Whether you're an independent contractor, freelancer, or consultant, it all adds up to the same thing: you need to be more aware of laws and taxes than the average person. Fortunately, Working for Yourself provides all the information you need to stay on top of it all. An independent contractor himself, author Attorney Stephen Fishman shows you everything you need to know to: meet business start-up requirements set up home or outside offices comply with strict IRS rules establish sound business relationships avoid unfair contracts draft good agreements get paid in full and on time The 5th edition now provides information on leasing space for work, Health Savings Accounts and solo 401(k) plans. It also examines how to choose a business name, deal with audits, take a home office deduction -- and much more.

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As a self-employed person, one of the most important decisions you have to make is what legal form your business will take. There are several alternatives -- and the form you choose will have a big impact on how you're taxed, whether you'll be liable for your business's debts, and how the IRS and state auditors will treat you. There are four main business forms: sole proprietorship (see Section A) corporation (see Section B) partnership (see Section C), or limited liability company (see Section D). If you own your business alone, you need not be concerned about partnerships; this business form requires two or more owners. If, like most self-employed workers, you're running a one-person business, your choice is between being a sole proprietor, forming a corporation, or forming a limited liability company. Don't worry too much about making the wrong decision. Your initial choice about how to organize your business is not engraved in stone. You can always switch to another legal form later. It's common, for example, for self-employed people to start out as sole proprietors, then incorporate later when they become better established and start making a substantial income. Ways To Organize Your Business Type of Organization Main Advantages Main Disadvantages Sole Proprietorship (See Section A) Simple and inexpensive to create and operate. Owner reports profit or loss on personal tax return. Owner personally liable for business debts. Not a separate legal entity. C Corporation (See Section B) Clients have less risk from government audits. Owners have limited personal liability for business debts. Owners can deduct fringe benefits as business expense. Owners can split corporate profit among owners and corporation, paying lower overall tax rate. More expensive to create and operate than sole proprietorship or partnership. Double taxation threat because the corporation is a separate taxable entity. No beneficial employment tax treatment. S Corporation (See Section B) Clients have less risk from government audits. Owners have limited personal liability for business debts. Owners can use corporate losses to offset income from other status. Owners can save on employment taxes by taking distributions instead of salary. More expensive to create and operate than sole proprietorship or partnership. Double taxation threat because the corporation is a separate taxable entity. Fringe benefits for shareholders are limited. Partnership (See Section C) Simple and inexpensive to create and operate. Owners report profit or loss on personal tax returns. Owners personally liable for business debts. Two or more owners required. No beneficial employment tax treatment. Limited Liability Company (See Section D) Owners have limited liability for business debts if they participate in management. Profit and loss can be allocated differently than ownership interests. No beneficial employment tax treatment. Adapted from Legal Guide for Starting & Running a Small Business, by Fred S. Steingold (Nolo).

 

1. Working for Yourself: The Good, the Bad, and the Ugly 2. Choosing the Legal Form for Your Business 3. Choosing and Protecting Your Business Name 4. Home Alone or Outside Office? 5. Obtaining Licenses, Permits, and Identification Numbers 6. Insuring Your Business and Yourself 7. Pricing Your Services and Getting Paid 8. Taxes and the Self-Employed 9. Reducing Your Income Taxes 10. The Bane of Self-Employment Taxes 11. Paying Estimated Tax 12. Rules for Salespeople, Drivers, and Clothing Producers 13. Taxes for Workers You Hire 14. Record Keeping and Accounting Made Easy 15. Safeguarding Your Self-Employed Status 16. Retirement Options for the Self-Employed 17. Copyrights, Patents, and Trade Secrets 18. Using Written Client Agreements 19. Drafting Your Own Client Agreement 20. Reviewing a Client's Agreement 21. Help Beyond This Book A1 Appendix 1: Forms and Documents A2: Appendix 2: Sample Agreements A3 Appendix 3: Agencies

Whether you already work for yourself or are thinking about making the move, Working for Yourself will help make sure it's done right.

 

Walks the reader through the basics of choosing a business form and then deals with start-up concerns, the myriad tax-paying and reporting issues and introductory information on recordkeeping, intellectual property and agreements.

 

Stephen Fishman received his law degree from the University of Southern California in 1979. After stints in government and private practice, he became a full-time legal writer in 1983. He has helped write and edit over a dozen reference books for attorneys. He is the author of Software Development: A Legal Guide, Copyright Your Software, The Copyright Handbook, Consultant & Independent Contractor Agreements, Wage Slave No More: Law & Taxes for the Self-Employed, and Hiring Independent Contractors: The Employer’s Legal Guide, all published by Nolo.

 

Working for Yourself by Stephen Fishman
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