Freelance Web Design and Business
So now you have gain some skills in web design and development. Some might want to find a corporate job and other may want to do freelance work. That is a personal choice, so we have provided resource for both.
If you are just starting out as a freelancer, be sure to check out the sites and forums listed here that are devoted to freelancers. Forums are a great place to ask questions and gain insights from other freelancers who have probably encountered some of the situations that you are facing.
Forming A Company
If you do freelance work (in the United States) without forming a company, you are considered a “sole proprietor”. Later you might want to form a company to limit your personal liability.
Some more resources…
When you form a company, many states require you to name a register agent that is available during regular business hours and whose address is publicly available. This is so that people who wants to sue you can deliver the Service of Process (or notice of litigation). There are firms that provides register agent services for you which has the added benefit of keeping your own address private.
Employer Identification Number
You may need an Employer Identification Number (or EIN) for applying for corporate bank accounts, or applying for business license, for filings, or for other business activities.
The IRS has online application for obtaining an EIN
LLC (Limited Liability Company)
LLC’s are becoming more popular because they are simpler to form and administer than corporations. They also have the advantage of limited liability.
LLC must keep separate accounting, checkbooks, and credit cards from personal accounting. In general they must file a separate business tax return in addition to the owner filing a personal return.
However, single-member LLC’s are permissible and they have the advantange of limited liability as well as pass-through taxation. Publication 334 says “Generally, a single-member LLC is disregarded as an entity separate from its owner and reports its income and deductions on its owner’s federal income tax return. An owner who is an individual may use Schedule C or C-EZ.” This is true, unless the single-member LLC elected to be taxed as a Corporation, in which case the LLC must file a separate return.
TurboTax article says in regards to single-member LLC’s: “Note that just because you don’t have to file a separate return for your LLC, that doesn’t mean your liability limitation is any different. It’s not; the way your business is taxed has nothing to do with liability.”
Forming an LLC requires filing an Article of Organization with the Secretary of State. And depending on your state you may need to file a “Statement of Information” and pay annual “limited liability tax” that is paid to the Franchise Tax Board.
Also check with your city. You may have to apply for a business license with your city and if you work from your home, then also an “Home Occupancy Permit”.