There are a growing number of people who are choosing to strike out on their own and become freelancers. In fact, there are nearly 54 million Americans now freelancing. So, if you’re one of the millions that are considering this, here are some questions you may want answered.
Does being a freelancer mean that you’re a business? Yes, as a freelancer you are now a business, so the question then becomes how will you structure your business? There are many things to consider when deciding whether to be a sole proprietor, limited liability corporation or corporation. As a sole proprietor, you and your business are one, and you may be exposing your personal assets to liabilities brought on by your business. As corporation your business is separate from your personal life. Things to think about.
What about taxes? When you strike out on your own, taxes become very important. The IRS will generally expect you to pay taxes four times a year, or quarterly. The way they do this is by asking you to estimate your income for the entire year and then pay it in four parts. Once you get used to it it’s not that bad but for the first couple of times you may want to seek the advice of a professional.
What bout health insurance? With Obamacare you are required to have insurance. Now that you’re on your own you’ll have to check out your states health insurance marketplace. Once you contact the health exchange they will help you set up a cost-effective plan for you.
What about retirement? As a freelancer you must be disciplined in order to save money for retirement. Go see a financial CPA who can walk you through the different plans and help you pick one that matches your needs.
Going freelance can be very rewarding. Hopefully this advice will help you on your journey to success.