Suppose you’re freelancing, and you want to do things real legal like — with the tax season on your mind.
If only for ease on your taxes, it’s my limited experience and what others have contended that you ought to set up your own business.
It doesn’t come with any liability or branding protection, but a simple sole proprietorship can do you just fine — it has for me for more than a year. As is sometimes the motivation for content here, I was asked enough times by others about what that means and one makes it happen.
To keep track of my income from freelancing, I wanted to funnel all payments I received through a specific bank account for that purpose. To do that, I needed a business. To do that, you work top to bottom.
- First, you file for an Employee Identification Number with the IRS.
- Then, go to your state’s small business administration — you’re not incorporating so the cost is minimal, usually less than $100 — and file your sole proprietorship’s name. In many states, if your business name is nothing more than your name and one or three descriptive words — i.e. Christopher Wink Writing, Editing and Multimedia or Steve Pisauro Pluming and Heating — you don’t need to file (and pay to file) a fictitious name.
- Finally check with your local government to see if there are any county or municipal expenses — Philadelphia, for example, requires a business privilege license. See the steps to file a business in Philly.
With all that done, you get yourself a small business checking account, and try to stuff it.