You may have come across the terms “sole trader” and “freelancer” interchangeably as a person who works for themselves. Despite the fact that they both refer to independent contractors, there are some key distinctions between the two.
A sole trader is a self-employed person who owns and operates their own firm. They are directly liable for all business-related expenses and obligations. They are completely in charge of their company and have the freedom to decide how it will be run. Industries like construction, retail, and hospitality frequently employ sole proprietors.
A freelancer, on the other hand, is an independent contractor who works for clients on a project-by-project basis. They are independent contractors who are not affiliated with any one employer or business. In creative fields like writing, design, and photography, freelancers are common.
Both single proprietors and independent contractors are in charge of paying their own taxes. However, sole proprietors have the choice of paying their taxes annually or quarterly, whereas freelancers are forced to pay estimated quarterly taxes.
Let’s now discuss the issue of LLCs. A business form known as an LLC, or limited liability company, protects the owners’ personal assets while enabling them to conduct business as a single unit. The name of the owner can typically be used to form an LLC as the company name.
A popular technique that might be a suitable choice for sole proprietors and independent contractors who want to build a strong personal brand is naming their LLC after themselves. It’s crucial to keep in mind, though, that if you intend to grow your company in the future, naming your LLC after yourself might not be the wisest move. Finally, there are a few things to think about when choosing a name for your freelance business if you’re just starting out. You should pick a name that is memorable, simple to say, and associated with your industry. As the availability of the domain name may have an effect on your online presence and branding, you might also want to take that into account.
Sole proprietors and independent contractors are both types of self-employed people, but there are some significant distinctions between the two. You can start or expand your own business by making wise judgments by being aware of these differences.