Working for Yourself: Law & Taxes for Independent Contractors, Freelancers & Consultants

A potential employer asked that I incorporate my freelancing business before they start sending me jobs. I wanted to do some research on the pros/cons of incorporating, what kind of start-ups costs this would entail, and what kind of corporation I should be. At first, the whole process of incorporating sounded like a huge money burden on my part--with filing fees and taxes--but this book has helped me sort out the issues and provided detailed information about the different ways to incorporate--sole proprietorship, LLC, S-corps. Although I haven't yet decided which path I will take, this book has made the jump to freelancing, and self-incorporating, less scary. Not only do I understand my choices better, but I also now understand the different structures for businesses and their tax responsibilities. Great distillation of information! The copies of tax forms in the back are also a great reference. Highly recommended.

I have been a consultant for 5 years. This book has proved an excellent reference in working with clients to keep my independant contractor status.I bought the ebook version, 1st time getting a protected .pdf file. Conclusion in that regard, I would *never* buy a ebook version of anything again!

"Working For Yourself" is a solid introduction to the basic taxes and laws that consultants and feelancers need to understand. The book doesn't cover inventory accounting, cogs, and other accounting/tax topics related to running a product-based business."Working For Yourself" discusses basic business structure, including sole proprietorships, LLCs, and corporations. Fishman points out that S-corporations offer an advantage over LLCs and sole proprietorships, if the consultant wants to save some money in self-employment taxes. This is because all net earnings from LLCs and sole proprietorships (up to a wage base of about $85,000) are subject to self-employment taxation. An S-corporation allows part of this money to be paid out as dividends, which aren't subject to employment taxes.Fishman says corporations don't offer consultants and freelancers as much liability protection as is commonly believed, because the individual is also the one rendering the personal service. And, most lenders to a small corporation will want a personal guarantee that debt will be paid (unless the corporation is well-financed).Professionals rendering certain services can form business structures unique to professional businesses, such as the RLLP, or registered limited liability partnerships. Clients can always sue certain professionals for malpractice, regardless of their business structure. But, a professional working with a partner shouldn't be unduly subject to suits against the partner for malpractice. These business structures are mentioned, but not covered in detail."Working For Yourself" covers these topics very well:- Self-Employment Taxes- Paying Estimated Taxes (And Calculating How Much To Pay)- Dealing with Independent Contractors and 1099-MISC Forms- Understanding/Drafting Client Agreements- Insurance- Worker's Compensation Insurance- Understanding Who Owns What Rights When An Independent Contractor Creates Intellectual Capital For A Client- Recordkeeping And Knowing What Documents to Save In Case Of An AuditIncidentally, Fishman says sole proprietors are one of the most heavily audited business structures. He says this happens because many people claim to operate businesses to get tax deductions, even if they aren't really trying to make money.Fishman discusses the "hobby loss" rule and how unprofitable businesses can be denied deductions after three consecutive years of losses. However, Fishman points out that if you can show that you really are trying to make money, losses in excess of the typical three years can be allowed.For example, Fishman discusses Donald, a "golf pro," who the IRS challenged was engaging in a hobby. Donald had lots of deductible net losses. The tax court decided that even though Donald had many years of losses, he really was trying his best to win tournaments and make money. He just sucked at it. And, the losses were allowed.Other topics are covered more superficially, but the reader is introduced to the basic concepts. Intellectual

I am a software contractor looking at incorporating. I had looked at LLC options, but some clients require incorporating, so that was ruled out. My best route seemed to be S-Corp. This book answered most of my questions. The "Incorporating Your Business, for Dummies" was pretty good, but not as good as this book. This book has a lot of details and laid some of my worries to rest. It will also save money with your professional team (attorney, accountant) by answering simple, but essential, questions. Definitely worth the money.

After surveying most of the small biz books out there, this is the far and away the best. Fishman claims his focus is on sole proprietors in a service business (in part to not compete with Steingold's Nolo Press book on small biz which isn't nearly as good). Even if you have an inventory based biz, 95% of this book is still extremely helpful. It covers the widest rage of topics and in more depth and with better organization than any other book on the subject. You won't need many other books except maybe something specific for taxes (do not get Nolo's Tax Savy book -- its very superficial; I really haven't found a tax book that I like yet). If your business will be very large and complex (and especially if it will involve other investors, complex financing, employees or IP) also get the Entrepeneur's Guide to Business Law by Bagley and Dauchy.