Independence - To Incorporate or Not to Incorporate?
Pay Yourself a Salary
Even if you are the only employee and you wear all the hats, you still have to pay yourself a salary. If you want to save yourself the headaches of tracking payroll taxes, unemployment insurance, and whatnot, get yourself a good CPA. Otherwise, check out the Social Security Administration's Employer's Kit at http://www.ssa.gov/employers/ for some great tax tips.
More Small Business Related Links
Small Office at http://www.smalloffice.com/
Small Business Administration at http://www.sba.gov/
Office of Women's Business Ownership at http://www.sbaonline.sba.gov/womeninbusi...
The IRS Small Business Corner at http://www.irs.ustreas.gov/prod/bus_info...
US Business Taxes for Small For-Profit Businesses at http://www.managementhelp.net/tax/fp_tax...
The Advantages of Being an Independent Contractor at http://www.moneyhaven.net/entrepreneurs/...
Don't Try This Alone
I very strongly suggest that anyone who wants to set themselves up as a business entity get the help of a qualified CPA. I have had one since day one and he's been a God-send. He does both our personal taxes and my business taxes. Especially this year, he was able to save us thousands. Anything that I do in the course of my writing, whether it be research, supplies, membership fees, etc can be partially written off as an expense. With a corporation, 15% of any expense is automatically deductible.
In order to keep yourself out of hot water, maintain meticulous records. Keep receipts for everything AND Document EVERYTHING. Some writers suggest that you keep a writer's diary of your activities. I don't go that far because I keep every letter, e-mail, and response.
Don't forget that you are going to be looking for contracts. Keep records of time spent online at job links, contacting leads, and sending out proposals.
Best Advice?
KEEP EVERYTHING!!! That's the best advice I can give you. Keep all correspondence with editors. That includes every time you submit a resume for a contract and every time you get a response.
The Chicken or the Egg
Writers find themselves in a catch-22 situation. Getting incorporated before or after your first contract. Which should you do first? If you can afford it, get incorporated first. It'll save you a lot of hassle and paperwork later. What about freelance writing? Do you have to sell an article before you can incorporate? Nope.
Big Brother is Watching
Yes. The IRS is going to be watching you. How do you prove to the IRS that as a "writer" you are working? That's where all your meticulous record keeping comes in. To prove to the IRS that you aren't just some
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