Freelance Question
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- OSFA
Ok, let's say you are ready to start freelanceen. If I wanna establish my own small corporation, are there any licenses or insurance I need to obtain before I start doing business? A guy asked me today if I have a state license to do business and it puzzled me. What exactly do designers (since our line of work is a lil' different) need to be covered and able to make some money need???
- OSFA0
I know there are better sources to find out this information, but I know there are lots od successful freelancers here...yeah, I'm kissin ass.
- skelly_b0
You don't need anything to represent yourself as self-employed / sole-proprietor. In the long run this isn't the best route due to taxes.
Look into setting up an LLC. Easy to maintain and cheap to setup. Get a relationship started with an accountant. They will help get all this stuff going.
- PonyBoy0
hi sh@wn!!
- lvl_130
yeah as skelly_b said, set up an llc.
i set one up last year for about $500+- with my accountant. it's pretty painless and helps you "establish" yourself for any larger business. it seems they won't touch any freelance designer that doesn't have at least an llc established.
it is another tax-step though just to pre-warn you. i haven't done anyhing with my llc yet...yeah, i'm working on it....slowlllllyyyyy... :D
- Crouwel0
Set up an eenmanszaak.
that is dutch for onemansbusiness, which means technically the same as LLC.
And even though the name would make you believe it is for a business run by one person, this is in fact not necessarily true. You are allowed employees under this license here, fafaik.
Anyway, why would you care about the Dutch anyway haha.
Set up an LLC and start making some dough, you wanker! ;D
- OSFA0
what is the MAIN difference between an LLC and S-Corp?
I am in the process of setting up an s-corp with my bro, should I switch? please explain...
- OSFA0
could I go for an LLC if I have a partner?
- lvl_130
could I go for an LLC if I have a partner?
OSFA
(Apr 18 07, 17:30)yes. mine is set up with a friend of mine.
- OSFA0
what is the MAIN difference between an LLC and S-Corp?
- oldelpaso0
what the fuck is an LLC? whats an S-Corp? way out of my depth here.. but something tells me i should know about these matters.. so.. do tell :)
- urban100
an s-corp has shareholders in a similar way as a regular c-corp, but doesn't pay income taxes on its profits. the main differences between an llc and s-corp is ownership (shareholders) and taxing methods.
http://en.wikipedia.org/wiki/S_c…
http://en.wikipedia.org/wiki/Lim…
- skelly_b0
HELLO KEV1N!
Both a LLC and S-Corp have pass through income, meaning profits are seen as the shareholders' individual income. For a small one man operation they are practically the same thing from a tax point of view.
I personally prefer the LLC since it requires no annual paperwork to maintain. Where a S-Corp I used to own required and annual reports along with annual fees. Big pain in the ass.
Basically if you aren't large enough to justify a C-Corp (which is even more paperwork) I would recommend an LLC. Cheap and only need to file paperwork every 30 years or so.
The advantage of all these over a sole-proprietor is the evil self-employment tax. With an LLC and a good accountant you can keep this to a minimum.
- skelly_b0
I would also add all this has more to do with taxes than business relationships. I have never had a client inquire about the type of business entity I have. It doesn't provide them any protection, but it does protect my personal assets from them if they were to sue me for whatever reason.
Another bit of advice is pursue regular work with design firms and agencies, not individual businesses. They are a pain in the ass and require a staff to manage, in my opinion. I learned this the hard way when I was a wee lad.
- OSFA0
Thanks everybody fopr the responses, learned a lot and I will talk to my accountant. But regarding licenses, if I set up an S-corp or LLC do I need any special licenses or permits to operate?
I know other type of fields require them like restaurants, construction, hair studios, etc. But I was under the impression designers (if they doing this as a side job) don't need these. What up with that?
- OSFA0
anybody?
- blaw0
this book is chock full of good information:
http://www.amazon.com/Working-Yo…
- lofielectronic0
what the fuck is an LLC? whats an S-Corp? way out of my depth here.. but something tells me i should know about these matters.. so.. do tell :)
oldelpaso
(Apr 18 07, 17:53)Yeah - I was thinking the same thing, thought it was something to do with 'the Apprentice' or somethin.
- j_red0
FYI: you don't need anything to start freelancing right now; if they ask for your EIN (or business license number) just give them your social security number.
All the company that's hiring you cares about is creating a paper trail in case they get audited, etc. they ask for your EIN so that they can prove they paid you; the SSN works the same way.
When you eventually get your LLC, you'll still file taxes under your SSN if you're just a solo freelancer. you can take deductions, etc the same way.
this is just what i've learned from experience....i may be doing something incorrectly but i haven't noticed in the 3 years i've been freelance.
- OSFA0
thanks j, that info helped a lot, but it also confused me a little because I am freelancin as a partnership with my bro. So I'm not solo. Does this change things?
- j_red0
it just matters how you're going to file your taxes....
The best advice i can give you is to hire an accountant. Just like with design, you can have your secretary do it or else hire a designer, hiring an accountant lets you worry about stuff you like to worry about - remember that there are people out there that LIKE to do accounting and are good at it. Look around until you find someone you're comfortable with; you'll find it's much more affordable than you'd think, and it will make you more $$ and save you more time in the long run.
if you're just starting in the freelance world, solo, you can probably just do it yourself, but otherwise i would say hire someone...