I am a creative/marketing professional who is looking to launch my own consulting business. Essentially I would like to set myself up to be paid as a contractor. Is it as simple as accepting a pay check, or are there other considerations? Is it necessary to establish myself as a "business". Any advice would be most appreciated.
First of all, congratulations on starting your business!
There are a few ways to go about setting up a business; the least formal is working as a sole proprietorship. There is no official paperwork to file with the California Secretary of State, although you will need to receive a business license from your city/county. You may also wish to receive an EIN number so you do not need to provide your SSN to other parties. The last formal requirement is filing paperwork to operate as a fictitious business name if you are going to be doing business with a name other than your legal name.
Otherwise, you may wish to set up as a corporation or an LLC. Depending on the amount of revenue you expect to generate, this may save you money on your self-employment tax as well as ensure additional liability protection.
I hope this answers your question, if not, you're welcome to send me an email to firstname.lastname@example.org or call (408) 369-0800 ext. 202. Good luck!
Landlord / Tenant Lawyer
If you own any assets, it's always best to form a separate entity such as a corporation, limited liability company (LLC), or limited partnership. That way, if you were to get into some type of business dispute or lawsuit, your liability would likely be limited to the company's assets and not your personal assets. Once you set up a separate entity, you can choose how you'll pay yourself (and pay taxes). For example, in an S-corporation the income of the business passes through to you personally and you include it on your personal income tax. It is beneficial because you only pay taxes once. Whereas a C-corporation would have to pay taxes on the corporate level, and you would also have to pay taxes as an individual. However, there are certain tax benefits, associated with the C-corp. Entity formation is an important first step for any business and should be tailored to your individual needs. Feel free to give me a call for a free initial consultation. 415-835-6777.
Disclaimer: You should discuss your situation with a local attorney, as the above statement is a general overview and does not take into account all of the factual considerations in your case. Nothing in this statement creates an attorney-client relationship.
In the realm of consulting professionals (marketing, IT, business, etc.), one of the most overlooked fundamentals is a succinct and clear terms and conditions contract that can be used with multiple clients. This contract can, if drafted properly, avoid routine and long term pitfalls. For example, it can speak to late fees for unpaid invoices, or the ownership of client versus consultant intellectual and tangible properties. It can also set parameters for the location of lawsuits for out of town and distant clientele. Above all, it also demonstrates a professional approach to risk management and clarity on the part of the consultant that generally impresses the client and deters it from taking liberties at your expense. I would consult with a local business attorney to devise one for you in addition to the other suggestions posted here.
I hope this helps.
Disclaimer: This answer is for informational purposes only and does not constitute general or specific legal advice, nor create an attorney client relationship.