Just Starting Out

Hello June,

I am currently unemployed but may have the option of doing some contract work in the near future. What would your recommendations be regarding:
1. Do I need to do anything to set up a sole proprietorship?
2. If I wanted to be a LLC, what do I do to get started?
3. Who do I contact and what are typical fees in either scenario?

I live in Colorado.

Thanks so much for your assistance and guidance.
Jay


Dear Jay,

Many people who decide to work for themselves are confused about what it means to “go into business.” They think they have to “set up a company.” Or they have to incorporate. Or they must notify ten different government agencies. Well, indies, here’s how to do it. Hold onto your socks!

As soon as you sell or attempt to sell your service or product in pursuit of making a profit you have “formed” a sole proprietorship.

A sole proprietorship is the most simple business entity. Other entities are partnerships and corporations. Did you have a lemonade stand when you were a kid? Or, did you babysit or do yardwork? If you were doing it to make money then you were a self-employed in business and your business structure was a sole proprietorship.

You don’t need a business name. You don’t need to rent an office. You don’t need a business bank account. You need do nothing by way of notification. There are no papers to complete, no agency to contact. You simply engage in your business activity.

There are chores you may have to do depending on your indie profession and in which state you live and where you work. You may have to do things such as obtain various permits from state and local governments to comply with zoning or health code regulations or register for state sales tax or show proof of insurance.

If you'd like to learn more, read this on my website -- I am a Business or these posts on this blog -- being self-employed.

Before starting down the road toward LLC-ville better know where you're going and why you're going there. To start your education I suggest you read these posts -- business entity -- LLC .

Should you have tax questions you would contact an indie-savvy tax pro. To get answers to LLC questions talk with an indie-savvy attorney in your state. Typical fees are from $100 to $600 per hour and depend on ability and locale. Attorneys' fees are usually higher than tax pros' but not always. The more you learn the less time you will spend with a professional and so the less you will spend on fees.

Best,
June