Comments on: The Corporate Veil (or How to Lose Your Business, but Keep Your House) http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/ Freelance Advice and Freelance Jobs - FreelanceSwitch Sun, 20 Jul 2008 01:26:33 +0000 http://wordpress.org/?v=2.5 By: TLM http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15629 TLM Tue, 29 Jan 2008 16:29:40 +0000 http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15629 This is a very good post. In order to become a sound business person you must learn how to protect yourself. One question, do many freelancers work by contract or is everything viewed as work for hire by inquiring parties? FYI, LLC stands for Limited Liability Company. :) This is a very good post. In order to become a sound business person you must learn how to protect yourself. One question, do many freelancers work by contract or is everything viewed as work for hire by inquiring parties? FYI, LLC stands for Limited Liability Company. :)

]]> By: Andy http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15581 Andy Mon, 28 Jan 2008 11:11:34 +0000 http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15581 @Marco: contact the Florida Department of Revenue and ask them whether they require you to collect state sales tax for the services/products you offer and whether that's just for clients within Florida or whether it would also apply to clients outside of Florida or even outside the USA. They should provide that information without needing information about you or your business. If they do, register for a state sales tax number and start collecting sales tax. As to your question about the IRS: your best bet is to go find a good small business accountant, but expect you'll spend about 30% of your income on income taxes. @Contentgrrl: yes, with payroll comes employer taxes. However, without payroll, you'd still end up paying most of those taxes anyway. The only taxes an employer usually pays is 1/2 of Social Security and state/federal unemployment taxes. Self-employed people end up paying both halves of Social Security taxes anyway, so you can't escape it anyway. However, with payroll and something like an S-Corporation, you can pay yourself a reasonable salary (say, $50K) and take any additional money as dividend distributions (which are not taxed for social security purposes). Yes, your best bet is to find a good small business accountant. As for your other question: the little guy gets sued or threatened with suits more often than anyone will care to admit. I've <em>never</em> been sued over my consulting gigs, but there's always a first time and the outcome can be quite awful if you don't have your company structure properly implemented. And you guys should go over and join the forums on the site, because many of these questions have already been answered there. @Marco: contact the Florida Department of Revenue and ask them whether they require you to collect state sales tax for the services/products you offer and whether that’s just for clients within Florida or whether it would also apply to clients outside of Florida or even outside the USA. They should provide that information without needing information about you or your business. If they do, register for a state sales tax number and start collecting sales tax. As to your question about the IRS: your best bet is to go find a good small business accountant, but expect you’ll spend about 30% of your income on income taxes.

@Contentgrrl: yes, with payroll comes employer taxes. However, without payroll, you’d still end up paying most of those taxes anyway. The only taxes an employer usually pays is 1/2 of Social Security and state/federal unemployment taxes. Self-employed people end up paying both halves of Social Security taxes anyway, so you can’t escape it anyway. However, with payroll and something like an S-Corporation, you can pay yourself a reasonable salary (say, $50K) and take any additional money as dividend distributions (which are not taxed for social security purposes). Yes, your best bet is to find a good small business accountant. As for your other question: the little guy gets sued or threatened with suits more often than anyone will care to admit. I’ve never been sued over my consulting gigs, but there’s always a first time and the outcome can be quite awful if you don’t have your company structure properly implemented.

And you guys should go over and join the forums on the site, because many of these questions have already been answered there.

]]> By: Marco Castro http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15577 Marco Castro Mon, 28 Jan 2008 09:00:51 +0000 http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15577 I am a freelancer based out of Miami, FL. Here is a question... When it comes to taxes i am a bit confused. Should i be charging my clients tax on projects? Or not? If not, how do i know what percentage is income and what percentage will be applied to Uncle Sam? Anyone i US managing this? your input will be appreciated. _M I am a freelancer based out of Miami, FL.

Here is a question…
When it comes to taxes i am a bit confused. Should i be charging my clients tax on projects? Or not?
If not, how do i know what percentage is income and what percentage will be applied to Uncle Sam?

Anyone i US managing this? your input will be appreciated.

_M

]]> By: Adrian http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15548 Adrian Sun, 27 Jan 2008 21:49:15 +0000 http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15548 Just what I was looking for, thanks for the informative writeup. Just what I was looking for, thanks for the informative writeup.

]]> By: Andy http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15539 Andy Sun, 27 Jan 2008 15:47:32 +0000 http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15539 @Jon: if you want to form an LLC, you may not need to pay someone else anymore to draw up the papers. Many states offer online forms to let you create your entity in as little as a few minutes (I set up an LLC in about 15 minutes from a hotel room using Georgia's online form). What you're looking for is going to be called something like the Corporations Division within your Secretary of State's office. Just contact the SecState where you live and they'll be happy to direct you to where you need to fill out the proper forms. In Georgia, the cost was about $100 and they had a link to the IRS site to create a Federal Employment ID Number and with both of those, I could go open a bank account and start operating my LLC. @Jon: if you want to form an LLC, you may not need to pay someone else anymore to draw up the papers. Many states offer online forms to let you create your entity in as little as a few minutes (I set up an LLC in about 15 minutes from a hotel room using Georgia’s online form). What you’re looking for is going to be called something like the Corporations Division within your Secretary of State’s office. Just contact the SecState where you live and they’ll be happy to direct you to where you need to fill out the proper forms. In Georgia, the cost was about $100 and they had a link to the IRS site to create a Federal Employment ID Number and with both of those, I could go open a bank account and start operating my LLC.

]]> By: MattT http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15538 MattT Sun, 27 Jan 2008 15:13:15 +0000 http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15538 @Jon You don't need to use a service like legalzoom.com. Creating an LLC is a relatively easy process. Start at the website of your state government. Most will have the information and forms you need, and doing it yourself will be a lot cheaper. @Jon You don’t need to use a service like legalzoom.com. Creating an LLC is a relatively easy process. Start at the website of your state government. Most will have the information and forms you need, and doing it yourself will be a lot cheaper.

]]> By: Jon http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15537 Jon Sun, 27 Jan 2008 15:06:38 +0000 http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15537 Nice post. It's not hard to go about forming a real company, it's just daunting. When I was thinking about getting an LLC, I was looking at using legalzoom.com, they've been around for a while and I've seen commercials for them too, so I tend to think they're somewhat legitimate. Nice post. It’s not hard to go about forming a real company, it’s just daunting. When I was thinking about getting an LLC, I was looking at using legalzoom.com, they’ve been around for a while and I’ve seen commercials for them too, so I tend to think they’re somewhat legitimate.

]]> By: CatherineL http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15536 CatherineL Sun, 27 Jan 2008 14:49:41 +0000 http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15536 Hi there - I chose one of these for my new business to limit my risk a little and also to pay less tax than I did as a sole trader. You do still need to tread carefully though. If you're taking out a business loan and you're a fairly new company, the bank may still want to secure the loan against your home. So you could still lose it if things went wrong. I would advise anyone from the uk to check out the Tax Cafe guides before deciding upon setting up a Limited Company, as it isn't worthwhile taxwise until you're making a certain amount of profit. Hi there - I chose one of these for my new business to limit my risk a little and also to pay less tax than I did as a sole trader.

You do still need to tread carefully though. If you’re taking out a business loan and you’re a fairly new company, the bank may still want to secure the loan against your home. So you could still lose it if things went wrong.

I would advise anyone from the uk to check out the Tax Cafe guides before deciding upon setting up a Limited Company, as it isn’t worthwhile taxwise until you’re making a certain amount of profit.

]]> By: Andy http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15535 Andy Sun, 27 Jan 2008 14:08:57 +0000 http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15535 @Brett: I sometimes write automation software for manufacturing customers. I've been in situations where, if something went wrong with the code, something would explode and possibly kill people in the general vicinity. Serious liability issues. Without the corporate entity around my work, I could lose everything I have now and into the future. Allan, good intro post for why you need a real company around you. Many freelancers will claim that any good lawyer can pierce the veil, but I think that's just wrong info. The best advice is to always run your freelancing business like a real business and not like an extension of your personal life and keep a good accountant and lawyer in your contacts list so you can quickly get assistance if you're not sure you're doing something right. Think of it like insurance: you hope you never need it, but you better pay the premiums to ensure that when you <em>do</em> need it, that it's there for you. @Brett: I sometimes write automation software for manufacturing customers. I’ve been in situations where, if something went wrong with the code, something would explode and possibly kill people in the general vicinity. Serious liability issues. Without the corporate entity around my work, I could lose everything I have now and into the future.

Allan, good intro post for why you need a real company around you. Many freelancers will claim that any good lawyer can pierce the veil, but I think that’s just wrong info. The best advice is to always run your freelancing business like a real business and not like an extension of your personal life and keep a good accountant and lawyer in your contacts list so you can quickly get assistance if you’re not sure you’re doing something right. Think of it like insurance: you hope you never need it, but you better pay the premiums to ensure that when you do need it, that it’s there for you.

]]> By: MikiP http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15534 MikiP Sun, 27 Jan 2008 11:53:16 +0000 http://freelanceswitch.com/the-business-of-freelancing/the-corporate-veil-or-how-to-loose-your-business-but-keep-your-house/#comment-15534 For example making sites using non original software, or using graphics and images protected with copyright. At least I guess For example making sites using non original software, or using graphics and images protected with copyright. At least I guess

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