I'm a php/mysql webdeveloper and I would like to start taking on freelance work. I have no idea where to begin. Do I need to form a company? Where do I begin with taxes?
And any other suggestions of how I do this would be appreciated. I get offered freelance work frequently, but I never take it.
It would depend on where you reside. But, generally in the US as a freelance developer you would declare your income when you file as a self-employed individual. So, it's important to keep accurate records of business expenses and all your earnings. You could consult an attorney in your area to provide guidance.
I am in the same boat, starting from scratch and i have no formal qualifications.
I am UK based does any one have any recommedations on how to get started.
I too am interested in how to start a business / go self employed / freelance inside the UK, if any body has been down this road before, please help us not so knowledged
I can only speak for here in the US, but it's quite easy to get started on a small scale and then ramp up as you go along. For individuals offering services only and working from their home, there's no need for a seller's permit (resale license). Likewise, there's seldom a requirement for a city business license when working from home in a service-based business conducted online.
If you will be collecting payments in your own name (John Smith & Associates, for example) for services rendered using Paypal and personal checks, then you can simply keep a record of those payments and use your personal back account to store the funds.
If you have a separate business name then you would need to file a "DBA" form with your local newspaper. The newspaper will (for a nominal fee) publish a notice that your are "Doing Business As" XYZ Company, and they will provide you with a receipt to give to your bank that will allow you to open a business account as XYZ Company.
It's wise to use an accounting program such as Quickbooks so that you can keep track of your business income and expenses. Each time you make a software purchase, for example, you'd enter that as an expense, which would offset the gross income from services you've provided.
At the end of the year your tax preparer will add a Schedule K to your normal 1041 form, and if you've made more income than expense you'll pay taxes on the extra income, including self-employment taxes.
When you get to the point that your self-employment income is getting so high that you need to lower your taxes, you can consider starting a corporation so that you are taxed at a lower rate.
Disclaimer: I'm not an accountant; I'm just sharing my experiences with you. It's always best to discuss your unique situation with an enrolled tax agent or CPA in order to see which tax model best fits your own situation.
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thanks for the input it was detailled enough for me to feel more confident about it, although im not planning anything yet, i would still like to people who done this in england/uk, im a little unsure of what the newspaper bit was about, why would a bank not let you open a business account without one of these reciepts :S im sure there is a legitiment answer though, im 20, and have only ever worked for a company
If you have a separate business name then you would need to file a "DBA" form with your local newspaper. The newspaper will (for a nominal fee) publish a notice that your are "Doing Business As" XYZ Company, and they will provide you with a receipt to give to your bank that will allow you to open a business account as XYZ Company.
Again, in the US:
The Fictitious Name rules actually vary quite widely from state to state. Many states having significantly more complex rules than simply publishing the name in the newspaper. In those states, proof of publication will not be enough to open a company account
Depending on the rules in place in your state (and other factors) you may be required to have a Federal ID number (separate from your Social Security Number) just to open the company bank account.
If your state requires registration of a Fictitious Name (DBA), failing to do so can result in fines and other sanctions, as well as opening you up to lawsuits from similarly named companies (anywhere in your state).
In some parts of the country, local governments do impose a business license requirement on freelancers, even those working over the internet. True, this is just another revenue stream for them. But nonetheless, if your area does this, registering or publishing your DBA will let them know where to find you.
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