Freelance definition ?

[NVDon]

I have read a lot here about going from a freelancer to starting a company. What does it mean to be a freelancer? From what I understand a person can only make so much money a year without getting a business license. Or does a freelancer have a business license but not a corporation, LLC , or whatever.
Thanks everyone.

[le_saut]

My definition of a freelancer would be someone who works for themselves, ie goes out and finds their own clients and also seeks to get contracts from large web dev co's.

Therefore anyone who doesn't solely work for a big web dev co. that is not their own.

As an aside : did you know the first freelancers were jousting knights?




James

[nocrapchurch]

Dictionary says:

free·lance
n. also free lance (frlns)
A person who sells services to employers without a long-term commitment to any of them.

That sounds about right to me.

-scott
http://www.scottmanning.com/

[JabezStone]

Originally posted by NVDon
From what I understand a person can only make so much money a year without getting a business license. Or does a freelancer have a business license but not a corporation, LLC , or whatever.

You can make as much as you want and still claim self-employed... however, there is a financial risk to this at tax time. You can obtain a DBA (Doing Business As) for a company name and work in that capacity, but you still claim as self employed. Another option is to incorporate, but be ready to pay your FICA, Social Security and other related fees for yourself.

Perhaps the best way for a "freelancer" to work is as a self-employed contractor. You will recieve "1099 forms" from those you work for, and simply file your taxes based on those.

It would be well worth anyone's time to buy a book or two on starting your own home-based business.

One good book is Small Time Operator : How to Start Your Own Business, Keep Your Books, Pay Your Taxes, and Stay Out of Trouble

Best wishes to you!

Jay

[erova]

Originally posted by JabezStone
Another option is to incorporate, but be ready to pay your FICA, Social Security and other related fees for yourself.

In the US, you're responsible for FICA, unemployment insurance etc. regardless of being an unincorporated john, a corporation, llc, s-corp, etc.

If you make more than 600 dollars on a project, then the company contracting you is legally obliged to submit your name and SS# or tax ID # to the IRS and give you a 1099.

[cadwallader]

anyone have similar info for the UK? I attempted to ask the question here

[NVDon]

Thanks all.
I know a CPA in town, soI think I will start talking to him also.

[fink]

Originally posted by cadwallader
anyone have similar info for the UK? I attempted to ask the question here

hello - I worked as a freelancer for a couple of years then formed a Limited Company with a friend (although you can do it on your own)

This was mainly done for tax reasons. As a self employed person (freelancer) you will be required to pay around 35 - 40% tax on everything you earn - As a Limited Company you give yourself a wage which you are taxed on, then you are then taxed on the profits you make(after expences and your wage. This ends up being about 20%)

Basically you pay yourself a low wage so you pay less tax, then as a shareholder in your company you can give yourself a tax free dividend once a quarter.

This does save you money but I would advise only to get into this if you are earning over 10K a year and can afford an accountant to sort it all out for you.

hope this helps - it works for me but everyone probably has their own way of doing things - i would be interested if other UK people have ways (legal of course) of paying less tax.

le fink

[cadwallader]

mmm that sounds like the sensible thing to do then.
thanks very much!

[cadwallader]

...just occurred to me, i am renting the place where i live at the moment, i'm sure it said in the contract i'm not allowed to run a business from the premises, I suppose i'd have to either buy a house or rent some office space in order to start a company.