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Thread: Suddenly unemployed, need advice

  1. #11
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    In addition to ArPaNET's advice - what will your employment status be? If you're going to be self-employed, you'll need to at least go to your county seat and establish a sole proprietorship (you won't even be allowed to open a business account without those documents, unless laws seriously differ across the US). You might be able to get away with a 1099-C (miscellaneous income considered as "non-employee income" on your personal tax return), but that's going to depend on the company you're working for. Forget about just pocketing the money, unless the company you're going to work for charges its customers under the table (never know with law firms) - the company you're working for will report the payments to the IRS, and you better make sure you report them, too.

    Establishing a sole proprietorship in my county costs $9.95 - not too hefty a fine to make sure you're legal, I would think... Next you'll need to consider state and federal taxes, which will depend on your state - you might also be responsible for municipal taxes. Next up is insurance - you need to take into account that as a sole proprietor, you are personally responsible for any and all debt your proprietorship incurs, and that if you want health insurance... let's just not go there.

    Not trying to scare anyone away from doing it - I actually think that it's one of those things everybody should at one point in their lives at least try. What I am trying to say is that if you're going to do it, do it the right way. I've got a pretty solid customer base (I started with less than $200, and never used any personal capital other than that initial investment), but I'm not making nearly as much as I would make working for an employer - that's not really a problem right now (I'm still going to college more-than-full-time, and insurance and other stuff are being taken care of by the wife), but it would be tough to make this into a "real" job (I would have to work more than I'm willing to to make a decent living).

    Feel free to send me a PM - I believe I've got a bunch of mistakes I have learned from doing this "self-employment" thing

  2. #12
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    yep... Negative jumped in right where I get off! I know very little about the legal aspects of working for yourself...

  3. #13
    Only african to own a PC! Cider's Avatar
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    Sirdice: This monsterboard is only US orientated.

    Onto the topic

    Here in SA it takes a ridiculous amount of time to set up a sole trader. YOu cannot claim TAX back or anything like that before you register as NEgative said. I hope the departments in your country are on the ball ...

    Good luck.
    The world is a dangerous place to live; not because of the people who are evil, but because of the people who don't do anything about it.
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  4. #14
    Senior Member nihil's Avatar
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    Obviously the rules over here are very different.

    Next up is insurance - you need to take into account that as a sole proprietor, you are personally responsible for any and all debt your proprietorship incurs
    It is not just "debt"........................ here, you would want professional liability insurance and public liability insurance. The first is in case you screw up, and the second is in case you drop something on someone's head

    Here you would not get work from a corporate unless you had them both.

    A common way around the "debt" problem is to set up a limited liability corporation and "employ" yourself............... I guess that would cost around $500 here.

    Also, check out any sales tax requirements.

  5. #15
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    Quote Originally Posted by nihil
    Obviously the rules over here are very different.



    It is not just "debt"........................ here, you would want professional liability insurance and public liability insurance. The first is in case you screw up, and the second is in case you drop something on someone's head

    Here you would not get work from a corporate unless you had them both.

    A common way around the "debt" problem is to set up a limited liability corporation and "employ" yourself............... I guess that would cost around $500 here.

    Also, check out any sales tax requirements.
    The only difference here in the US is that some companies will hire other companies that don't have sufficient insurance. It is not required to look into the other persons insurance in most cases. The one major difference would be any type of building construction. Most places require workman comp, etc.. type of insurance.

    But for technical work, there are plenty of business that run without the proper liability insurance.

    I have a friend that is in the hole for around $50k right now. Long story short, he had some expensive equipment that got damaged in his possession. And he didn't have insurance to cover that. His previous customer sued him for the cost of that equipment and won.

  6. #16
    Master-Jedi-Pimps0r & Moderator thehorse13's Avatar
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    Getting a business checking account here in the good ol US requires a tax ID number at inception. This means you need to incorporate. I'd suggest you do so in Delaware and by God man, get an LLC (limited liability corp), NOT a sole propietorship. Your new spouse will certainly appreciate this considering that when you marry, her assets are on the line should you get sued if you're a sole proprietor.

    --TH13
    Last edited by thehorse13; February 29th, 2008 at 09:24 PM.
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  7. #17
    0_o Mastermind keezel's Avatar
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    Quote Originally Posted by thehorse13
    Getting a business checking account here in the good ol US requires a tax ID number at inception. This means you need to incorporate. I'd suggest you do so in Delaware and by God man, get an LLC (limited liability corp), NOT a sole propietorship. Your new spouse will certainly appreciate this considering that when you marry, her assets are on the line should you get sued if you're a sole proprietor.

    --TH13
    Good call.

    Are you sure it's necessary to incorporate? Hell, every Joe Blow running an ebay account has a State tax ID #, surely they aren't all incorporated?

    As for LLC...yeah, that's pretty brilliant. The last thing I want is someone coming after everything my wife and I have.

    I'm trying to decide if I should even get a business license before I've tried this for a couple of weeks to make sure I can get enough clients to make some kind of living...

    So far I've coded six web pages (and the style.css), bought a domain and host from godaddy.com, came up with a somewhat witty company name that my friends and family seem to like, and I'm now working on getting some business cards. There is a LOT of stuff to consider, but if this gets off the ground (even considering I'll probably still be quite poor) it'll be a dream come true. It's ironic how much of a nightmare getting into it is.

    *edit*
    Is it more expensive to set up LLC? It's already $95 just for a sole proprietorship license. Also, is it possible to change over to LLC if I don't have the money at first but want to later? This is probably something I should ask the officials...
    Last edited by keezel; February 29th, 2008 at 09:56 PM.

  8. #18
    Master-Jedi-Pimps0r & Moderator thehorse13's Avatar
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    Is it more expensive to set up LLC? It's already $95 just for a sole proprietorship license. Also, is it possible to change over to LLC if I don't have the money at first but want to later? This is probably something I should ask the officials...
    Unfortunately, you're asking questions that a business attorney would be most appropriate to answer. That said, hop over to law.com and ask an attorney there for free (or at least it used to be).

    When I considered this move, an attorney pal of mine set me on the road to an LLC. I never followed through so I can't give you the details on the costs but I can tell you this is going to be an all in or nothing deal. The LLC part of the deal was reasonable though. I believe it was around 50 bucks.

    Getting a tax ID is simple. Getting protection from liability is not. Go the extra mile if you're truly serious here.

    Look at this site for more infoz.
    http://www.thedelawarecompany.com/
    Last edited by thehorse13; February 29th, 2008 at 10:06 PM.
    Our scars have the power to remind us that our past was real. -- Hannibal Lecter.
    Talent is God given. Be humble. Fame is man-given. Be grateful. Conceit is self-given. Be careful. -- John Wooden

  9. #19
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    Getting a business checking account here in the good ol US requires a tax ID number at inception. This means you need to incorporate.
    You don't need to incorporate to get a tax ID number, or to get a business checking account.

  10. #20
    Senior Member nihil's Avatar
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    The only difference here in the US is that some companies will hire other companies that don't have sufficient insurance. It is not required to look into the other persons insurance in most cases. The one major difference would be any type of building construction. Most places require workman comp, etc.. type of insurance.
    Yes, that is pretty much the same here. It is a case of "due diligence" on the part of the principal contractor.

    For public liability and employer's liability it is a legal requirement, otherwise it is very much up to the individual. In the IT sector you would find it difficult to get any work without proving that you had suitable cover.

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