October 18, 2017

Legal Facts About Self-Employment and Working From Home

When you work from home there are several things you need to know about the law in order to keep from getting into trouble in the future. You need to be able to manage your finances appropriately, pay any taxes required, and make sure that you are following all IRS and local laws.

The first thing to understand is the definition of self-employment. Even though you are selling products for a company or doing work for them, you may not be an employee. If you are paid without taxes being withheld, you are likely an independent contractor. In most cases, you will be told this and made to sign an independent contractor agreement. The independent contractor agreement will come from the other party. If you are not made aware of this fact, remember that you can easily tell if you are a contractor or an employee by how you are paid and whether or not you receive benefits. The IRS has a great worksheet available on their website that will help you determine if you are self-employed by their standards. You will be considered a 1099 candidate.

The other thing you need to understand is that you have to pay income taxes on your income even if you don’t own an actual business or you do not have taxes withheld from your pay. This is considered self-employment tax. Typically it is paid quarterly, depending on the amount of your income. Payments throughout the year will save you from having to pay the entire tax amount at the end of the year. The self-employment tax is in addition to individual income taxes. You may want to consider a corporate entity. There are several to chose from such as a LLC, S Corp or C corp. Good Legal or Accounting counsel can help you with which is best for you and your business.

Managing your finances will play a huge role in the accuracy of your annual tax preparation. Keeping your business and personal finances separate is essential. You should keep a log of all your expenses and have separate accounts for personal and business expenses. Good record keeping is essential; and will make it much easier to compute income and expenses related to your self-employment.

There are many deductions you could miss out on if you do not keep accurate and separate financial records. The IRS has a publication that can help you track your deductible expenses more easily.www.irs.gov.

Finally, you need to realize that there are other legal entities to please besides the IRS. If your business is not solely operated on the internet you will likely need to obtain a business license for your state, county or city. You may also be required to charge sales tax on your services or products based on your location. It is best to obtain all of this information from your local small business administration before starting your business to avoid future legal complications.

Where To Get Advice On Starting A Business

One of the toughest challenges that many newbie marketers face is: how and where to get advice on starting your home business. If you are outside of USA, chances are that you know very few people who have started their own home based business (in my city, there are only a handful of internet marketers out there). So if you don’t know anyone else who has started a home business then how do you get advice on starting your own?

If you don’t know, the internet itself is a huge source of information. Simply a quick search on Google will show you different articles and newsletters with information and advice on how to start your niche business (tip: if your niche is weight loss, and you are searching for articles on weight loss, simply put this phrase in the search box: “weight loss” articles). There are also a lot of message boards, forums and blogs related to your niche. You can read blogs and forums, ask your questions in message boards and get advice, etc. Also, do you visit your local library?

Libraries generally contain a wealth of information on home business. Your librarian should be able to help you with this. You might also consider visiting your local bookstore.

Find a mentor who you think will help you in your business. Mentors are of two types: volunteers who have years of experience and are willing to give advice to new businessmen. There are another group of mentors who charge a fee for their consultation. If their fee is within your budget, go for it! You will be benefited in more ways than you can imagine by having an experienced mentor by your side, and you will surely make your original investment back by at least three-to-four times. I would like to tell you of another good resource…

The SBA. The Small Business Administration provides a lot of material on starting your own business.

Depending on where you live, you might be able to get free tips and advice from local government agencies. Check out the listings for small business center in your locality.

When you were thinking of starting your home business, probably the very first place you went to was your local bank. While it is true that they are no match for professional business accountants, most banks often have their business advisors to help you open a business account. These business advisors will be bale to advise you, especially on the financial and technical aspects of your business. Just as business advisors, lawyers also form a necessary part of any business, online or offline. Here is why.

Lawyers know about the legal aspects of starting a home business. It would be a good investment to pay for one hour of your lawyer’s time and ask him every sort of question you can think of regarding your business. Look around and if you are lucky enough you
might be able to get a free consultation! I would also suggest that you hire a professional accountant for your business.

Just as lawyers know about the legal aspects of starting a business, accountants know about its financial aspects. Accountants are less expensive than lawyers. If you want to make your business profitable accountants can help you out by drawing a comprehensive budget for your business. If you don’t yet have your accountant, you should get one for yourself! The next thing you need to do is to find investors!

Look for investors who are willing to invest in businesses like yours. They invest capital in businesses for a living. If you think your business idea is attractive then approach them with the details of your business. If they find your business plan attractive enough they would do a quick setup to have your company up and running as quickly as possible.

Visit your local business universities. There you can find business students who spend their time learning and discussing about business. Many of them would love to start one real business off the ground. Business students can really be a profitable source of free help and advice.

Remember that regardless of whatever industry you are starting your business in, there should be some kind of association,union or ‘society’ whose members have business as in the same industry as yours. If you can find one such association, join it immediately and take advantage of the resources the association has to offer to its members.

So you can see that there is no dearth of places where you can get advice on starting your home business. What you may not know, however, is where and how you can find profitable business opportunities.