Self Employed - Are you one of them?

Being a freelancer or doing some part time freelance work is great for most of us. It supplements our income and makes sure that we always have enough to pay our bills and live the life that we have always wanted to live. But all this said and done, the headache is our tax returns and most of us don’t have a clue as to how to include this freelance income. But the first question is that are you even considered a freelancer or an individual contractor?

Quite a lot of people have made fortunes from their hobbies like stamp collection, artifacts collection, photography, copywriting etc. But most of these people were doing it after their job hours as just a time pass and to generate a few extra dollars.

According to IRS a self employed person is one who owns the business entirely and is responsible for every action and decision taken. An independent contractor may also be called a self employed person because he or she makes each and every decision about how a service or a product is to be delivered or made.

A self employed person need not necessarily have a registered firm. An individual doing freelance copywriting or transcription or programming jobs can be considered as independent contractor.

But once you decide to call the shots and hire a few people to work for you, it becomes a bit complicated. You now must get your firm registered with the local authorities and start doing all the transactions in the name of the firm and not yourself or an individual.

A lot of people in a bid to start their company and build a brand name rent an uptown commercial space and spend thousands of dollars in buying expensive furniture which can be easily done without. We all must understand that the brand name is built by a lot of other factors and not only where or how your office looks. These two things perhaps come in the last.

Also, just because you are working for someone in a 9-5 job does not mean that you cannot do freelance work or that anything you do before and after your work hours will not be considered as freelance work. Anything and everything that you do apart from your job hours is freelance work and when you file your tax returns you can claim every benefit offered to freelancers on your freelance earnings.

Also, just because you are a freelancer, does not mean that your income is not liable to being taxed. You must file your income tax returns even on your freelance income and if possible get your company registered to avoid any kind of legal issues that may arise anytime in future.

More information can be found at www.irs.gov/business.