaper. It’ll depend on your industry, where you live and work, and the type of business license you’re applying for.

There may be fines to pay if you operate without a business license when you should in fact have one. That’s why it’s key you find out from your local authorities whether you need a business license before you start freelancing!

Do Freelancers In The UK Need A Business License?

Freelancers in the UK often don’t need a business license, especially if they’re operating as digital freelancers. However, 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.

Registering Your Business In The UK

While you might not need a business license, freelancers working in the UK do 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 (which many digital freelancers will be), 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 (something to bear in mind as your business expands). You also need to register for VAT if your turnover exceeds £85,000.

Do Freelancers In The US Need A Business License?

Freelancers in the US typically don’t need a business license, especially if they’re selling services online. As with the UK though, things can be different if you offer physical services or goods as part of your freelancing operation.

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.

Registering Your Freelancing Business In The USA

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.

Freelance Business License Requirements Across The World

Do I Need 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.

Do Canadian Freelancers Need A Business License?

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 US, 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. In a lot of cases, you won’t need a business license, but you will typically need to register as a freelancer in some way. The rules can also vary if you’re not a citizen of that country, so always check with the relevant local government if you’re not sure.

Do Freelancers In Asia Need Business Licenses?

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 and usually don’t need a business license. 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 usually 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 below a certain threshold.

Do Freelancers In Africa Need A Business License?

Freelancers operating as sole traders in South Africa must register with the South African Revenue Service within 60 days of starting their business. But you typically won’t need a business license.

In Kenya, freelancers must register their business via the Government’s eCitizen platform, regardless of what type of business structure they’re using. But again, usually you won’t need a separate business license.

It varies by country, so always check with your local authority!

Do You Need A Business License To Freelance In South America?

Freelancers in South America don’t usually need a business license, and may not even need to register their freelancing business. However, this varies between countries, so always check with your local government before offering any services.

Do You Need A Business License?

Business registration and licensing requirements for freelancers varies greatly from country to country, and from state to state. 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!

If you’re ready to jump into the world of self-employment, check out our guide to becoming a freelancer for more helpful tips!

Freelance Ready is reader-supported. That means some links on this website are affiliate links. If you sign up or make a purchase through these links, we may earn a commission.