Author Topic: Freelancers  (Read 4154 times)

0 Members and 1 Guest are viewing this topic.

D

  • New to Town
  • **
  • Posts: 9
  • Gender: Female
    • View Profile
Freelancers
« on: Jul 17, 2007, 11:34 am »
I'm curious...

Is anyone established as a business?  How do you handle your taxes and such.  I am at the point now were I am doing this and other technical stuff full time and have been investigating creating a business.  Is is it necessary?  Business checking accounts, credit cards, and loans, etc?

LisaEllis

  • Guest
Re: Freelancers
« Reply #1 on: Jul 17, 2007, 09:42 pm »
About 1/2 my income is on 1099s and 1/2 on W-2s, so I have not found it necessary to Incorporate or form an LLC.  I file a Schedule C as a self-employed sole proprietorship and deduct business expenses on that.

I have started keeping a small separate checking account, with my own check card, to keep my travelling expenses separate from the household expenses.

Hire an accountant, who can help you categorize your expenses correctly.  Best $500 I spend every year.  I also file in multiple states, so it helps to have someone else checking all the correct boxes.  There is also a book that I've found helpful "The New Tax Guide for Artists of Every Persuasion: Actors, Directors, Musicians, Singers, and Other Show Biz Folks" by Peter Jason Riley.

I keep a running spreadsheet in Excel to track my business related expenses.  In March, I take my accountant the totals, and we review how long I was in each state, the per diem rates, my health insurance costs, etc. 

Good luck!  The first couple of years are a real sticker shock, if you haven't withheld additional on your W-2s or paid some estimated tax.  Whatever you think you're clearing, the feds will want 25% (not to mention whatever state you live in).  It can hurt, particularly when you needed that money to pay the rent last month...

Mac Calder

  • Forum Moderators
  • *****
  • Posts: 970
  • Gender: Male
  • Plan for the future, live for the now
    • View Profile
  • Affiliations: Live Performance Australia / Media Arts and Entertainment Alliance
  • Current Gig: Technical Director
  • Experience: Former SM
Re: Freelancers
« Reply #2 on: Jul 18, 2007, 12:53 am »
I am a business (however I am in Australia, and our laws are different to those in the US).

There are pro's and con's. Every job I apply for (which is willing to employ me as a contractor, and not as an employee) requires careful contracting to cover both of our backsides. There is also stuff like OH&S to consider, as well as insurance (Personal liability insurance is nice to have, although I admit to being a bit slack with it, and not organising it for most jobs)

Australia has a 10% Goods and Services Tax which is pretty much a blanket tax and makes my invoicing and tax really easy. I quote prices as Rate + GST, and just add the tax at the end of the invoice. Then I put that 10% into a separate account (an account which has minimal fees - whilst it means low interest, it doesn't matter). Since I am considered "Low income" I file a quarterly Business Activity Statement, which details my income (and expenses), and because it is lodged online, it tells me exactly what sized cheque I need to send right away - which is always less than the balance of the bank account - so appart from the paperwork, I don't really notice tax that much, as I pass it all on to my clients.

That said - whatever you do, make sure you sit down with an accountant before you start registering yourself a business.

ljh007

  • Permanent Resident
  • *****
  • Posts: 340
    • View Profile
  • Affiliations: SMA
Re: Freelancers
« Reply #3 on: Jul 20, 2007, 08:40 am »
I file my Schedule C as a self-employed independent business. I am not incorporated, nor do I have separate banking accounts, credit cards, etc etc. But I am able to keep strict track of all my business expenses and income, so it's not a problem for me. I am non-union, and I have an IRA where I stash my retirement. I do my taxes myself - but I am one of those sick people who enjoy it. Nearly everyone I know uses an accountant. You might consult with an accountant before you think about formally incorporating or creating separate accounts or anything; it might not be worth it. You could be better off just keeping receipts and filling out a plain old Schedule C every year.

KMC

  • Forum Moderators
  • *****
  • Posts: 962
  • Gender: Male
    • View Profile
  • Current Gig: Project Manager, Systems Integration
  • Experience: Former SM
Re: Freelancers
« Reply #4 on: Jul 20, 2007, 09:12 am »
The Schedule C is marvelous for itemizing deductions if you keep all of your receipts.  The nice thing about it is you can file a schedule C even if you only have one 1099 and the rest of your income is W-2.  You can deduct everything from mileage on your vehicle, meal per diem each day when you've been gone from your primary residence for more than 24 hours, office supplies, etc...  If you organize your place of residence right you can also deduct for a home office.  Say 25% of your home is taken by your home office (this is a large portion of course, but this is just for argument's sake).  You can deduct 25% of your rent, 25% of utilities, etc... on a schedule C. 

For those still in college and reading this, if your theatre department offers any kind of theatre business or professional prep course, I'd highly recommend taking it before graduation.  If they don't, get a few students together and ask to create one.

The professional prep course I took in school is one of the most beneficial courses I took in the four years there.
« Last Edit: Jul 21, 2007, 11:08 pm by kmc307 »
Get action. Do things; be sane; don’t fritter away your time; create, act, take a place wherever you are and be somebody; get action. -T. Roosevelt

D

  • New to Town
  • **
  • Posts: 9
  • Gender: Female
    • View Profile
Re: Freelancers
« Reply #5 on: Jul 23, 2007, 02:26 pm »
Thank you all for your advise and input; it's a lot to think about.  Over the years I have discussed this topic with several people, though they were all non theatre folk and I could never get any advice specific enough for my situation.  I knew I should be able to claim the expenses I incur but there has been pressure from others suggesting I create a business. 

Anyhow, thanks again. 

juliz1106

  • SM Expert
  • ****
  • Posts: 122
    • View Profile
  • Affiliations: AEA
  • Current Gig: TYA Stage Manager, Marriott Theatre Lincolnshire
  • Experience: Professional
Re: Freelancers
« Reply #6 on: Jul 25, 2007, 07:49 pm »
The most important thing to remember is to keep track of everything.  Because our business is considered by many to be a "hobby," there are enough gray areas that we need to watch our backs constantly.  Though it is a viable business, the IRS will be looking for loopholes.  So keep track of your records like you work for the IRS yourself - it will make you much more aware and safe in the long run.  If you make a mistake that the IRS will want to see - make sure you can defend it!

Tags:
 

riotous