Starting an editorial and publishing services business.....

[LindaDuyer]

I'm just one person starting a side business with editorial services and other services helping people get published via publish-on-demand, initially (and helping promote their books).

So it's just me. But if I were to add someone to work at times, as a freelancer, what are my tax obligations or paperwork? I've worked briefly as a freelancer for a small newspaper. I had to fill out an IRS form and no taxes were taken out (no big deal, since I wasn't paid much). I don't know enough about all this to know if using a freelancer is even feasible.

Also, and I'm guessing it's asked a lot, is the LLC the way to go for super-small businesses? Or can I change to that later?

Please give my ignorance, I'm pathetically new at this.

Thanks.


Linda

[vangogh]

Welcome to the forum Linda.

If you hire a freelancer then you aren't hiring an employee. You wouldn't have any payroll taxes or extra taxes. You'd be able to deduct the expense from your income. Now the other person really needs to be a freelancer. That person needs to have their own business, their own tools of the trade etc.

At the end of the year you send the other person a 1099 for the amount of money you paid them (you'll need to collect their information on a W9 form (http://www.irs.gov/pub/irs-pdf/fw9.pdf)? I think). The amount on the 1099 is a deduction for you (probably on a schedule C) and income for the freelancers. It used to be that you needed to spend $600 over the course of the year with the freelancer before you had to actually fill out the form, though I think the amount might have changed. Don't hold me to the amount changing though.

Hope that helps.

[LindaDuyer]

Absolutely! That really helps. And it's a relief.

About the question of LLC, do you recommend that at this initial stage? Or can I just wing the sole proprietorship (as an editor, hope I spelled that right! lol ) for awhile? Since at the most I'd be using a freelancer if needed, then perhaps I don't need LLC?

Thanks again, and thanks for the welcome!



Linda

[vangogh]

Glad I could help.

Oh yeah I forgot to answer your LLC question. First it's your choice. There are pros and cons to different business entities and you can change later so you're not locked into anything now.

Being a sole proprietor will be the easiest to set up. It's not anything more than registering your business name with the department of state for your state. There should be a form to first search the business name you want and if it's available to register the name. The cost varies by state, but it's inexpensive. It's probably under $100 and more likely much less. You'll file taxes as an individual much like you do now. The main difference is instead of the a W2 representing your income you fill out a 1040 Schedule C to report your income. It's more complicated, but not overly so. You'll also be able to deduct more things as expenses on various forms.

An LLC exists to give you limited liability protection as the name says. As a sole proprietor if someone was suing your business they could sue for anything you own. As an LLC you get some protection, however it is limited. Depending on how much you own in your name might determine if an LLC is the way to go. I assume filling out taxes for an LLC is a bit more involved than for a sole proprietor, though I'm also guessing it's not overly complicated.

One of our members, David, is an attorney who's written a lot about LLCs (http://www.limitedliabilitycompanycenter.com/) on one of his sites. Check out the link and read through some of the articles. If I know anything about LLCs it's likely from one of David's articles.

[LindaDuyer]

I've got the form to register the business with the state and checked locally if a license is required (it is not).

I am in Maryland, but on the Maryland Eastern Shore, adjacent to Delaware and portions of Virginia. My hope is to get customers from all three, since they are so close.

Is it needed or wise to register with Delaware and Virginia as well?


...... Thanks so much. I run a forum for a medical issue, so I know how amazingly helpful and friendly forums like this can be. Thanks!


Linda

[vangogh]

If you're a sole proprietor, you just need to register in the state where your business will be located even if you get clients from other states.

Thanks for the compliments on the forum. We do try and I guess you know what it's like to run a forum. :)

[LindaDuyer]

Thanks!

And yes, forums can be challenging to run, at times frustrating, but overall satisfying knowing you help people.