Rendering Company - Liability

[Jason Matthews]

Hey everyone.

 

Until recently, I have always done renderings for people and companies as myself - no company name to hide behind. Lately, I have been asked to give many proposals, most are to former co-workers and one to a large company. So my question is this: Should I create a true company, registered with the state?

 

If the consenses is that I should create a company (which I unofficially have) does it need to be an LLC, Corporation, Partnership, etc. if it is just me and me alone? I am not trying to ask legal advise I just want to know what other people have done.

 

Thanks in advance.

[Jonathan Sanchez]

Hey Jason

I see you are from Florida. I myself am a freelancer in Miami. If you plan to be a sole propiertor like myself, then all you really need is to register a ficticious name with the state of Florida, and create a business bank account so that people can make out a check to your fictitious name. In my case, the name I go under is CGSketch.

[Jason Matthews]

Thanks for the info! I will definitely look into it.

[Crazy Homeless Guy]

We don't contract work unless the person or company has a business license, and at least for us it is highly preferred to be an instate license. I don't know all of the details of why this is other than the head of architecture, and the corporate accounting department say that this is a must.

[BVI]

I would contact an accountant and ask them the best way forward (forget the attorney). Companies offer very little in form of protection (Don't listen to the BS about protection that people spout) as you sign personal surity on just about everything anyway.

 

Your Tax & Financial laws are what should be foremost in your decision. In South Africa, SARS (our IRS) can go so far as to put you in jail for tax avoidance I'm sure its the same in the US and at the very least, dip into your accounts. Keep in mind back taxes as well - which means that you could be liable for past taxes even if you officially form now. I dont know the laws in the states but I'm sure they are similar. Our government is becoming harder on sole traders who avoid their tax burden - im sure with the depression it is the same over there.

[Jason Matthews]

Thanks for the comments CHG and Nicolas. For the last few years I have been doing "side work" for people that I know which in turn is for a client. The client thus far has not requested or asked for any type of business license or anything like that. As far as taxes are concerned, I basically have just claimed additional income, filled out the 1099 (US) and paid taxes on it. Of course there is some grey matter. I have also claimed some of my expenses as non-reimbursable from my employer. I guess I really haven't had that much work so it never really mattered. I will definitely look into the tax benefits of each component.

[anejo]

We don't contract work unless the person or company has a business license, and at least for us it is highly preferred to be an instate license...

 

When freelancing not only do firms want to see a business lic., but some also want to know if you have business insurance. i'm really not sure why, but i'm sure there's a reason.

 

I would recommend that you setup as a corporation, this protect your personal assets. However, i'm not sure if LLC does the same.

[hockley91]

For me, I just went to our city hall and created a DBA (doing business as) entity and I had my bank create an account for that name. I did not need a state tax ID and when I worked with any companies, they only required my SSN# so I could get my 1099 miscl. income for tax purposes. Any money I made was not taxed though, so that was always a GREAT feeling to see the government take away your money at the click of a button in April. Thanks Turbotax.

 

That's okay though. I have three kids just for the purposes of getting some tax credits so it kinda evened out :-)