This may have been addressed in another thread, if so please point me in the right direction, if not, then perhaps you can enlighten me. If a person does an occasional moonlight job for friends, neighbors, or whomever, does one need, and I emphasize need, to take the steps necessary to become a business?
Tek-Tips is the largest IT community on the Internet today!
Members share and learn making Tek-Tips Forums the best source of peer-reviewed technical information on the Internet!
-
Congratulations Mike Lewis on being selected by the Tek-Tips community for having the most helpful posts in the forums last week. Way to Go!
Perhaps this is an ignorant question
- Thread starter BFOJ
- Start date
You may want to check out some of the posts in this thread: thread1248-969763
I guess it all depends on what you're willing to risk. In the event you were ever taken to court for one of your moonlight jobs, without the protection of an actual business you would be personally liable and someone could take everything you have (home, car, etc...).
On the other hand, it can be rather costly to set up an actual business (I'm in the process of doing it myself right now), and if you're only going to do a few "favors" a month/year for friends and family, it's hardly worth the it to set up a business.
I'm not even going to get started on taxes...
So I guess you just have to decide if you have enough business to justify the cost, or if you want to risk running without it.
Hope This Helps!
Ecobb
Beer Consumption Analyst
"My work is a game, a very serious game." - M.C. Escher
I guess it all depends on what you're willing to risk. In the event you were ever taken to court for one of your moonlight jobs, without the protection of an actual business you would be personally liable and someone could take everything you have (home, car, etc...).
On the other hand, it can be rather costly to set up an actual business (I'm in the process of doing it myself right now), and if you're only going to do a few "favors" a month/year for friends and family, it's hardly worth the it to set up a business.
I'm not even going to get started on taxes...
So I guess you just have to decide if you have enough business to justify the cost, or if you want to risk running without it.
Hope This Helps!
Ecobb
Beer Consumption Analyst
"My work is a game, a very serious game." - M.C. Escher
I agree with Ecobb. A lot depends on the amount of risk you are undertaking when you moonlight. Ask yourself what's the worst that can happen if the project fails due to your fault. The greater the potential risk, the more you want to think about incorporating.
In you current capacity, you are likely to be personally responsible for all liability, taxes and all good and bad things that result from your engagement. Options to consider:
1. Incorporating and following the business protocols that go along with doing business as a corporation. If you don't sign any personal guarantees for the corporation and you truly run all business through the corporation, you should be insulated from personal liability.
2. Sign a service contract with your customers that limits your liability.
In addition (or as an alternative to incorporating), you could get liability insurance and make sure that you sign a written contract with all customers that limits your liability. Operating as a sole proprietorship with liability insurance and contracting to limit your liability may be the least expensive ways to protect your personal assets. If you incorporate, you'd still want to investigate getting liability insurance for the corporation.
This is all, of course, from a business perspective. Your relationship with your family and friends is something else. Good luck.
Rich
rckatz_usa@comcast.net
In you current capacity, you are likely to be personally responsible for all liability, taxes and all good and bad things that result from your engagement. Options to consider:
1. Incorporating and following the business protocols that go along with doing business as a corporation. If you don't sign any personal guarantees for the corporation and you truly run all business through the corporation, you should be insulated from personal liability.
2. Sign a service contract with your customers that limits your liability.
In addition (or as an alternative to incorporating), you could get liability insurance and make sure that you sign a written contract with all customers that limits your liability. Operating as a sole proprietorship with liability insurance and contracting to limit your liability may be the least expensive ways to protect your personal assets. If you incorporate, you'd still want to investigate getting liability insurance for the corporation.
This is all, of course, from a business perspective. Your relationship with your family and friends is something else. Good luck.
Rich
rckatz_usa@comcast.net
In most places, if you are not selling items (reselling typically requires a permit of some type and a tax id), you do not have to set yourself up as a business.
In most cases, you can simply do business and receive payment under your name and then include a Schedule C on your taxes.
However, I would, at minimum, speak to an accountant about what you can write-off and how you must claim your earnings.
Matthew Moran
In most cases, you can simply do business and receive payment under your name and then include a Schedule C on your taxes.
However, I would, at minimum, speak to an accountant about what you can write-off and how you must claim your earnings.
Matthew Moran
I would be interested in seeing where you got your information, mmorancbt. "In most places" that I've been, service providers such as doctors, lawyers, and dentists, required business licenses even though they are not selling items. Wouldn't the same apply to a person doing computer repair, or someone selling an Internet service? The only reason I ask is, I'm about to write a big check to an attorney to set me up a business. I'd rather not do it if I don't need to.
Hope This Helps!
Ecobb
Beer Consumption Analyst
"My work is a game, a very serious game." - M.C. Escher
Hope This Helps!
Ecobb
Beer Consumption Analyst
"My work is a game, a very serious game." - M.C. Escher
- Thread starter
- #6
I am sorry - I was addressing the situation he was suggesting - meaning, taking on some part-time, bit jobs.
I will restate. As a sole practitioner, working out of my house, writing, consulting, or even working on someone's computer, I am not required to have a business license in most cities.
However, should I start driving traffic to my home - assuming I have gone outside the stipulations of a home-owners organization or the city I live in, no license is required.
Or to be more specific. I don't need a business license to write an aricle or to log into a remote client (or drive there and meet with them and perform work).
If I setup a brick and mortor shop, the city will usually require a business license. If I have clients meet in my home, I will probably require a license. If I resell I will need a reseller permit and tax ID.
However, when it comes to taxes - if your work is substantial, you will want to setup a more definable businesss in both locale (even if out of your house) and in licensing. Otherwise, the IRS and state revenue departments get "funny" about deductions.
That just didn't seem to be the case in his circumstances.
Matthew Moran
I will restate. As a sole practitioner, working out of my house, writing, consulting, or even working on someone's computer, I am not required to have a business license in most cities.
However, should I start driving traffic to my home - assuming I have gone outside the stipulations of a home-owners organization or the city I live in, no license is required.
Or to be more specific. I don't need a business license to write an aricle or to log into a remote client (or drive there and meet with them and perform work).
If I setup a brick and mortor shop, the city will usually require a business license. If I have clients meet in my home, I will probably require a license. If I resell I will need a reseller permit and tax ID.
However, when it comes to taxes - if your work is substantial, you will want to setup a more definable businesss in both locale (even if out of your house) and in licensing. Otherwise, the IRS and state revenue departments get "funny" about deductions.
That just didn't seem to be the case in his circumstances.
Matthew Moran
Here is more on the same subject...
If you provide service of less than a certain dollar amount (depending on municipality) - ie: $1,000 per month
Or
If you do not operate as a business (doing a side-job is not necessarily a business and are not taking deductions), you may not need a license.
But, the easiest way it to contact your city's chamber of commerce or your city revenue or licensing office. Don't let them tell you that you need a tax id. In most cases, as an independent, you don't. But a license may be required.
Also, regarding the protection of a corporation or LLC. Almost no business structure will protect a sole owner of that corporation or business should they defaud a client or get sued. The corporate veil is easily pierced with a sole corporate owner/officer..
In the case of most small (independent operators) it is not very effective.
Matthew Moran
If you provide service of less than a certain dollar amount (depending on municipality) - ie: $1,000 per month
Or
If you do not operate as a business (doing a side-job is not necessarily a business and are not taking deductions), you may not need a license.
But, the easiest way it to contact your city's chamber of commerce or your city revenue or licensing office. Don't let them tell you that you need a tax id. In most cases, as an independent, you don't. But a license may be required.
Also, regarding the protection of a corporation or LLC. Almost no business structure will protect a sole owner of that corporation or business should they defaud a client or get sued. The corporate veil is easily pierced with a sole corporate owner/officer..
In the case of most small (independent operators) it is not very effective.
Matthew Moran
Every jurisdiction is different. In Pennsylvania (my home state), you would not need a specific business license to run a home computer consulting business. Your state should have all of the info that you need on its website. Here's the corresponding version from PA.
Good luck.
Rich
rckatz_usa@comcast.net
Good luck.
Rich
rckatz_usa@comcast.net
- Thread starter
- #11
I did get a business license today, plus other things involved like filing a fictitious name and applying for a home occupancy (certificate of zoning). Just started reading a real interesting book, "Start Your Own Computer Business" by Morris Rosenthal. Probably should have done this before proceeding so far into the process, but oh well! Even published my website today, really enjoying learning all this new stuff, maybe I'll make a dollar or two, if not, it's still been fun, now the real work begins.
- Status
Similar threads
- Locked
- Question