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Summary: Excellent Book For Understanding Contractor/Freelancer Taxes
Review: "Working For Yourself" is a solid introduction to the basic taxes and laws that consultants and feelancers need to understand. The book doesn't cover inventory accounting, cogs, and other accounting/tax topics related to running a product-based business."Working For Yourself" discusses basic business structure, including sole proprietorships, LLCs, and corporations. Fishman points out that S-corporations offer an advantage over LLCs and sole proprietorships, if the consultant wants to save some money in self-employment taxes. This is because all net earnings from LLCs and sole proprietorships (up to a wage base of about $85,000) are subject to self-employment taxation. An S-corporation allows part of this money to be paid out as dividends, which aren't subject to employment taxes. Fishman says corporations don't offer consultants and freelancers as much liability protection as is commonly believed, because the individual is also the one rendering the personal service. And, most lenders to a small corporation will want a personal guarantee that debt will be paid (unless the corporation is well-financed). Professionals rendering certain services can form business structures unique to professional businesses, such as the RLLP, or registered limited liability partnerships. Clients can always sue certain professionals for malpractice, regardless of their business structure. But, a professional working with a partner shouldn't be unduly subject to suits against the partner for malpractice. These business structures are mentioned, but not covered in detail. "Working For Yourself" covers these topics very well: - Self-Employment Taxes
- Paying Estimated Taxes (And Calculating How Much To Pay)
- Dealing with Independent Contractors and 1099-MISC Forms
- Understanding/Drafting Client Agreements
- Insurance
- Worker's Compensation Insurance
- Understanding Who Owns What Rights When An Independent Contractor Creates Intellectual Capital For A Client
- Recordkeeping And Knowing What Documents to Save In Case Of An Audit Incidentally, Fishman says sole proprietors are one of the most heavily audited business structures. He says this happens because many people claim to operate businesses to get tax deductions, even if they aren't really trying to make money. Fishman discusses the "hobby loss" rule and how unprofitable businesses can be denied deductions after three consecutive years of losses. However, Fishman points out that if you can show that you really are trying to make money, losses in excess of the typical three years can be allowed. For example, Fishman discusses Donald, a "golf pro," who the IRS challenged was engaging in a hobby. Donald had lots of deductible net losses. The tax court decided that even though Donald had many years of losses, he really was trying his best to win tournaments and make money. He just sucked at it. And, the losses were allowed. Other topics are covered more superficially, but the reader is introduced to the basic concepts. Intellectual capital, such as patents, copyrights, and trademarks are touched upon. Also, hiring employees is very briefly discussed. (Fishman is also the author of a book about copyright that sounds really good.) One section discusses naming your company and the importance of a good name. We're told the French company that decided to market their soft drink Pischitt in the U.S. had to rename it. "Working For Yourself" has a great discussion showing how much various expenses reduce your income taxes (basically, multiply the expense by your incremental income tax bracket). The book also does a good job showing the kinds of logs you need to keep if you use an item for business and for pleasure. But, I found one piece of advice that seems a bit silly. Fishman writes: "To avoid having to keep such records, try to use items either only for business or only for personal use. For example, if you can afford it, purchase two computers and use one solely for your business and one for playing games and other personal uses." It seems you'd be better off just buying one computer and not claiming any deductions for it at all, rather than buying an extra computer you don't need. Suppose a computer costs $1,000. That's how much you spend to purchase your personal PC. If you purchase a business PC for $1,000 also and you're in a net 30% incremental income tax bracket, you save $300 in taxes. Your total cost for both computers, after the business deduction, is $1,700, which is still more than $1,000 for the single PC, if no deductions are claimed. This seems a bit akin to people who don't want to pay off their mortgage because they want to get the tax deduction. Sure, you save some money in taxes, but you pay a larger amount overall in interest. "Working For Yourself" also includes a good discussion about car expense deductions and travel and entertainment deductions, which many consultants have. Overall, "Working For Yourself" is a great book for freelancers and independent consultants who want to learn about the basic recordkeeping, taxation, and legal issues of running such a company. Peter Hupalo, Author of "How To Start And Run Your Own Corporation: S-Corporations For Small Business Owners"
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Summary: Straighforward intro to the legal aspects of freelancing
Review: A potential employer asked that I incorporate my freelancing business before they start sending me jobs. I wanted to do some research on the pros/cons of incorporating, what kind of start-ups costs this would entail, and what kind of corporation I should be. At first, the whole process of incorporating sounded like a huge money burden on my part--with filing fees and taxes--but this book has helped me sort out the issues and provided detailed information about the different ways to incorporate--sole proprietorship, LLC, S-corps. Although I haven't yet decided which path I will take, this book has made the jump to freelancing, and self-incorporating, less scary. Not only do I understand my choices better, but I also now understand the different structures for businesses and their tax responsibilities. Great distillation of information! The copies of tax forms in the back are also a great reference. Highly recommended.
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Summary: The best book on small biz that I have found
Review: After surveying most of the small biz books out there, this is the far and away the best. Fishman claims his focus is on sole proprietors in a service business (in part to not compete with Steingold's Nolo Press book on small biz which isn't nearly as good). Even if you have an inventory based biz, 95% of this book is still extremely helpful. It covers the widest rage of topics and in more depth and with better organization than any other book on the subject. You won't need many other books except maybe something specific for taxes (do not get Nolo's Tax Savy book -- its very superficial; I really haven't found a tax book that I like yet). If your business will be very large and complex (and especially if it will involve other investors, complex financing, employees or IP) also get the Entrepeneur's Guide to Business Law by Bagley and Dauchy.
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Summary: Great for Software Contractors
Review: I am a software contractor looking at incorporating. I had looked at LLC options, but some clients require incorporating, so that was ruled out. My best route seemed to be S-Corp. This book answered most of my questions. The "Incorporating Your Business, for Dummies" was pretty good, but not as good as this book. This book has a lot of details and laid some of my worries to rest. It will also save money with your professional team (attorney, accountant) by answering simple, but essential, questions. Definitely worth the money.
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Summary: !
Review: I have been a consultant for 5 years. This book has proved an excellent reference in working with clients to keep my independant contractor status. I bought the ebook version, 1st time getting a protected .pdf file. Conclusion in that regard, I would *never* buy a ebook version of anything again!
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Summary: superb
Review: if you're even thinking of doing your own taxes; or wondering whether or not to incorporate; or just need some standard contracts; BUY THIS BOOK. If you already have a great lawyer and a great accountant, than this book is probably redundant.
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Summary: Useful and focused
Review: This seems to be a rewriting of the author's former book "Wage Slave No More : Law and Taxes for the Self-Employed". Following the same steps, his writing is clear and focused. The number of independent contractors and freelancers in the IT market has increased considerably in the past years. But not at all their awareness about law and taxes. That is where this book will prove to be useful, not only financially, but also towards better career planning.
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Summary: Fantastic book
Review: This was exactly what I was looking for -- very thorough, to-the-point, no frills and complete at the same time. It's also very clear and a suprisingly easy read. This book contains all the pertinent advice described in the TOC.
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