Freelancing skills

The Basic Legal/Financial Stuff Freelancers Have To Know




1. Business structure: Businesses like to deal with other businesses. Maybe it is a trust issue or someone inside doesn't want to deal with the 'hassle' of having to create another form/process to deal with individual freelancers.

 

Most freelancers start out as sole proprietors – circumstances decide whether they form a LLC (limited liability company) or incorporate.

 

Why set up a company? It limits your liability. The authorities will come after the company, not you, at first at least.

 

In the United States, Colorado and Nevada are some states which make filing for LLC (Limited Liability Company) a breezy affair. You also have to think about local laws about business license and stuff.

 

2. You will also need business permits, licenses, and registrations: Requirements vary by industry and location. Also check local business licensing requirements.

 

You will also need to collect, report, and pay taxes on your service/product. This requires other registrations, which vary by state or country - seller's permit in the United States, for example.

 

Get legal opinion. Ask around. Ask a fellow freelancer.

 

3. Taxes: You can expense things for tax purposes, and that does not depend on what kind of entity you are (company or an individual).

 

You can expense many things as legitimate business expense, be wary of attracting attention of the tax authorities. Get help from professional accountants and experts to know where the 'line' is.

 

After a certain revenue threshold, you will need help from a professional accountant, or you will find yourself dealing with exemptions and tax filings more than doing the actual job.

 

4. Finances: Keep your personal bank account and professional bank accounts separate.

It helps with record-keeping. More importantly, it keeps your personal bank account safe, in case your business runs foul of the authorities. You never know.

 

Get a new credit card and start using it for any business expense.

Any card with do, no need to have a 'business' card. It also comes in handy for emergency purposes when you find yourself short of ready cash or some other emergency expense comes up.

 

5. Copyright issues: Generally, all you create belongs to the client after delivery. However, in coding projects, programmers may use a common module in multiple projects, and in this case, you have to specify the ownership in detail in the contract.

 

Protect your assets, wherever you think you must.

 

Who owns the copyright varies from country to country. In the United States, clients own the copyright of freelance commissions in any contract that uses the words 'work for hire'. In the United Kingdom, the freelancer owns the work.

 

6. Get insurance: There are many things to insure - property, product liability, etc. Get advice on the matter and then get some insurance.

 

7. Read the contract very carefully: The contract is discussed in a separate chapter below. Understand all terms mentioned in the contract. Ask what you don't know. Google the term. Also make sure any rights are transferred only after you've received full payment. Don't assume anything. All terms and conditions, yours and the client's must be specifically mentioned in the contract.

 

Thank you for reading.
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