Financial Moves To Make When You Become A Freelancer

Imagine this: You recently lost your job or your job lost you, and now you have decided to take some freelance consulting job to pick up some spare cash. Or, you are finally starting that side hustle you’ve always dreamed of and your Etsy store is about to be up and running. Sound familiar? You fill out a W-9 in order to get paid, and a few weeks later a check comes in the mail made out to you.  You are overwhelmed with excitement because this is the first time no taxes have been taken out of your paycheck and you are feeling flush with cash.  At some point in 2020, you’ll be getting your first 1099’s in the mail, but what should you be doing here in 2019 to make sure your ducks are in a row come tax filing time? The reality is that most of you who earned your first 1099 will likely file Schedule C (sole ...

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You Are A Sole Proprietor: How About A Solo 401(k)

I am seeing more and more people quit the corporate America lifestyle and venture into becoming their own business owner.  This shape of a business owner can be a freelancer, consultant, or someone who actually starts up a ‘brick and mortar’ operation.    Many of these folks will ask questions about whether they should incorporate their business, which I have discussed in other articles.    Once they become profitable, they often ask which kind of retirement plan would suit them the best.   For someone who is a sole business owner, the Solo 401(k) has been around for about a decade and provides a great alternative to helping maximize your retirement contributions.   Here’s a little history on the Solo 401(k) and how it can be a smart money move for your business. The Solo 401k came about in 2002 after Congress passed Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). EGTRRA added some small paragraphs to the tax code that put ...

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I’m a Freelancer – Should I Set Up a Corporation?

If you are starting a business as a freelancer, you have a choice of the legal type of business structure (entity) that you choose. There are advantages and disadvantages among becoming a Subchapter S Corporation, a C Corporation, a Limited Liability Corporation, a Sole Proprietor, or a Partnership. Since there are both legal and tax implications attached to each type, it is best to get your lawyer, financial advisor, and/or accountant involved in the decision making process. Most people want to pay a little tax as possible, and incur the least amount of paperwork overhead when running their own business. In this article we will detail the facts that you need to consider, along with their consequences, so you can have a good starting point of reference when you meet with your legal and tax professionals. About Being A Sole Proprietor This type of entity will happen de facto if you choose no other form of entity for your business. ...

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