Tuesday, February 9, 2010

The glamorous life of the freelancer

I am now two-and-a-half weeks into being self-employed. So far, the overriding feeling is that of an extended home vacation, but the reality of my situation has been slowly seeping in by dribs and drabs. This gig has many aspects; it's fun, fulfilling, mundane, and terrifying. In short, being a freelancer is the perfect combination of elements to keep my attention and motivate me to work. So far so good.

For your edification, the following is a list of the plus side of working from home:
  • I get to make your own schedule
  • Sleep in when necessary
  • Go pants- and/or shirt-less whenever I want (no pants dance! no pants dance!)
  • More time for cooking
  • Save on gas since there's no daily commute and I loves me my bike
  • Do the work I want/like to be doing
  • Have more time to expand and find new venues for my work
Of course there are downsides as well, and we'd all do well not to forget:
  • Far less stability / security; don't always know when your next paycheck will come
  • If you're not good at scheduling yourself and sticking to it, you're screwed
  • It can get lonely
  • Health insurance? Pfft.
  • Taxes. Goddamn taxes.
Apparently I made enough money freelancing last year for the IRS to demand a decent chunk of change from me when I sat down to work out my taxes the other day. No sweet refund for me this year. And even though I was just gonna blow it all on hookers and coke, I still take offense to being so put upon. I'm not sure how me paying 1/4 of an incredibly meager take is sensible, but thems the breaks.

Which brings me to the first major lesson of the freelancer: It's time to turn my ass into an LLC. Doing so will help me to avoid a major IRS smack down come next tax time. I'm in the process of making this happen now and will post about my experience as it unfolds. I'm hoping the story ends up being more encouraging than cautionary, but keep in mind that I'm no accountant (another good thing to look into, frankly). The odds are pretty even.

But becoming an LLC, and then opting to be treated as an S-Corp, will go a long way toward simplifying my life when it comes to dealing with taxes without paying out the wazoo. It's also important to then keep incredibly detailed track of all my work related expenses so that I can claim them as deductions and save cash that way, too. Plus then I'm ironclad if Uncle Sam comes sniffin'. I like being on the up-and-up, personally. I also like getting to (legally) hold on to as much of the little money I make as possible. It's all about balance, you see.

So once I've done the LLC thing, what's my next step? Buying a file cabinet. Ah, the glamorous life. I'll be sure to blast some Lady GaGa while I set up the thing. Y'know, for ambiance.


Movie Maven said...

a. is the comment before me just spam? OR CREEPILY PRESCIENT SPAM?!!?

b. I am (truly) eager to hear about your travails of self-employment, especially the LLC formation.

c. The 40 in your glamor pic really brings it all together.

M Big Mistake said...

I've been thinking absentmindedly about forming an LLC for years. I do contract work (in addition to random music/writing schite...whose tax implications are dubious) sometimes and yes, get totally screwed on the tax end of that. So looking forward to what you find out.

Emily said...

MM - I think it's creepily prescient spam, which is a rarity to be sure. I'm letting it stand because of that, even though there's a stupid link in that long line of dots.

MBM - I'm told it's a very worthwhile thing to do. I will definitely keep the blog updated on my progress in the hopes that it might make the process easier for others in the future.

George H. said...

That is one strange comment. Just replace "a warning" with "an inspiration."
I, too, will follow your path through this process closely.

Anonymous said...

"I also like getting to (legally) hold on to as much of the little money I make as possible."

Does this mean you will give up your obsession with T Wall LEGALLY doing the same thing?


Emily said...

Oh snap! Only I'm not a millionaire land developer using shady tax loopholes to not pay ANY taxes for years at a time and then still asking people to elect me to public office, now am I?

Anonymous said...

If it's legal and part of the tax code then what makes it shady?

He didnt pay personal income taxes right? Thats much different than "not paying ANY taxes" isnt it?

So should only us poor folk(includes me) be allowed to use tax codes to our advantage?

I get that you dont like T Wall and thats fine. I won't be voting for him either but the obsession with this 1 issue seems petty to me.


Emily said...

Huh, so 1) are you saying we shouldn't talk about the tax evasion at all? Because that seems odd. And 2) that's definitely not the only thing I've criticized him on. I also disagree with much of his politics. You may be right that the majority of blog and media stories about the guy are about the tax thing, but you have to admit that it's a pretty big issue. Should we diversify our complaints? Sure. But I hardly see how that equals dropping the tax issue entirely.

Anonymous said...

If it was tax "evasion" IE-ILLEGAL then yes its a lot to talk about. But since what he's doing is what most people do i don't see the issue.

Plenty of things to criticise Wall about so why did the left leaning media/bloggers jump all over this story? Sensationalism is my guess. Very Fox Newsish, and thats not a good thing.


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