View Full Version : Legal issues for freelancers

07-06-2012, 11:48 AM
Hi all,
Could you share your experience regarding your legal status?

A friend with a similar job, he is an 'independant contractor' certified in 'program managment', told me that as a freelancer, there is no advantage to legalise a company under my 'own proprietorship' and that i am as good to do nothing special and bill clients with my own name. I assume this varies from state to state, by in Texas, that's what he said is the best.

So, what's the best for a graphic freelancer? also, how do you deal with benefits and other legal issues?

Nicolas Jordan
07-06-2012, 01:12 PM
In my opinion it is nice to keep business separate from personal because if you get sued as a freelancer it is you that is being sued and not your business. If your business gets sued at least you are separated from it. Some may argue this point since when it comes to the law nothing is really that black and white.

If your a freelancer just make sure you keep your butt covered.

Ryan Roye
07-06-2012, 01:36 PM
Although i've never made enough to surpass the "materiality" amount via freelancing (~$500 or less/yr), I can tell you that if you're making enough you will want to talk to a tax professional to help you on the topic of benefits, writeoffs, etc... the price of admission for the service is often well worth the cost (and in some cases, pays for itself). You will find that your livelihood as a freelancer depends heavily on how you take advantage of what the government offers, and knowing what things are put in place to help people like you.

I'd worry about that more than whether you want to make yourself considered a "company" or not (a tax pro can help you with stuff like this)... at least from what i've learned in my business courses I can't see any real advantage other than modifying your "image".

07-07-2012, 03:49 AM
It's easier to keep track of your business transactions if you separate your personal and business finances - which will reduce your accountancy fees.

You'll be considered more professional by many if you're trading as a business, it shows that you're committed and aren't just trying to make some extra cash on the side, potentially disappearing off the face of the earth in the morning.

If you trade as a limited liability company your personal assets are separate from your business assets. If, for example, you get into financial trouble through the business only your business assets can be stripped from you. If you are a sole trader you can lose everything you own...your house, TV, car etc.

Visit an accountant and don't just go for the cheapest you can find ;)

Shnoze Shmon
07-07-2012, 03:14 PM
LegalZoom.com and a local CPA

I suggest starting with a sole proprietorship until your established. For a small fee Legal Zoom will get your DBA and Tax ID plus a few other things done for you, as well as free training on basics you need to know.

Don't risk yourself on the comment of an acquaintance. It's your hide hanging in the breeze not theirs.

I can't stress enough Legal Zoom and a visit to a local CPA (in that order).

I started my business this year as well.