Want To Be A Freelancer? Just Punch Yourself In The Face, Instead • Hacker News Board

Re: Want To Be A Freelancer? Just Punch Yourself In The Face, Instead

#61

Post by rada » Fri, Sep 17, 2010, 10:10 PM UTC

larrywright wrote: post #42

rada wrote: post #41

Earlier quoted context omitted.

You do need an LLC for liability protection but you don't need to pay yourself a salary. Instead, you take whatever you want as pass-through income distribution.

Ah, ok. That makes sense. Can you only pass through a portion? In other words, keeping some back for expenses like computers, cell phones, hosting, whatever?

You can pass through whatever you want but you should pay all the expenses through your LLC, otherwise you "pierce" the liability veil.

TIP: presuming you are in the US and you are married to someone who has a full-time job, you can save a large chunk of money if you sell 99% of your company to your spouse, have them be a passive partner, and distribute 99% profits to them. (Ask your accountant for details).

Re: Want To Be A Freelancer? Just Punch Yourself In The Face, Instead

#62

Post by kls » Sat, Sep 18, 2010, 1:26 PM UTC

rwhitman wrote: post #12

gexla wrote: post #10

One item I disagree with. You are a freelancer, but you are also a company. You are employed under whatever name you are doing business as. If you don't have a business name, then it's just your own name as a sole proprietor. You can give yourself a real work history and paychecks, just like you would be receiving by working for any other company. Whatever is left over after your regular paychecks you can give yourse…

You can't put yourself on salary unless the business entity is a corporation or an LLC taxed as a corporation. Even if you do payroll for yourself you still have to file a 1099 and a schedule c. For a freelancer a Corp is a bit overkill and you get taxed twice.

Which you should be if you are in the US. A freelance should be a S-Corp and pay themselves a "reasonable" salary. To not do so you are throwing a huge chunk of money away on employer FICA. Basically you are pissing away 8% of you income if you are not a S-Corp and that is just in taxes. When you factor in the tax deductions a corp can take the savings are astounding.

Someone up stream mentioned that a freelancer should hire a secretary and stop doing the office work for $100 hr. My though is the first thing a freelancer should do is outsource accounting to a CPA. These people pay for themselves, second should be legal counsel, at least a paralegal after that a secretary would be a good third.

Re: Want To Be A Freelancer? Just Punch Yourself In The Face, Instead

#63

Post by DennisP » Sat, Sep 18, 2010, 1:31 PM UTC

zavulon wrote: post #22

listic wrote: post #18

It's not the first time that I hear health insurance mentioned in stories I read on Hacker News. As a person living far away from USA I'm afraid I'm not getting the situation, and they don't seem to write about this sort of stuff often on the Net - because that's the way things are, except I think they are different in different countries. For example, here in Russia every citizen including unemployed (which I am now…

(I'm also from Russia) The doctors here are much better and don't need "motivation" in a Russian sense of this word.. They will give you their best treatment, if you have insurance. For this reason, insurance here is very expensive. There's a lot of poor people here that don't have any kind of insurance. The cheapest insurance in NY, for example is ~ $300/m, but you also pay up a large amount if you require serious t…

2014 actually. 2013 was the House version of the bill but the Senate chose to make us wait another year.

Re: Want To Be A Freelancer? Just Punch Yourself In The Face, Instead

#64

Post by rwhitman » Sun, Sep 19, 2010, 2:03 AM UTC

rwhitman wrote: post #12

gexla wrote: post #10

One item I disagree with. You are a freelancer, but you are also a company. You are employed under whatever name you are doing business as. If you don't have a business name, then it's just your own name as a sole proprietor. You can give yourself a real work history and paychecks, just like you would be receiving by working for any other company. Whatever is left over after your regular paychecks you can give yourse…

You can't put yourself on salary unless the business entity is a corporation or an LLC taxed as a corporation. Even if you do payroll for yourself you still have to file a 1099 and a schedule c. For a freelancer a Corp is a bit overkill and you get taxed twice.

A lot of folks misinterpreted this and I can't edit it.

A sole proprietorship, a single-owner LLC and an S-Corp are all pass-through to your personal income taxes. Meaning that in the eyes of the government you are still self-employed and need to file a 1099 and schedule C, even if you put yourself on payroll instead of paying out on draw.

I learned this the hard way.

What I'm saying is that even if you have a business entity you are still technically self employed. That is unless you have a C-Corporation or an LLC taxed as a corporation, in which case yes you can put yourself on payroll and do tax withholding and can legally be considered 'employed' by the company, however you get taxed double and face a number of costly state and federal requirements not to mention new overhead costs for legal and bookkeeping etc which is in most cases not worth it unless you are earning quite a lot of money.

But regardless, I don't know how much a mortgage company would care about such things. Maybe regular issue of a check from one company would be enough to suffice and I'm overblowing the issue...