Self Employment

Sean Kirkby skirkby at concentrico.net
Fri Jul 15 16:50:07 MDT 2005


Whether or not you need a legal entity probably will have to do with how
much part-time consulting work you plan to do.  IANAL, so consult an
accountant and/or an attorney for advice.  If it won't be a significant
source of income, it may not be worth the hassle to set up an LLC.
 
If you do set up an entity, LLC's may be a good choice.  Many believe
LLC's offer the best blend of benefits from sole proprietorships and
corporations.  You avoid double-taxation as in a proprietorship, you
generally avoid personal liability as in a corporation, and you can
share equity with others, to a degree.  You also avoid a lot of the
overhead that comes along with C-Corps.  S-Corps are also a good choice,
but seem to be less popular among self-employed's.  Concentrico is an
S-Corp, mostly because of the fact that we had investors when we
started, and wanted to make room for more as it grew.  A lawyer told us
that it might make things easier down the road.  Again, IANAL.
 
Here is a "research center" run by smallbiz.com that might be helpful
in choosing an entity type:
http://www.smallbizincorporator.com/static/incorporate/research_center.cfm.
 There are lots of other places on the web with similar information.
 
LLC's and other entities are not that expensive to set up either (a
lawyer could help you do it for $200-$300, or the nice people at the
state commerce department can help you do it.  There are a lot of
resources here: http://www.commerce.utah.gov/cor/How_To.htm.  There are
also a lot of companies you can find via the Internet that will do it
for much less.  One such company is www.smallbizincorporator.com.  I
have never used them, and don't know anyone who can... I just found them
on Google.  They will prepare and file articles of organization for an
LLC in Utah for $83.  I can't vouch for the quality of their work, or
whether or not it would be a good idea to use them, though.  Just FYI.
 
For accounting, most smaller accounting firms should be able to help
you.  I recommend doing your own bookkeeping, but let an accountant
handle your monthly, quarterly, and annual taxes, and
payroll/compensation issues.  There's a lot of stuff to remember, and it
gets to be a drag when you aren't an accountant.  (Frankly, I can't see
how it's not a drag even if you ARE an accountant...)
 
$40-$60 an hour is average for accountants, at least that's what I've
found.  We pay ours roughly $600/year, but I think he may not bill us
for everything he does.  (Find an accountant like that!  I'd be glad to
give you a reference - contact me directly.)
 
You can do all of your own accounting, but it is a lot of minutia.  The
bookkeeping isn't that bad though - we need to keep track of bills,
invoices and payments anyway.
 
HTH.
 
--sk.

>>> hans at fugal.net 07/15 4:09 PM >>>

I tried the archives because I could swear we discussed this recently,
but to no avail. I blame the plug sysadmin.

I'm going to start doing some contract work. I always hear these
jargon-filled statements about setting up some sort of corporation or
LLC or something, but I have no clue what that all means yet. But I
set
up my own DNS and mail servers so maybe this is for me. ;-) Where do
you
find the manpages about this stuff?

We discussed getting yourself an accountant, that much I did find. Is
that still good advice for part-time consulting work? Will any old (or
young) accountant do, or do they have to specialize in self employment
stuff?

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