With job loss at an all time high right now, more and more people are considering being their own boss. For many this may be a temporary solution but for some it could be more permanent. Once you do actually decide that you need a little extra income, you will need to do a little thinking of what that actually means. There are two different approaches to working for yourself. One is becoming a licensed business and filing the appropriate paperwork and the other is to be a freelancer. There are definite benefits to both of these choices. You will need to weigh those benefits yourself.
There are different aspects that you will need to look at when deciding which route you want to go. In some states, you still need to file a business license as a freelancer but they are cheaper fees and less paperwork. There are also some industries that you will need additional paperwork and fees. An example of that is in California you need a license to sell any type of monitor or T.V. screen. Many states have some additional licenses and fees for products sold but for services offered there are little to no fees. A trip to your local Chamber of Commerce, either online or in person, will answer many of your questions.
As a freelancer, you will have the benefit of not filing for a business license. This is a definite choice for those that are only doing work from home temporarily or part time. If the business is not a full time or permanent way of life for you, you stand to gain from freelancing. As a freelancer, you advertise your services or goods yourself and do the work on your own. As a freelancer, you cannot have any employees. You are basically an independent contractor. This means that you work on your own. If you are offering labor services, you can hire additional help on a contract basis. In some states, this makes you a business and you will need to file the appropriate paperwork. The biggest benefit of being a freelancer is that you do not have a lot of tax paperwork. You need to keep a log of what you earned for your taxes but you do not have to report monthly or quarterly. As a freelancer, you also do not have any overhead, hiring restrictions, EO responsibilities, insurance requirements, or any of the other business requirements. It is much harder to advertise and you are not eligible for any government contracts or services. If you are only working temporarily or in certain industries, like IT or writing, then freelance would be a viable alternative.
When you file for a business license, there are many responsibilities that go with it. There are many benefits as well. As a small business, you can qualify for some loans, lines of credit, and local grants. You will also be able to separate your personal finances from business finances. This will allow …