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

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

#41

Post by rada »

larrywright wrote: post #29
rwhitman wrote: post #12

Earlier quoted context omitted.

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.

That depends on what you're doing. If you're a developer or a sysadmin or something, you need to set up a corporation to provide you some level of liability protection. I'm not a lawyer/tax expert, but my understanding is that this is not something you could do without at least an LLC in place. If I'm wrong about this, someone please correct me.

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.

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

#42

Post by larrywright »

rada wrote: post #41
larrywright wrote: post #29

Earlier quoted context omitted.

That depends on what you're doing. If you're a developer or a sysadmin or something, you need to set up a corporation to provide you some level of liability protection. I'm not a lawyer/tax expert, but my understanding is that this is not something you could do without at least an LLC in place. If I'm wrong about this, someone please correct me.

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?

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

#43

Post by jdietrich »

There is no such thing as freelancing. I mean it. There are insecure, short-term jobs and there are businesses. Freelancers are neither fish nor fowl. They don't have the security and legal protection of an employee, nor the efficiency and delegation of a business. If you consider yourself a freelancer, stop. If you have the inclination and the ability to delegate and manage, take on an assistant and start acting like a business. It is insane for a $100/hr worker to spend their time doing menial administration.If you just want to do a job of work without worrying about that stuff, you'll almost certainly be better off on a permanent contract with all the benefits that come with it.

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

#44

Post by modoc »

fierarul wrote: post #2

A must read for any would-be freelancer. Freelancing doesn't mean just sitting in a Starbucks with your MacBook Pro.

As I read this, I'm sitting in a Starbucks on my MBP. Now it doesn't JUST mean this, but it's not a bad part of it:)

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

#45

Post by gexla »

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?

Yes you would keep a certain amount of money in the company accounts for expenses. The company expenses would have to be paid by the company (as opposed to your personal income which is passed through to you) for these expenses to be tax deductible (right? I'm not a tax guru either.)

@rwhitman I wasn't necessarily referring to a salary. I know that you can't pay yourself a salary as an employee when you are the owner of the sole proprietorship. As the owner in such a case, essentially you are the company, not an employee.

As I mentioned in my other reply. I'm thinking that giving yourself regular payments from your business account would be a better way of showing a regular and steady income than showing the more crazy activity of the business account

I think the biggest problem is that he simply couldn't give a straight answer to questions. He could only say he is a freelancer and he works for himself. He could have said that he is a sole proprietor and that his company name is x.

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

#46

Post by moxiemk1 »

gaius wrote: post #38
zavulon wrote: post #22

Earlier quoted context omitted.

(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…

To buy the same insurance that I used to have when worked for a financial company here would be $500-600/month. To put that in perspective, I pay a comparable amount of National Insurance every month in the UK, deducted from salary. No such thing as "free healthcare".

Beyond that amount, however, in the US, we also all have to pay Medicare and Medicade taxes. Also, that health insurance at $500-$600 also almost certainly includes a deductible. And copays.

And, as a sister comment points out, National Insurance also includes government pension. I don't know if this is true, but if it is, also include our Social Security taxes in the cost.

All of these together makes our equivalent cost thousands a month.

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

#47

Post by jseliger »

jdietrich wrote: post #43

There is no such thing as freelancing. I mean it. There are insecure, short-term jobs and there are businesses. Freelancers are neither fish nor fowl. They don't have the security and legal protection of an employee, nor the efficiency and delegation of a business. If you consider yourself a freelancer, stop. If you have the inclination and the ability to delegate and manage, take on an assistant and start acting lik…

This is a good post and accurate one; it also describes how my family's business basically runs -- as a business. We do grant writing for nonprofit and public agencies (http://blog.seliger.com/about/), and most of our clients and more than half of our revenue comes from shortish (6 to 8 week) clients. But it's run... like a business.

However, one thing I'd point out is that most businesses don't have the immediate cashflow to hire an assistant right out the gate, and many businesses that eventually charge $100+ / hour don't start that way as they try to acquire clients and get some amount of money going. When I was a little kid and my parents were starting the firm, my Dad routinely worked 80 – 90 hour weeks -- and that is not an exaggeration. He couldn't have hired someone else to do the scut work at the time.

I think there are two lessons to take from this, which isn't to discount your observation -- as soon as you can afford someone in a secretary / office manager type role, get them, but you might not be able to --

1) Do anything it takes to survive. pg calls this "maximizing your runway" and so forth, but that's the basic idea.

2) Do something that, ideally, everyone else isn't doing. We're basically the only non-specialist grant writing firm in the country. No one else works the way we do, from what I can tell. If you're a freelance writer for magazines and so forth... every third person in Brooklyn works the way you do. (That's one reason I never tried to be one, tempting though it was; I'm probably better suited for journalism than grad school, but here I am). If you're trying to be a freelancer, the competition is, to my mind, insanely fierce.

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

#49

Post by jdminhbg »

jdietrich wrote: post #43

There is no such thing as freelancing. I mean it. There are insecure, short-term jobs and there are businesses. Freelancers are neither fish nor fowl. They don't have the security and legal protection of an employee, nor the efficiency and delegation of a business. If you consider yourself a freelancer, stop. If you have the inclination and the ability to delegate and manage, take on an assistant and start acting lik…

Is it less work to find a reliable, very part-time assistant than to just do the menial stuff yourself?

Serious question, because I'd love to be pointed to a way to do that.

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

#50

Post by samatman »

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 properly managed S corporation avoids double taxation while providing the liability and legitimacy benefits of doing business as a corporation. That or an LLC should be in place any time someone is doing business; if you aren't working for one, make one. The benefits vs. the ~ $250 a Delaware corporation costs are huge.
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