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Thread: Starting up the Home Business

  1. #1
    Beyond the Sea
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    Ok, I'm about to embark upon legalizing my whole in-home operation. I'm planning on getting a real, honest-to-goodness business license and all that goes with it.

    What are the caveats here? What are some book-based/online resources for more info on setting this up? Obviously, there are specifics to where I live on this whole thing, but what are the general pitfalls and problems and good things I should look out for here?

    thanks,
    Rich

  2. #2
    Ximensions.com Sul's Avatar
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    resolved

    Well it working at home has it's advantages and disadvatages:

    Advantages:

    -You are in the comfort of you home and in a familiar environment
    -You may find it easier to work in this enviroment because of this
    -No travel expenses, etc

    There are other adv...

    Disadv:

    -It can be stressing because a reminder of work will always be around you at home
    -It may be hard to stop working since everything is just at home and by you...which may take to taking away social activities and fun time!
    There are others.

  3. #3

    Smile

    Just wanted to say best of luck to you!

    I am also starting up my own business, and am curious of what the steps are.


  4. #4
    Beyond the Sea
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    Thanks, Sul. Yeah, working at home sucks for some things...it's good for others...

    I guess I should mention I'm doing this in a freelance capacity. I mean, I already do a lot of work at home, I just haven't made it official. And still, I'm not going whole hog...I kept my day job... I just don't want to get screwed when it comes to taxes, so I'm getting a business license...plus, then I get to write off all the crap I already spend money on anyway...

    Here's a couple of books I've found on Amazon:

    The Streetwise Guide to Freelance Design and Illustration:
    http://www.amazon.com/exec/obidos/AS...349961-9453724

    Getting Started as a Freelance Illustrator or Designer:
    http://www.amazon.com/exec/obidos/AS...349961-9453724

    Graphic Artists Guild Handbook : Pricing & Ethical Guidelines:
    http://www.amazon.com/exec/obidos/AS...349961-9453724

  5. #5
    Beyond the Sea
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    forget about the trolls

    help ME!
    It's all about ME!
    ME! ME! ME!

  6. #6
    Beyond the Sea
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    ok, dredging up the silt from the bottom of the pond...

    Here're my questions:
    1) What do you need to start your own freelance business? Business license? What kind of company? Proprietorship or LLC or Corp?
    2)How much do taxes actually take out of what you make? I've heard anywhere from 30 to 50 percent! On the flip side how much does it actually save you in taxes? Do you have to pay more taxes because you now OWN a business? Like a small business tax or somesuch?
    How do freelance illustrators do it? I mean, one of my professors in college was a well-known, respected illustrator who never suffered for work, but how did he handle this? Did he have his own business? Is it different because he had an agent scouting work for him?

    Now, I've been making small-time cash on a few projects here and there, but I wanna go legit. I'm just scared I'm missing something and I'm gonna get bit in the butt.

  7. #7
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    Don't start a business if it's just you: there is no reason and it can sharpley curb your potential client list.

    Freelancers are just freelancers and pay taxes as such. A business is usually set up to limit the financial liability that can be held against you in the event that you mess up really badly.

    It doesn't save you any money and you can still write off the expenses as business expenses as a freelancer.

    I started a company with some other people and we started a s-corporation. all sorts of paperwork (i didn't have to do it, that was the business department's work) that took up a ton of time.

  8. #8
    Beyond the Sea
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    so...

    what are the laws about being a freelancer? Is it different depending on where you live? How do you get the tax breaks for stuff you buy? Where can I go for more info? I can't find any books that don't talk about starting a business...nothing on being a freelancer...

    does the GAG book explain any of this?

    ps. Thanks a lot, Mad Clown!

  9. #9
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    MadClown,

    Why should you NOT create a business? Most web designers start out as freelancing, and then soon start their own business. Why not start one, and then build it from the ground up. Also, there is a question on "professionalism". How can you land good clients, without a business? Not many businesses will contract a job to the avg college freelancer.

    Try this one out, Kraken!
    http://www.lycos.com/business/index.html

    There are lots more... I can post more later if you like.

    --Neelixx

  10. #10
    Beyond the Sea
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    thanks, neelixx,
    I'm such a newbie at this, I didn't know lycos had a business section.

    After thinking about it, I don't actually want to form and grow a business...I just want me...but making money. And I don't want to get screwed when tax time comes... I've heard somewhere that you can just keep track of your receipts and save about 1/3 of your income from the freelance for taxes and you'll be ok...but is that all? Can I build a business of just me...but still benefit from tax breaks? Would the business end of it just put me in over my head, though? AND...if I declare all this stuff I bought during the year on my taxes...aren't they going to want to see some kind of written paper saying "yes, I'm a business"?

    very befuddled...
    [Edited by Kraken on 02-23-2001 at 05:05 PM]

  11. #11
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    I'm not sure how to answer that, Kraken. I, myself, am starting up my own business... but with the thoughts of having my own office space and 2 other people under me in about a year (java programmer, graphics designer, and me - actionscriptor). I'm currently freelancing, but have no idea how to do the tax thing without a business. Plus, I'm just not sure how you can pull of being professional to other businesses without one. It's really not that hard, if you are working from home (which is me). Just apply for a business license, obtain a tax ID, and start up a business account at your local bank. That's about it.

    There's much more about starting a business.... but if you are just freelancing, that's really all you need. Anyone else have ideas?

    --Neelixx

  12. #12
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    I freelanced for a long time before I started a company, so I don't say 'you better off freelancing' without some basis.

    The are many pluses to being a freelancer that other companies see. First off, freelancers are seen as far more accessable and informal. That is a plus for many businesses. Many time they won't want to subcontract to another business, because then that business will be claiming credit for the same work that they are claiming credit for. A person claiming credit is much easier, because then you can just respond that he was employed by you.

    Taxes aren't that different for another thing. I am a part of a s-class corporation that a small group of people has sunnk a fair deal of money in starting up. Resultingly we know that come tax time we'll have spent more than made and we won't need to pay taxes. So we having been withholding them. We don't need do and we're not legally required to as a s-class corporation. If i had my own business i wouldn't withhold taxes and on tax day it'd be the same as being a freelancer.

    There are many employees that will withhold your taxes as a freelancers too. I've freelanced with MTV and they withhold taxes as if I was a normal employee. Come tax day it's all the same. I take all my receipts, add up what i made, what I paid and pay (or get refunded) the difference.

    I subtract all business related expenses. When I was in a band, i got to take out whatever gas purchases i made. I just had to keep the receipts to prove it. I write down on the back of all my receipts how they are related to business so later on down the road I know. you don't have to establish anything more than that the expenses are work related. not that they are related to your primary source of income. i just did some freelance PA work for the superbowl and all my meals to and from the job and mileage are rightoffs. so are all the related phone calls.

    I still do freelance, and combine both incomes when tax time rolls around, but my freelance work is down under my name. Clients don't freak because they see my work.

    there are freelance sites out there (i think aquient.com i one) that may help too. zeldman.com might have something too.

    just remember receipts and to go with whatever avenue makes you feel more comfortable. if you're cool with telling people your company is one person and you don't think that you'll feel silly, go for it. if your confident enought to present yourself as a freelancer do that. either way, enjoy.

  13. #13
    Beyond the Sea
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    you guys rock!

    thanks for the info.

    I'm still not sure exactly what I'm going to do, but I have a better idea of what's involved. I'll post more about what I find about specific laws in my area when I find out more.

    cheers,
    Rich

  14. #14
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    starting a business

    when i started my company i went to the bank to open a business account. the amount of info on businesses they had was incredible.
    go to as many banks as you can and grab all of their stuff, they are more than willing to give it away without obligation.

  15. #15
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    tricopter

    nice site

  16. #16
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    Hey Kraken, good for you buddy! I wish you every success!

    My wife is a freelancer - writer. So she doesn't have a business license, etc., but she does pay quarterly taxes, she has a business card, a P.O. Box, three websites and email. She has an in-home office which she deducts and she saves every expense receipt for deducting off taxes.

    You have to decide what you want out of your venture before you leap. Do you just want to be a one-person operation? Or do you intend to really start a company? In which case, per my previous topic - then be a company. I think that the main reason that so many people fail is because they haven't defined what they want to do - they don't plan for their business or freelance endeavor - they don't act on those plans - and they end up having a wishy washy experience - or they fail.

    One thing about being a freelancer - don't compromise on contracts - people will think it may be easier to do business with you because you are freelance - and they may think it is easier to NOT pay you because you are freelance. I have friends who are freelance illustrators and they live and die by their contracts. As a freelance worker, you don't have time to do work that doesn't pay, and in a timely fashion. Don't do work on Spec - they can see your work on your site or your CD.

    As for presenting yourself, I definately recommend:

    - A Website - duh!
    - Flyers/brochures/CDs - all good depending on your cash base and equipment to produce such things.
    - A business card
    - Phone #, email, fixed address
    - A Business Plan - map out where you want to be in one-year and five-years.
    - A base contract

    My wife and I use a tax advisor and a financial advisor - they run about $1,000 per year, but it saves us loads of headaches doing our own taxes, etc (what form do you use for a home office deduction? - they know that stuff and will generally get you more money back than you can yourself). You will have to decide if you have cashflow for an investment like that or not.

    Hope that helps dude!



  17. #17
    Beyond the Sea
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    Thanks GGW and Darkstar

    Great advice on going to banks. I'll have to do that. I've also got some books on reserve at the library...gonna do some studyin' today.

    GGW, I really need to get some watertight contracts. I've heard of some places that have contracts written up for freelance illustrators that you can adapt to web design. Any idea on sites for that?

    thanks again,
    keep the advice comin'!

  18. #18
    Senior Member
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    Originally posted by Kraken
    Thanks, Sul. Yeah, working at home sucks for some things...it's good for others...

    I guess I should mention I'm doing this in a freelance capacity. I mean, I already do a lot of work at home, I just haven't made it official. And still, I'm not going whole hog...I kept my day job... I just don't want to get screwed when it comes to taxes, so I'm getting a business license...plus, then I get to write off all the crap I already spend money on anyway...

    Here's a couple of books I've found on Amazon:

    The Streetwise Guide to Freelance Design and Illustration:
    http://www.amazon.com/exec/obidos/AS...349961-9453724

    Getting Started as a Freelance Illustrator or Designer:
    http://www.amazon.com/exec/obidos/AS...349961-9453724

    Graphic Artists Guild Handbook : Pricing & Ethical Guidelines:
    http://www.amazon.com/exec/obidos/AS...349961-9453724
    I just wanted to add another book to the above great list. Look up "The Business Side of Creativity" on Amazon. The book is full of great info for a freelancer, and it even touches on growing you business into a multi-person shop.

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