Any advice for setting up a business?

Discussion in 'Digital Video' started by diamond3, Jun 30, 2013.

  1. diamond3, Jun 30, 2013
    Last edited: Jun 30, 2013

    diamond3 macrumors 6502a

    Oct 6, 2005
    I've been scouring the internet looking for some good information on setting up a business, but i'm struggling to find anything super helpful or applicable.

    I know there are probably a several out there that have your own business license and could use some advice.

    My background info:

    Recent college grad, currently working at a regular job (standard pay, taxes deducted etc)
    Starting to do a lot of freelance work that looks like it will continue for the rest of the year. I've been filing w-9 forms with several employers so it's not as if i'm getting paid under the table.
    Since this freelance is on the side, I don't have a main office or anything of that nature.

    What business license type did you use? LLC?

    Any tips I should know starting out that will make things easier in the long run?
    - Paperwork, Organization, claiming expenses (things I can use as a business expense).
    - I've made several video purchases in the past year, is there a way to incorporate these expenses into the business (help offset personal income)?

    Any good online resources you'd recommend reading?

    I'll probably talk to an accountant soon just to get things setup correctly for my area, but I'd like an idea of certain things before I go in.

    Thanks for any help.
  2. 12dylan34 macrumors 6502a

    Sep 3, 2009
    Hi there,

    I'm no business expert, but I've set up my own LLC in the past for freelance work.

    It's pretty easy to do. You'll first need to come up with a name, then register that name both federally, and with your state. Some googling will quickly find where you need to go to do this. I believe the federal registration is free, but there will probably be a $25-50 fee for your state.

    As far as paperwork, just keep your invoices well organized and easy to find, and you'll be good. Keep a spreadsheet on all of your expenses and credits as well.

    Keep in mind that claiming income/expenses under a sole proprietor LLC raises your chances of being audited rather significantly (because it's usually a pretty easy way to cheat on taxes), so make sure that you have everything well organized and you're doing legitimate business. This isn't to say that an LLC isn't the correct thing to do, just that the IRS watches those more closely.

    Also, if you didn't already know, as a freelancer, you're a 1099 employee to the organization you're freelancing for, so you're paying double (15%) of what you'd normally pay in social security taxes, so factor that into your rate, as well as costs for health insurance, and things like that. Freelancers should get paid much more on an hour-for-hour basis than normal W-2 employees.

    Incorporating expenses for your equipment or whatever into your business, I don't really have much to advise on, but keep in mind that a lot of expenses and not much revenue is an audit flag, so make sure that your assets are actually being used for business 80% or more of the time (and yes, 80% is the number the IRS uses). I wouldn't claim any expenses incurred prior to the incorporation of your business.

    Other than that, I think that talking to an accountant is a good thing to do. Any accountant would know much better than me.
  3. Dambuster43 macrumors member

    May 20, 2013
    Get an accountants will have to deal still your "day job" income to deal with plus your additional earnings. As a start up should be able to claim some if not all of the costs of your equipment and costs etc.
  4. diamond3 thread starter macrumors 6502a

    Oct 6, 2005
    Thanks for the tips thus far. I plan on staying organized from the start which is why I want to find out as much as I can about it now. I haven't heard that 80% figure before. That seems rather high which would eliminate the possibility of writing off my cell phone bill/Internet, technically my computer. I've heard you want to at least save 25% of your income for taxes, ss and other.
    The name part of the business process is going to kill me though!
  5. daybreak macrumors 6502a

    Sep 4, 2009
    Not being rude but this is a forum for computer relate items. Any business venture needs to go through proper channels.
    Also any advice given should only come from accountancy departments. There is more to start up then asking on a computer forum.:)
    Anyway good luck.
  6. diamond3 thread starter macrumors 6502a

    Oct 6, 2005
    I'm relating it to video editing and shooting aspect of business. I can find all sorts of generic business info through google, but that isn't what I wanted. That is why I came to this forum because I know there are several people here with the exact experience of owning their own freelance business.

    Also, I understand there is more to a startup then just asking for advice. That's why I called it advice and mentioned I was still going to see an accountant. I'd never just blindly trust an Internet forum however great macrumors might be. ;) I have to start somewhere and felt like this forum could provide some insight, which it has a little. I looked on here, creative cow and other websites and couldn't find anything like this and feel like its a good topic that would come in useful for others.

    If it needs to be moved to a different topic, that's fine. I just feel like the video crowd is the advice I'm after.
  7. LethalWolfe macrumors G3


    Jan 11, 2002
    Los Angeles
    Just to keep the terminology accurate, if you are 1099 you are an independent contractor, not an employee and being a freelancer doesn't automatically make you independent contractor. The IRS has criteria for what qualifies as an employee and what qualifies as an independent contractor. Basically, if work at the company's office, use the company's gear, have a company supervisor, etc., you are most likely an employee in the eyes of the IRS. Though many companies will want to illegally classify employees as independent contractors to save money.

  8. Consultant macrumors G5


    Jun 27, 2007
    Business type:
    - Assuming you are based in the US, you are a solo proprietor, unless you pay money to incorporate (hundreds to set up).
    - Search your city / town for small business license, you probably need to register (usually under $100 per year).

    In terms of tax, get business edition of your tax software (I use Turbotax). And just spend half a day going over everything you need to fill out. It'll show you what expenses you need to keep track of.

    If you can pay an accountant, the person can answer your questions better.

    If you generate enough revenue, you might need to pay tax every quarter or every month. Otherwise you'll get hit with late tax fees.

  9. 12dylan34 macrumors 6502a

    Sep 3, 2009
    Ah, yes, thanks for that. As an intern, I worked at a place for 7 months in their office, on their computers, and followed their schedules, but was still considered an independent contractor. I was in a very unfavorable tax situation, especially since they set my (low) rate of $10/hr, even though I was bringing in a few thousand a week for them in the smaller projects they would give me to do.

    I finally ended up leaving because they brought on some other interns who would work for free, and I found a better paying job at my university.

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