Re: Starting Out

At 08:39 AM 3/21/00 , Joe Keilholz wrote:
>Hello All,
>
>I have been interested in starting to do some freelance for local
>companies/individuals and I have a question. Someone I know mentioned that I
>could deduct all of the programs that I use from my taxes as a business
>expense (which makes sense).

Vert true. You can simplify matters with a corporation as the rules are a lot simpler about what is deductible. Check with your accountant for an answer in your situation [see also #5 below, .. VERY important]

>  Another colleague of mine mentioned that if I
>do this I should get a business license.

Only required if you have a business that requires a 'public presence' (i.e. storefront or retail signage). In most zoning areas, it is not a requirement to have a business license for your *own private office*.

A business license is a BIG no-no in a lot of communities, as it triggers the restrictions on businesses in private residences (e.g. if you get a business license for a retail business, you can no longer run it out of your house). If you do not have a retail business (i.e. storefront), don't worry about it (unless you have some really weird zoning laws where you live).

>  I asked the person who said I could deduct programs from my taxes if he had a business license and he stated
>that he didn't.

Most likely not. I have five separate operating corporations, and none require a business license (even when collecting sales tax - a separate issue). Licenses are only required for a retail business. Rember that the *FORM* of the business is completely separate (i.e. proprietorship or corporation).

>  My question is: do I definitely need a business license and
>if so how do I go about getting one and is there a fee involved for this?

I would recommend against it. You shouldn't have to deal with zoning laws for your own private office.

A few other common sense rules that also help satisfy the IRS that you do, indeed, have a valid business:

1) Get a PO box for the business (use the address of the facility (e.g. Mail Boxes Etc., if you wish and a Suite # if you don't like PO boxes).

2) Setup a separate phone line for the business.

3) Print some stationary and cards (not a big deal - check at any Office Depot [or your equivalent] for preprinted stationary].

4) Open a separate bank account, .. and be VERY studious about keeping your business expenses separate from your personal assets. Makes the bookkeeping easier and keeps the IRS happy.

5) If you deal with the public, incorporate, as it provides a pretty good measure of 'isolation', protecting your personal assets from people that don't like you. I, for one, would NEVER operate a business unless it WAS a corporation!

6) Get an EIN from the IRS for the business (whatever form), .. and ALWAYS use that when a client, bank, etc., requests a TIN. NEVER give your personal SSN to anybody for the business.

         Lee
============================================
    Leland V. Lammert                                lvl(at)omnitec.net
       Chief Scientist                         Omnitec Corporation
   Network/Internet Consultants              www.omnitec.net
============================================

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