Do I have to create a "business" or can I just be a freelancer/self contractor? - Virtual Assistant Forums

Carmen Olivo · #1 (**permalink**) 03-13-2010

I'm completely new to this and learning, but can't I just offer my services and then file my taxes as an individual using my social security #?

vrsi-office · #2 (**permalink**) 03-13-2010

Carmen,

How you set-up your business is a personal decision and completely up to you. You could set-up a Sole Proprietorship, a LLC, or a Corporation (S-Corp or C-Corp). But I would set-up a business.

I would not recommend using your SSN. (It is really not smart to give your SSN to anyone these days, and if you operate as an individual you will need to give your SSN on your W-9 to the companies you work for so they can send you a year-end 1099.)

If you are going to be Sole Proprietorship, then I would recommend going to the IRS website and applying for an tax id number in your business name, and not use your SSN for your business tax id. (This process is very easy. Just make sure to apply for your business name first. --See below.)

Furthermore I would make sure you go to your local Corporation Commission or Secretary of State website and apply for a business name/Trade Name. (Using a business name is more professional, and safer. I would use a business name as opposed to your personal name.)

Hope this helps,

Julie

Business-Bytes · #3 (**permalink**) 03-13-2010

Originally Posted by Carmen Olivo

I'm completely new to this and learning, but can't I just offer my services and then file my taxes as an individual using my social security #?

If you are a freelancer or "self contractor" i.e. independent contractor, this is considered self-employed income and subject to self-employment (SE) taxes, therefore you would need to be setup as a business. Maybe think of it this simplified way: income comes from either being a self-employed business owner or from W-2 income as an employee. Self-employed, you pay your own SE taxes for your business income. Employee that gets a W-2, your employer withholds and pays taxes for you from your paycheck.

Some helpful information from the IRS on starting a business.

The other Julie gave you some good information on what types of business entities there are. I've always been a sole proprietor and file a Schedule C as part of my 1040 tax return. You can use your social security number, but I also agree that you should get an EIN (FTIN). More info here on how to apply, etc.

HTH a bit,

Office Goddess · #4 (**permalink**) 03-15-2010

This article, "The Top 5 Reasons To Avoid Sole-Proprietorship" pretty much says it all!

vrsi-office · #5 (**permalink**) 03-15-2010

Lily,
Great article.

I could not agree more. This is why I always set-up a C-Corp or a S-Corp. You can never be too careful!

Thanks,
Julie

Business-Bytes · #6 (**permalink**) 03-15-2010

Originally Posted by Office Goddess

This article, "The Top 5 Reasons To Avoid Sole-Proprietorship" pretty much says it all!

Great article, Lily. My concern, and one that has held me back, is the requirement for a registered/resident agent. I don't want to be tied down to my office from 9 - 5 every week day (and don't think I could assign one of my kitties

). Not so sure I'd want to go with a nationwide registered agent service as an option either.

Thoughts?

Office Goddess · #7 (**permalink**) 03-16-2010

Originally Posted by Business-Bytes

Great article, Lily. My concern, and one that has held me back, is the requirement for a registered/resident agent. I don't want to be tied down to my office from 9 - 5 every week day (and don't think I could assign one of my kitties

). Not so sure I'd want to go with a nationwide registered agent service as an option either.

Thoughts?

That's an interesting requirement and one we don't have in Colorado. Have you talked to someone at your Secretary of State's office about it? i'm wondering if being physically present during work day is a 'set-in-stone' requirement or just having a permanent physical address would address this issue (not to dis the kitties, of course

).

donnamarie · #8 (**permalink**) 03-27-2010

Wow! why did it take me so long to find this thread! it answers most of my questions, Ug - I'm going to bed! I'm going to sleep good tonight knowing that I'll have to do on Monday to get this business up and running! Thanks!!