query: What are the risks & rewards of being a self-employed independent contractor / consultant vs. being a permanent employee?

positive: When I worked for myself it was bad because But Ultimately I gave up my business and went to work for a school teaching, and through a series of other jobs ended up in a very stable reliable trustworthy job.  When I was younger the variable paycheck didn't outweigh the freedom.  Now that I am a dad I only think about having insurance and a secure job. The other option to consider is having a regular job, and then doing a little side work for yourself.  You get all the benefits of both (and all the detractions)

positive: In the current economy there is no upside to working for yourself.  Get in a salaried position as soon as you can, and sacrifice to whatever gods you worship that you don't get made redundant. If you're already working for yourself, and wouldn't give it up for anything, hire someone, and get them off the street.

negative: These 'issues' don't exclusively relate to the 'sharing economy', the challenge of uncertainty would exist for any small business / independent contractor. It's not as if people didn't work as independent contractors in these industries before, it's just now the industries are being enhanced and overhead lowered, from technology.  For example:  Uber driver vs Medallion [Leasing] Taxi Driver  AirBNB landlord vs Apartment landlord, vacation rental landlord, or traditional bed & breakfast owner.  PostMates messenger vs traditional bike messenger

negative: No, as a director normally you can't. As a director of a Limited company, all those payments should be accounted for as directors' remuneration and have been subject to PAYE and NIC, even if you are self-employed. Currently there is no legislation which prevents a director from receiving self-employment income from a company in which he is a director, however the default position of HMRC's is that all the payments derived from the directorship are subject to PAYE. In other words, it's possible only invoice from an unconnected business or in a consultancy role that's not directly related to the trade of business. But it really depends on the circumstances and the contracts in place. Sources: Monsoon at AAT forum, David Griffiths at UKBF, Paula Sparrow and Abutalib at AW  More sources: If a person does other work that’s not related to being a director, they may have an employment contract and get employment rights. Source: Employment status as director at Gov.uk In principle, it is possible for an employee or office holder to tender for work with their employer outside their normal duties, in circumstances where that individual will not be providing service as an employee or office holder but as a self-employed contractor. Where there is any doubt about whether service is provided constitutes employment or self-employment, see the Employment Status Manual (ESM). Source: Section 62 ITEPA 2003 at HMRC

negative: "Can the companies from USA give job to me (I am from New Zealand)? Job as being employee - may be tricky. This depends on the labor laws in New Zealand, but most likely will trigger ""nexus"" clause and will force the employer to register in the country, which most won't want to do. Instead you can be hired as a contractor (i.e.: being self-employed, from NZ legal perspective). If so, what are the legal documents i have to provide to the USA for any taxes? If you're employed as a contractor, you'll need to provide form W8-BEN to your US employer on which you'll have to certify your tax status. Unless you're a US citizen/green card holder, you're probably a non-US person for tax purposes, and as such will not be paying any tax in the US as long as you work in New Zealand. If you travel to the US for work, things may become tricky, and tax treaties may be needed. Will I have to pay tax to New Zealand Government? Most likely, as a self-employed. Check how this works locally. As for recommendations, since these are highly subjective opinions that may change over time, they're considered off-topic here. Check on Yelp, Google, or any local NZ professional review site."

negative: "My late answer is: Be aware of the difference of being a contractor and being an employee.  I am not sure of the laws in Canada, but in the United States lots of small companies like to hire people as ""contractors"" but make them work under rules that fall into employee.   The business is trying to avoid paying payroll taxes, which is fine, but make sure you know your rights and responsibilities as a contractor vs employee. You can check with your state's Bureau of Labor and Industry in the US, but I am sure wherever you are from there is a government agency to do the same thing."

negative: For the first four months of the year, when you were an employee, the health insurance premiums were paid for with pre-tax money.  When you receive your W-2 at the end of the year, the amount in Box 1 of the W-2 will be reduced by the amount you paid for health insurance.  You can't deduct it on your tax return because it has already been deducted for you. Now that you are a 1099 independent contractor, you are self-employed and eligible for the self-employed health insurance deduction.  However, as you noted, the COBRA premiums are likely not eligible for this deduction, because the policy is in your old employer's name.  See this question for details, but keep in mind that there are conflicting answers on that question.

negative: When getting a mortgage it always depends on the bank and each bank may be more or less strict. With that being said there are rules and general guidelines which can help you understand how you fit in the world of mortgage approvals. If you can provide the same paper work as an employee of your company that you would normally provide from any other company then a bank may just accept that alone. However to me it seems like you will be looking at a new variation of what was known as a Self-certification mortgage A self-certification mortgage is basically a mortgage for those who   cannot prove their income. As a result of the housing collapse, the rules on a traditional self-cert mortgages have changed. As someone who is self employed, it is more difficult today to get a mortgage but is still possible. This article provides some good information: Can the self employed still get a mortgage? I advise doing some research on this topic and speaking with a professional mortgage broker.  Some Resources: Compare Self Cert Mortgages How to beat the mortgage famine in 2012 Can the self employed still get a mortgage?

negative: All things being equal, a $55,000/year job with 25% benefit load is about $68,750/year. That's a little more than $34/hr. Your rate really depends on the nature of the work. If it's strictly a part-time job where you are an employee, you're probably looking at a $28-38/hr range. If you're an independent contractor, the rate should be higher, as you're paying the taxes, doing other administrative stuff. How much higher depends on the industry... software/it rates are usually 1.5-2x, construction is driven by the union scale in many places, etc. Note that you need to meet criteria defined by the IRS to successfully maintain independent contractor status from a tax POV.

negative: You can file a revised W-4 with your employer claiming more allowances than you do now. More allowances means less Federal tax and (if applicable and likely with a separate form) less state tax. This doesn't affect social security and Medicare with holding, though.  That being said, US taxes are on a pay-as-you-go system. If the IRS determines that you're claiming more allowances than you're eligible for and not paying the proper taxes throughout the year, they will hit you with an underpayment penalty fee, which would likely negate the benefits of keeping that money in the first place. This is why independent contractors and self-employed people pay quarterly or estimated taxes. Depending on the employer, they may require proof of the allowances for adjustment before they accept the revised W-4.

negative: There are many different types of 1099 forms. Since you are comparing it to a W-2, I'm assuming you are talking about a 1099-MISC form.  Independent contractor income If you are a worker earning a salary or wage, your employer reports   your annual earnings at year-end on Form W-2. However, if you are an   independent contractor or self-employed you will receive a Form   1099-MISC from each client that pays you at least $600 during the tax   year. For example, if you are a freelance writer, consultant or   artist, you hire yourself out to individuals or companies on a   contract basis. The income you receive from each job you take should   be reported to you on Form 1099-MISC. When you prepare your tax   return, the IRS requires you to report all of this income and pay   income tax on it. So even if you receive a 1099-MISC form, you are required to pay taxes on it.

negative: If you want to subcontract some of your excess work to somebody else, you better be in business!  While some kinds of employees (e.g. commissioned salespeople) are permitted to deduct some expenses on their income tax, generally only a real business can deduct wages for additional employees, or the cost of services provided by subcontractors. Do you invoice your clients and charge HST (GST)?  Or do you tell your clients each pay period how many hours you worked and they compensate you through their payroll system like everybody else that walks through the door?  If you're not invoicing and charging HST (GST) (assuming you exceed the threshold, and if you have too much work, you probably do!), then perhaps your clients are treating you as an employee – by default – and withholding taxes, CPP, and EI so they don't get in trouble? After all, Canada Revenue Agency is likely to consider any person providing a service to a company to be an employee unless there is sufficient evidence to the contrary, and when there isn't enough evidence, it's the company paying for the services that would be on the hook for unpaid taxes, CPP, and EI. Carefully consider what form of business you are operating, or were intending to operate.  It's essential for your business to be structured appropriately if you want to hire or subcontract.  You ought to be either self-employed as a sole proprietor, or perhaps incorporated if it makes more sense to your situation.  Next, act accordingly. For instance, it's likely that your business should be taking care of the source deductions, CPP, and EI.  In fact, self-employed individuals shouldn't even be paying into EI – an independent contractor wouldn't qualify to make an EI claim if they lost a contract. As an independent, one doesn't have a job, one has a business, and EI doesn't cover the business itself, only the employees that the business deals with at arm's length.  As a business owner, you would be considered non-arms-length, and exempt from EI. Growing your business in the way that you are suggesting is an important enough a step that you should seek professional advice in advance.  Find a good accountant that deals with self-employed individuals & small businesses and run all this by him.  He should be able to guide you accordingly.  Find a lawyer, too.  A lawyer can guide you on how to properly subcontract others while protecting you and your business. Finally, be mindful of what it is you agreed to in your contract with your client:  Do they expect all services to be performed by you, personally?  Even if it wasn't written down who exactly would be performing the services, there may be an assumption it's you.  Some negotiation may be in order if you want to use subcontractors.

negative: "Read ""Rich Dad, Poor Dad"" and learn about Cashflow Quadrants, specifically the difference between being self employed and being a business owner.    The short version is that when you're self employed, you just own your job, and your boss is a complete asshole.  Owning a business is about leveraging the efforts and capital of others, essentially ""Playing the orchestra"" as your instrument.    Edit:  BTW, gorgeous work!!"

negative: "While the other answers try to quantify the value of health care the question you ask is about employee vs contractor. The delta between those regarding benefits goes way beyond health care. In fact because almost every full time employee must have health care offered by their employer the option of  ""you can have X with healthcare, or Y with no healthcare"" is no longer an option. I have seen situations in the last few years where employees who had no need for healthcare coverage (retired military) were offered additional vacation days to compensate for their lower cost to the employer. For employee vs contractor what is different isn't just healthcare. It also includes holidays, vacation days, sick days, employer portion of social security, education benefits, and 401k. Insurance benefits include not just healthcare but also dental, vision, short term and long term disability, and life insurance. The rule of thumb to cover all these benefits that are lost when you are a contractor is an amount equal to your income. Of course some of these benefits  depend on single vs married and kids or not. But unless the rate they are paying the contractors is approaching twice the rate they are paying employees the contractor will be hard pressed to cover the missing benefits."

negative: Since your YouTube income is considered self-employment income and because you probably already made more than $400 in net income (after deducting expenses from the $4000 you've received so far), you will have to pay self-employment tax and file a return.  This is according to the IRS's Publication 17 (2016), Your Federal Income Tax, so assumes the same rules for 2016 will remain in effect for 2017: You are self-employed if you: Carry on a trade or business as a sole proprietor, Are an independent contractor, Are a member of a partnership, or Are in business for yourself in any other way. Self-employment can include work in addition to your regular full-time business activities, such as certain part-time work you do at home or in addition to your regular job. You must file a return if your gross income is at least as much as the filing requirement amount for your filing status and age (shown in Table 1-1). Also, you must file Form 1040 and Schedule SE (Form 1040), Self-Employment Tax, if: Your net earnings from self-employment (excluding church employee income) were $400 or more, or You had church employee income of $108.28 or more. (See Table 1-3.) Use Schedule SE (Form 1040) to figure your self-employment tax. Self-employment tax is comparable to the social security and Medicare tax withheld from an employee's wages. For more information about this tax, see Pub. 334, Tax Guide for Small Business. I'd also note that your predicted income is getting close to the level where you would need to pay Estimated Taxes, which for self-employed people work like the withholding taxes employers remove their employees paychecks and pay to the government. If you end up owing more than $1000 when you file your return you could be assessed penalties for not paying the Estimated Taxes. There is a grace period if you had to pay no taxes in the previous year (2016 in this case), that could let you escape those penalties.

negative: Firstly, check your visa conditions (if you're not from the EU): http://www.ukcisa.org.uk/Information--Advice/Working/How-many-hours-can-you-work You do need to register for NI, but that's apparently streamlined into registering as self-employed: How to pay N.I contributions when both employed and self-employed? (Realistically, you can almost certainly get away with doing <£50 month in cash-in-hand jobs with no paperwork whatsoever, but in the very unlikely event of being caught it could result in being deported)

negative: > Michael Preiss was happy to escape the corporate grind after being laid off by International Business Machines Corp. in 2001. He became a contractor, earning more than $100,000 a year from steady assignments helping companies figure out how to do things faster and cheaper. >  That work eventually dried up. The past decade has been a revolving door of outsourced jobs for shrinking pay, fear that any day at a company could be his last, and reminders that full-time employees live in a different world, even though they often sit at the next desk. Mr. Preiss says one manager reprimanded him because co-workers complained that he laughed too loudly.       An experienced tech contractor that does process reengineering who earns less than $50 per hour?  Something doesn't add up.      Many industries have contractors who are taken advantage of.   In tech, contractors are often making 50-100% MORE than employees.  It is highly lucrative, a huge portion are contractors by choice (I am yet to work at a firm that didn't try to offer a lowball permanent position).

negative: "The ""independent contractor"" vs. ""employee"" distinction is a red herring to this discussion and not at all important just because someone suggested you use your LLC to do the job. Corp-2-Corp is a very common way to do contracting and having an LLC with business bank accounts provides you with more tax deductions (such as deducting interest on credit lines). Some accounting practices prefer to pay entities by their Tax ID numbers, instead of an individual's social security number. The actual reasoning behind this would be dubious, but the LLC only benefits you and gives you more advantages by having one than not. For example, it is easier for you to hire subcontractors through your LLC to assist with your job, due to the opaqueness of the private entity. Similarly, your LLC can sign Non Disclosure and Intellectual Property agreements, automatically extending the trade secrets to all of its members, as opposed to just you as an individual. By signing whatever agreement with the company that is paying you through your LLC, your LLC will be privy to all of this. Next, assuming you did have subcontractors or other liability inducing assets, the LLC limits the liability you personally have to deal with in a court system, to an extent. But even if you didn't, the facelessness of an LLC can deter potential creditors, for example, your client may just assume you are a cog in a wheel - a random employee of the LLC - as opposed to the sole owner. Having a business account for the LLC keeps all of your expenses in one account statement, making your tax deductions easier. If you had a business credit line, the interest is tax deductible (compared to just having a personal credit card for business purposes). Regarding the time/costs of setting up and managing an LLC, this does vary by jurisdiction. It can negligible, or it can be complex. You also only have to do it once. Hire an attorney to give you a head start on that, if you feel that is necessary. Now back to the ""independent contractor"" vs. ""employee"" distinction: It is true that the client will not be paying your social security, but they expect you to charge more hourly than an equivalent actual employee would, solely because you don't get health insurance from them or paid leave or retirement plans or any other perk, and you will receive the entire paycheck without any withheld by the employer. You also get more tax deductions to utilize, although you will now have self employment tax (assuming you are a US citizen), this becomes less and less important the higher over $105,000 you make, as it stops being counted (slightly more complicated than that, but self employment tax is it's own discussion)."

negative: Careful.  I would personally need a LOT more than $5 more per hour to go from W-2 employment to 1099 employment.  It boils down to two reasons: (1) employers pay a huge amount of taxes on behalf of their employees, and (2) you would have to pay all of your own withholding up front. Your current proposal from them doesn't account for that. There are also risks that you face as a 1099.  On the first item, your employer currently pays 6.2% of your Social Security tax. You pay the other 6.2%. If you go to 1099 status, you will be self-employed as an independent contractor and have to pay the full 12.4% out of your increased 1099 wages.  On the second item, your employer also does your withholding out of your paychecks based on what you tell them on a form W-4. If you're disciplined enough to pay this out yourself in estimated taxes every time you get a paycheck, great. Many people aren't and just see a much bigger paycheck with no taxes out of it, and end up with a large tax bill at the end of the year.  Overall, there are some other considerations like healthcare and other benefits. These will not be available to you as a 1099 employee. You can also be terminated spontaneously, unless you have a specific contract length with the company.  As I see it, not including any benefits you would receive, you're looking at LESS money in your pocket at $50/hr as a contractor than at your $48/hr. Your pay net social security deductions is: $48 x 40 hrs x 52 weeks = 99,840 * .938 = 93,649.92. As a 1099 @ $50/hr you would net $50 x 40 hrs x 52 weeks = 104,000 * .876 = 91,104.  Then there are the rest of taxes, etc to figure out your real take-home pay.  I'm not a tax advisor, but I would be very careful to get the whole picture figured out before jumping. I would ask for a lot more with the added risk you would take as an independent, too.

negative: I think women are at risk from it because they have a need to become self employed not a want. If you don't have a rich husband you have a choice between  going back to work after your maternity leave (if you're in a country which will give you one) or being on single mom benefits. Neither are appealing. I'm self employed which means I can spend time with my baby and have money. People probably assume it's because I am part of a mlm scheme too!   In my opinion mlms usually target women because of this.

negative: "My number one piece of advice is to see a tax professional who can guide you through the process, especially if you're new to the process. Second, keep detailed records. That being said, I found two articles, [1] and [2] that give some relevant details that you might find helpful. The articles state that: Many artists end up with a combination of income types: income from   regular wages and income from self-employment. Income from wages   involves a regular paycheck with all appropriate taxes, social   security, and Medicare withheld. Income from self-employment may be in   the form of cash, check, or goods, with no withholding of any   kind. They provide a breakdown for expenses and deductions based on the type of income you receive.  If you get a regular paycheck: If you've got a gig lasting more than   a few weeks, chances are you will get paid regular wages with all   taxes withheld. At the end of the year, your employer will issue you a   form W-2. If this regular paycheck is for entertainment-related work   (and not just for waiting tables to keep the rent paid), you will   deduct related expenses on a Schedule A, under ""Unreimbursed Employee   business expenses,"" or on Form 2106, which will give you a total to   carry to the schedule A. The type of expenses that go here are: If you are considered an independent contractor (I presume this includes the value of goods, based on the first quoted paragraph above): Independent contractors get paid by cash or check with no withholding   of any kind. This means that you are responsible for all of the Social   Security and Medicare normally paid or withheld by your employer; this   is called Self-Employment Tax. In order to take your deductions, you   will need to complete a Schedule C, which breaks down expenses into   even more detail. In addition to the items listed above, you will   probably have items in the following categories: Ideally, you should receive a 1099 MISC from whatever employer(s) paid you as an independent contractor. Keep in mind that some states have a non-resident entertainers' tax, which is  A state tax levied against performers whose legal residence is outside   of the state where the performance is given. The tax requires that a   certain percentage of any gross earnings from the performance be   withheld for the state. Seriously, keep all of your receipts, pay stubs, W2's, 1099 forms, contracts written on the backs of napkins, etc. and go see a tax professional."

negative: Note:  This is not professional tax advice.  If you think you need professional tax advice, find a licensed professional in your local area. What are the expected earnings/year? US$100? US$1,000?  US$100,000?  I would say if this is for US$1,000 or less that registering an EIN, and consulting a CPA to file a Partnership Tax return is not going to be a profitable exercise.... all the earnings, perhaps more, will go to paying someone to do (or help do) the tax filings. The simplest taxes are for a business that you completely own.  Corporations and Partnerships involve additional forms and get more and more and complex, and even more so when it involves foreign participation.  Partnerships are often not formal partnerships but can be more easily thought of as independent businesses that each participants owns, that are simply doing some business with each other. Schedule C is the IRS form you fill out for any businesses that you own. On schedule C you would list the income from advertising.  Also on schedule C there is a place for all of the business expenses, such as ads that you buy, a server that you rent, supplies, employees, and independent contractors.  Amounts paid to an independent contractor certainly need not be based on hours, but could be a fixed fee, or based on profit earned.   Finally, if you pay anyone in the USA over a certain amount, you have to tell the IRS about that with a Form 1099 at the beginning of the next year, so they can fill out their taxes.  BUT.... according to an article in International Tax Blog you might not have to file Form 1099 with the IRS for foreign contractors if they are not US persons (not a US citizen or a resident visa holder).

negative: > A lot of contract positions have become less or equal pay than the permanent workers.      That many be true in many industries, but not in IT.   Technology contractors typically make far more than employees.   The example in the article was someone working for IBM.   IBM is a low paying IT contractor, and still pays more than $50 per hour for legally resident contractors (H1B's is a completely different story).

negative: Are you being paid through a limited company or an umbrella company ? Are you self employed If not what they are doing is illegal. If you are being paid a salary, then the employer has to contribute their part of National Insurance. I believe they are treating you as self employed, hence asking you to generate invoices. Check your contract wordings properly. Or get help from Citizens Advice. Call them or visit their local office. Or else do call up HMRC.  But if you are invoicing them, I would assume you are self employed and you have to do your self assessment. Get in contact with HMRC and ask them to generate your Unique Taxpayer Reference (UTR). THey will send you the UTR and using this you can fill your tax returns.  It looks like cumbersome now, but it isn't so. You can do it yourself, I do mine. Or at the end of the financial year, get an accountant to do the returns for you, probably should charge you £100-£150. Keep all your invoices, bills, bank statements safely. This is some help from HMRC website

negative: I'm not sure why you're confusing the two unrelated things. 1040ES is your estimated tax payments. 941 is your corporation's payroll tax report. They have nothing to do with each other. You being the corporation's employee is accidental, and can only help you to avoid 1040ES and use the W2 withholding instead - like any other employee. From the IRS standpoint you're not running a LLC - you're running a corporation, and you're that corporation's employee. While technically you're self-employed, from tax perspective - you're not (to the extent of your corporate salary, at least).

negative: I assume by not-so-good prospects you mean small account clients whose revenue will not justify the time required to close a deal and/or post-sale service.  Glad to see you are being realistic about the value of your time vs. what a prospect is paying.    A big part of your practice is going to come down to what infrastructure/processes your dealer firm or back office support has.  Is yours one with a formal small account policy that assigns servicing to a centralized service center (aka call center)?    I've also seen others separate direct at fund vs held in-house (omnibus) based on client assets.  Small accounts go direct to at fund and are directed to the mutual fund transfer agent for post-sale servicing needs.  The up-front sales charge compensates for the initial consultation and the rest is self-servicing / support by the fund transfer agent.

negative: Note: I am in the UK. I don't know specifically about australia but I expect the general principles will be much the same everywhere. What banks want is to be reasonablly confident that you have a steady income stream that will continue to pay the mortgate until it completes.  In general employed are fairly easy to assess. Most employed people will have a steady basic pay that increases through their career. Payslips will usually seperate-out basic pay, overtime and bonuses. There is little opertunity to cook the books. The self-employed are harder to assess. Income can be bursty and there are far more opertunities for cooking the books to make it look like you are earning more than you really are. So banks are likely to be far more careful about lending to the self-employed, they will likely want to see multiple years of buisness records so that any bursts, whether natural due to the ebbs and flows of buisness or deliberatly created to cook the books average out and they can see the overall pattern. A large deposit will help because it reduces the risk to the bank in the event of a default. Similarly not being anywhere near your limit of affordability will help.

negative: Let me first start off by saying that you need to be careful with an S-Corp and defined contribution plans.  You might want to consider an LLC or some other entity form, depending on your state and other factors. You should read this entire page on the irs site:  S-Corp Retirement Plan FAQ, but here is a small clip: Contributions to a Self-Employed Plan You can’t make contributions to a self-employed retirement plan from your S corporation   distributions. Although, as an S corporation shareholder, you receive   distributions similar to distributions that a partner receives from a   partnership, your shareholder distributions aren’t earned income for   retirement plan purposes (see IRC section 1402(a)(2)). Therefore, you   also can’t establish a self-employed retirement plan for yourself   solely based on being an S corporation shareholder. There are also some issues and cases about reasonable compensation in S-Corp.  I recommend you read the IRS site's S Corporation Compensation and Medical Insurance Issues page answers as I see them, but I recommend hiring CPA You should be able to do option B.  The limitations are in place for the two different types of contributions:  Elective deferrals and Employer nonelective contributions.  I am going to make a leap and say your talking about a SEP here, therefore you can't setup one were the employee could contribute (post 1997). If your doing self employee 401k, be careful to not make the contributions yourself. If your wife is employed the by company, here calculation is separate and the company could make a separate contribution for her. The limitation for SEP in 2015 are 25% of employee's compensation or $53,000.  Since you will be self employed, you need to calculate your net earnings from self-employment which takes into account the eductible part of your self employment tax and contributions business makes to SEP.  Good read on SEPs at IRS site. and take a look at chapter 2 of Publication 560. I hope that helps and I recommend hiring a CPA in your area to help.

negative: They might be concerned with having to charge sales tax in California if they have a single employee in California, creating a nexus situation with CA. If that's the case, or even if there is some other issue, you might be able to switch from being a W2 employee to being a 1099 independent contractor. There's a host of additional issues this could cause, but it alleviate the nexus problem (if THAT is the problem). Here's a terrible solution you can bring up, but shouldn't do under any circumstances: offer to set up a mailing address in an allowed State, and give your company plausible deniability with regards to your legal residence. Obviously, this is a terrible idea, but exploring that option with your employer would help you suss out what the actual objection is. Ultimately, anything said here about the reason is just conjecture. You need to talk to the decision maker(s) about the real reason behind the denial. Then you can talk through solutions. Also - don't forget that you can get another job. If you are serious about a future with your girlfriend, you should put that relationship ahead of your current employment comfort and security. If you are willing to walk away from your position, you are in a much better situation to negotiate.

negative: Note too that being a contractor means that you will unavoidably have periods between contracts; you tend to be out of work more often than a salaried employee would. You need to set your rates so your average income, including those down times, adds up to a living wage including all those benefits that aren't being covered. If a company hires a contractor, they understand that this is part of the trade-off. They avoid making a long-term commitment when they don't have a long-term need, and they accept that this convenience may cost a bit more in the short term.

negative: Have you found a general contractor to rebuild your home? I would imagine that someone with a bit of expertise in the area is used to dealing with insurance companies, floating the money for a rebuild, and hitting the gates to receive payment for work accomplished.   Business are used to not receiving payment when work is accomplished and it is part of the risk of being in business.  They have to buy materials and pay employees with the expectation of payment in the future.  Much like workers go to work on a Monday for the work that day, three Friday's later, business often have to float costs but for longer periods of time. If you are looking to be your own general contractor then you will have to float the money on your own. The money should not be used for living expenses or mortgage payments, it should be used for down payments in order to get the work of rebuilding started.

negative: "Both are saying essentially the same thing.  The Forbes articles says ""as much as 20% [...] up to a maximum of $50,000"".  This means the same as what the IRS page when it says the lesser of a percentage of your income or a total of $53,000.  In other words, the $53k is a cap: you can contribute a percentage of your earnings, but you can never contribute more than $53k, even if you make so much money that 20% of your earnings would be more than that. (The difference between 20% and 25% in the two sources appears to reflect a difference in contribution limits depending on whether you are making contributions for employees, or for yourself as a self-employed individual; see Publication 560.  The difference between $50k and $53k is due to the two pages being written in different years; the limits increase each year.)"

negative: "It doesn't generally matter, and I'm not sure if it is in fact in use by the IRS other than for general statistics (like ""this year 20% of MFJ returns were with one spouse being a 'homemaker'""). They may be able to try and match the occupation and the general levels and types of income, but for self-employed there's a more precise and reliable field on Schedule C and for employees they don't really need to do this since everything is reported on W2 anyway. So I don't think they even bother or give a lot of value to such a metric. So yes, I'm joining the non-authoritative ""doesn't matter"" crowd."

negative: "Because 401k's are also used by self employed. A person who has a schedule C profitable income can open a 401k and ""match"" in whatever ratio he wants, up to 25% of the net profits or the limits you stated. This allows self-employed to defer more income taxes to the future. Why only self-employed? Good question. Ask your congressman. My explanation would be that since they're self-employed they're in much more danger of not having income, especially later in life, if their business go south. Thus they need a bigger cushion than an average W2 employee who can just find another job."


query: As director, can I invoice my self-owned company?

positive: Sure you can. Obviously it means your company will make less profit, saving you 20% corporation tax, while your personal income will be higher, meaning you will likely spend more than 20% in income tax and National Insurance contributions.

positive: No, as a director normally you can't. As a director of a Limited company, all those payments should be accounted for as directors' remuneration and have been subject to PAYE and NIC, even if you are self-employed. Currently there is no legislation which prevents a director from receiving self-employment income from a company in which he is a director, however the default position of HMRC's is that all the payments derived from the directorship are subject to PAYE. In other words, it's possible only invoice from an unconnected business or in a consultancy role that's not directly related to the trade of business. But it really depends on the circumstances and the contracts in place. Sources: Monsoon at AAT forum, David Griffiths at UKBF, Paula Sparrow and Abutalib at AW  More sources: If a person does other work that’s not related to being a director, they may have an employment contract and get employment rights. Source: Employment status as director at Gov.uk In principle, it is possible for an employee or office holder to tender for work with their employer outside their normal duties, in circumstances where that individual will not be providing service as an employee or office holder but as a self-employed contractor. Where there is any doubt about whether service is provided constitutes employment or self-employment, see the Employment Status Manual (ESM). Source: Section 62 ITEPA 2003 at HMRC

negative: Another person, not a shareholder or director, will be treated as when a bank loans you money. You are loaning out money and you are sort of getting interest income out of it or some other benefit, which needs to be put down in you company's annual return. Full source on the HMRC website. But for a shareholder or director is different matter. Check the HMRC source for sure and check with your accountant, if you have one. If you owe your company money You or your company may have to pay tax if you take a director’s loan. Your personal and company tax responsibilities depend on how the loan is settled. You also need to check if you have extra tax responsibilities if: If the loan was more than £10,000 (£5,000 in 2013-14) If you’re a shareholder and director and you owe your company more than £10,000 (£5,000 in 2013 to 2014) at any time in the year, your company must: You must report the loan on your personal Self Assessment tax return. You may have to pay tax on the loan at the official rate of interest. If you paid interest below the official rate If you’re a shareholder and director, your company must: You must report the interest on your personal Self Assessment tax return. You may have to pay tax on the difference between the official rate and the rate you paid.

negative: Are you being paid through a limited company or an umbrella company ? Are you self employed If not what they are doing is illegal. If you are being paid a salary, then the employer has to contribute their part of National Insurance. I believe they are treating you as self employed, hence asking you to generate invoices. Check your contract wordings properly. Or get help from Citizens Advice. Call them or visit their local office. Or else do call up HMRC.  But if you are invoicing them, I would assume you are self employed and you have to do your self assessment. Get in contact with HMRC and ask them to generate your Unique Taxpayer Reference (UTR). THey will send you the UTR and using this you can fill your tax returns.  It looks like cumbersome now, but it isn't so. You can do it yourself, I do mine. Or at the end of the financial year, get an accountant to do the returns for you, probably should charge you £100-£150. Keep all your invoices, bills, bank statements safely. This is some help from HMRC website

negative: This is pretty normal.   I am in the UK and currently doing the exact same thing.  As some answers state there is additional tax law called IR35. But thats all it is, an additional tax law that may be applicable to your situation (it very well may not). It is all perfectly legal and common (all my university friends now do it). You will be the director of a company, and invoice the recruiters company.  This has benefits and disadvantages. Personally I love it, but each to their own. Don't do it if you don't want to.

negative: If this will be your sole income for the year, going self-employed is the best way to do this: So, here's how to go at it: Total cash in: £2000 Total Tax paid: £0 Admin overhead: approx 3 hours. Legit: 100%   :) Edit:  Can you tell me that in my case what are the required fields on the invoice? If you're non-VAT registered, there are no legal requirements as to what information you need to put on the invoice -it literally can be a couple of numbers on a napkin, and still be legit.  With that said, to make a professional appearance, my invoices are usually structured as follows: Left side: ( Sidenote: why client-specific incremental numbering? Why, so they can't make educated guesses to the number of clients I have at any given time :)  ) Right side: Center table: And so far, none of my clients missed any fields, so this should have everything they need to :) Hope this helps, but keep in mind, all of the above is synthetic sugar on the top -ultimately,  the relationship you share with your Clients is the thing you will (or will not) get paid for! Edit#2: The voices in my head just pointed out, that I've totally omitted National Insurance contributions in the above. However, and I quote HMRC: If your profits are expected to be less than £5,315 you may not have to pay Class 2 National Insurance contributions. Hence, this won't change the numbers above, either -just make sure to point this out during your registration in the office.

negative: Yes. I can by all means start my own company and name myself CEO. If Bill Gates wanted to hire me, I'll take the offer and still be CEO of my own company. Now, whether or not my company makes money and survives is another question.  This is the basis of self-employed individuals who contract out their services.

negative: Depending on how much freelance work we're talking about you could set up a limited company, with you and your wife as directors. By invoicing all your work through the limited company (which could have many other benefits for you, an accountant/advisor would... well, advise...) it's the company earning the money, not you or her personally. You can then pay your wife up to £10,000 per year (as of writing this) without income tax kicking in. You would probably have to pay yourself a small amount to minimise exposure to HMRC's snooping, but possibly not... as far as I'm aware the rules do not state anything about working for free, for yourself - and I wouldn't worry about the ethics, you're already paying plenty into HMRC's bank account through your day job! Some good information here if you're interested: https://www.whitefieldtax.co.uk/web/psc-guide/pscguide-how-does-it-all-work-in-practice-salaries-and-dividends/

negative: You need to clarify with Bob what your agreement is. If you and Bob are working together on these jobs as partners, you should get a written partnership agreement done by a lawyer who works with software industry entity formation. You can legally be considered a partnership if you are operating a business together, even if there is nothing in writing. The partnership will have its own tax return, and you each will be allocated 50% of the profits/losses (if that's what you agree to). This amount will be reported on your own individual 1040 as self-employment income. Since you have now lost all the expense deductions you would have taken on your Schedule C, and any home office deduction, it's a good idea to put language in the partnership agreement stating that the partnership will reimburse partners for their out-of-pocket expenses. If Bob is just hiring you as a contractor, you give him your SSN, and he issues you a 1099, like any other client. This should be a situation where you invoice him for the amount you are charging. Same thing with Joe - figure out if you're hiring him as an independent contractor, or if you have a partnership. Either way, you will owe income and self-employment tax on your profits. In the case of a partnership, the amount will be on the K-1 from the partnership return. For an independent contractor who's operating as a sole proprietor, you report the income you invoiced for and received, and deduct your expenses, including independent contractors that you hired, on your Schedule C. Talk to your tax guy about quarterly estimated payments. If you don't have a tax guy, go get one. Find somebody people in your city working in your industry recommend. A good tax person will save you more money than they cost. IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law.

negative: No, even businesses pay taxes quarterly.  So if you formed Nathan, LLC, or otherwise became self employed, you'd still have to file quarterly estimates and make tax payments.  This would cause taxes to be a much more high touch part of your life. However, you should ensure that you're claiming the proper exemptions etc to avoid excessive withholding.

negative: I am a freelancer based in Europe and I want to tell you: - if you are a freelancer, then you INVOICE your Swizzerland based client The word salary is improper. - So your client will DEDUCE the invoice from its taxes, and NOT pay income tax on top of that invoice. Because invoice = expense.  So, ONLY YOU pay income tax in India. Your client pays no tax at all, not in India, not in Swizzerland. As you are a freelancer and not employee, the company has no obligation to pay employer taxes for you. A company  has financial benefits from working with a freelancer.

negative: Boards of Directors are required for corporations by nearly all jurisdictions.  Some jurisdictions have almost self-defeating requirements however, such as in tax havens. Boards of Directors are compensated by the company for which they sit.  Historically, they have set their own compensation almost always with tight qualitative legal bounds, but in the US, that has now changed, so investors now set Director compensation.  Directors are typically not given wages or salary for work but compensation for expenses.  For larger companies, this is semantics since compensation averages around one quarter of a million of USD. Regulations almost always proscribe agencies such as other corporations from sitting on boards and individuals convicted of serious crimes as well.  Some jurisdictions will even restrict directories to other qualities such as solvency. While directors are elected by shareholders, their obligations are normally to the company, and each jurisdiction has its own set of rules for this.  Almost always, directors are forbidden from selling access to their votes. Directors are almost always elected by holders of voting stock after a well-publicized announcement and extended time period. Investors are almost never restricted from sitting on a board so long as they meet the requirements described above.

negative: There is no reason for you to open a firm. However, it will help you, if you operate separate bank account for business and personal purposes. You can run your business as proprietorship business. Your inward remittance is your income. You can deduct payment made to your colleagues as salary. You should pay them by way of cheques or bank transfer only. You are also entitled to deduct other business expenses provided you keep proper receipt of the same such as broadband connection charges, depreciation on equipment and more importantly, rent on your house. If your total receipt from such income exceeds INR 60,00,000 you will need to withhold tax on payment made to your colleagues as also subject to audit of your accounts. If you want to grow your business, suggest you should take an Import / Export Code in your own name.  You can put any further question in this regard.

negative: In a simple case as the sole UK resident director/shareholder of a company, with that company as your only income, you are usually best paying yourself a salary of the maximum tax free amount allowed under your tax code (~£11k for most people at present).  On this you will have to pay some employer and employee National Insurance (NI) contributions (totalling around £1000). Your salary/employer NI counts as an expense, so that is taken off the company profits.  You then pay corporation tax on the remainder (20%).  The first £5k you take as dividends is tax free, the remainder at a lower tax rate than the equivalent combined income tax/NI (starting at 7.5% instead of 20% tax plus employee plus employer NI), giving a significant saving compared to salaried income even after corporation tax. To declare and pay the tax, you would need to complete a self-assessment tax return.  Your company will also need to file a return. The Contractor UK website, although aimed at IT contractors, has some very useful information on operating Ltd companies. That said, finances are rarely that simple so I would concur with the recommendation you engage an accountant, which is a tax-deductible expense.

negative: If you could find a breakdown, I suspect that it would show not just that they are self employed but own their own company. There are many people that are self employed, many of them make a good living at it, but are not millionaires.  My neighbour the plumber is a perfect example of this sort of self-employed and comfortable but not rich person. The key to wealth growth is to own (a significant part of) a company.  It one way to leverage a smaller amount of money to something much larger.  Plough your profits back in to the company to grow it, pay yourself reasonably for some time as the company grows.  After it is some size, you can afford to pay yourself more of the profits, if not sell it as a going concern to someone else. One last thought - I am assuming that your book is claiming that they made their money through self-employment, instead of choosing to become self employed  after striking rich somewhere.  If I were to win the lottery, I might then become a self-employed something, but in that case it was not my self-employment that got me there.

negative: I don't know Australian law, but I will give my US perspective here.  The custom in the US is for officers and directors to be indemnified by the corporation, and that LLCs have an even broader power to indemnify (even to remove the duty of loyalty!).  Moreover, directors will typically be able to purchase D&O insurance to protect them from loss in the event of liability. For US corporations (not LLCs), the duty of care (prudence) requires that directors behave responsibly in weighing major decisions, and consult experts and specialists before coming to rash decisions.  It usually becomes a court case in the context of a large public company in the midst of an acquisition event.  The only people with standing (in the US) are shareholders.  If all the other shareholders are directors, then it may be hard for them to blame you. Additionally, if you are concerned about the propriety of your actions, there may be sources to rely on.  First, discussion with your fellow directors can be a helpful guide (though will not usually immunize you from any accusation of wrongdoing), and disclosure tends to cure almost any accusation of breaching the duty of loyalty.  Second, boards often secure the advice of legal counsel, and sometimes bring on lawyers as members or will outright hire counsel for the board.  Third, there may be services that will provide you with generic advice (e.g. UK Companies House and US-based IOD), which might set you at ease a little bit. I don't know the details of Australian law, as I say.  But my sense of common law countries is that, like the US, they are primarily concerned about negligence (incompetently or imprudently neglecting to understand the business and make informed decisions), disloyalty (fraudulently engaging in self-interested transactions that either hurt the company or should have been offered to the company), and recklessness (not bothering to seek out information).  As long as you are active, informed, engaged, and not engaging in secret deals outside the company (especially deals where either side is competing with the company), then that would be more than sufficient under the US standard. If you are concerned about liability, then inquire into indemnifications by the company (in the US, the company can usually pay all legal costs of directors), insurance, and legal counsel.  I imagine your business partners are no more savvy than you are.  My impression is you are overreacting to relatively rare and exotic expression of corporate law (at least in the US). But I'll close by repeating that I don't know Australian corporate law.

negative: You can receive funds from US Client as an individual. There is no legal requirement for you to have a company. If the transactions are large say more than 20 lacs in a year, its advisable to open a Private Ltd. Although its simple opening & Registering a company [A CA or a Laywer would get one at a nominal price of Rs 5000] you can do yourself. Whatever be the case, its advisable to have seperate accounts for this business / professional service transactions. Maintain proper records of the funds received. There are certain benefits you can claim, a CA can help you. Paying taxes in Advance is your responsibility and hence make sure you keep paying every quarter as advance tax. Related questions Indian citizen working from India as freelancer for U.S.-based company. How to report the income & pay tax in India? Freelancer in India working for Swiss Company Freelancing to UK company from India How do I account for money paid to colleagues out of my professional income?

negative: Yes, but make sure you issue a 1099 to these freelancers by 1/31/2016 or you may forfeit your ability to claim the expenses. You will probably need to collect a W-9 from each freelancer but also check with oDesk as they may have the necessary paperwork already in place for this exact reason.  Most importantly, consult with a trusted CPA to ensure you are completing all necessary forms correctly and following current IRS rules and regulations.  PS - I do this myself for my own business and it's quite simple and straight forward.

negative: You can't do what you would like to do, unless your business has another, unrelated investor or is willing to invest an equal amount of funds + .01 into a corporation which will employ you.  You will then need to set up a self-directed IRA. Additionally, you will need a trustee to account for all the disbursements from your IRA.

negative: Good answer.  I set up an S-Corp on my own, but I intend to transfer our intellectual property to an LLC at a later date.  I would say hiring an attorney to draft an operating agreement is a must and worth the expense.

negative: There is no strict need to do that, you can consider yourself to be consulting, a 10% of your payment will be withheld and paid as tax by the company, you can deduct up to 60% of your income as expenses and pay tax on the rest (factoring the tax deducted at source). In another approach, you could register for service tax and charge service tax on your invoice and pay to the service tax department, the tax calculations are similar to above. It will be good if you speak to a chartered accountant and get more clarity. As for business card, you could print it with your name and qualification, there are no restrictions on that.

negative: From what I understand this is what you can do : You need to raise an invoice to your brother's company in USA Your brother makes a payment into your Indian company's bank account using wire transfer straight into a bank account in your company's name. Your brother wont have to pay taxes on the money that he pays you against an invoice as it would be an expense and would not be considered as profit for tax purposes. Once you have the money you can then file your income tax returns after deducting your own expenses etc in India. I hope this helps.

negative: I took littleadv's advice and talked to an accountant today. Regardless of method of payment, my US LLC does not have to withhold taxes or report the payment as payments to contractors (1099/1042(S)) to the IRS; it is simply a business expense.  He said this gets more complicated if the recipient is working in the US (regardless of nationality), but that is not my case

negative: In the UK is perfectly acceptable to use your personal bank account as a business account if your a sole trader, although it can be messy. Just record and keep all relevant transaction invoices etc documents for self assessment time. At self assessment time they will tell you the amount of tax you need to pay when you fill out the forms. Not sure how it is Canada.  If you get bigger get an accountant.

negative: "Owning more than 50%  of a company's stock normally gives you the right to elect a majority, or even all of a company's (board of) directors. Once you have your directors in place, you can tell them who to hire and fire among managers. There are some things that may stand in the way of your doing this. First, there may be a company bylaw that says that the directors can be replaced only one ""class"" at a time, with three or four ""classes."" Then it could take you two or three years to get control of the company. Second, there may be different classes of shares with different voting rights, so if e.g. ""A"" shares controlled by the founding family gives them ten votes, and ""B"" shares owned by the other shareholders, you may have a majority of total shares and be outvoted by the ""A"" shares."

negative: for starters get a cheap easy accounting software pack like quickbooks and have the salesmen train you on it's use and set-up. the 50k you put into the company will count as paid up share capital. then any future withdrawal from company account will show as loan to director.

negative: Source Sole trader   If you start working for yourself, you’re classed as a self-employed sole trader - even if you’ve not yet told HM Revenue and Customs (HMRC). As a sole trader, you run your own business as an individual. You can keep all your business’s profits after you’ve paid tax on them. You can employ staff. ‘Sole trader’ means you’re responsible for the business, not that you have to work alone.You’re personally responsible for any losses your business makes. Tax responsibilities   You must: You’re personally responsible for any losses your business makes. This is one condition which you would need to have a look. If you do some shoddy work and your client wants to recover the losses they can come after your personal money or property. LLPs have the same probelm too. And you pay NI and income tax on all of your profits.  If you have a partner then both can take out the profits of a limited company, if both are directors. The tax hit will be less as compared to a single person.

negative: "If you're really interested in the long-term success of your business, and you can get by in your personal finances without taking anything from the business for the time being, then don't.   There is no ""legal requirement"" to pay yourself a prevailing wage if doing so would put the company out of business.  it is common for a company's principals not to draw wages from the business until it is viable enough to sustain payroll.  I was in that situation when I first began my business, so the notion that somehow I'm violating a law by being fiscally responsible for my own company is nonsense. Be wise with your new business.  You didn't state why you feel the need to take some kind of payment out, but this can be a crucial mistake if it imperils your business or if that money could be better spent on marketing or some other areas which improve revenues. You can always create a salary deferral agreement between yourself and your own company which basically states that the company owes you wages but you are, for the time being, willing to defer accepting them until such time that the company has sufficient revenues to pay you.  That's one solution, but the simplest answer is, if you don't need the money you're thinking of paying yourself, don't do it.  Let that money work for you in the business so that it pays off better in the long run. Good luck!"

negative: Yes, you can do this.  I do this for my own single-member LLC, but I usually do it online instead of writing a check. Your only legal obligation is to pay quarterly estimated tax payments to the IRS. I'm assuming you are not otherwise doing anything shady. For example, that you have funds in your business account to pay any expenses that will be due soon or that you are trying to somehow pull a fast one on someone else...

negative: "Be careful of the other answers here. Many are wrong or partially wrong. The question implies that you knew this, but for everyone else's benefit, you can keep you LLC organization and still elect to be treated as a S-Corp by the IRS just for tax purposes.  You do this by filing Form 2553 with the IRS. (You can also, by the way, elect to be taxed as a ""regular"" C-Corp if you want, although that's probably not advantageous.  See Form 8832.) The advantage of electing to be treated as an S-Corp is that income beyond what constitutes a ""reasonable salary"" are not subject to social security and medicare taxes as they would when paid was wages or counted as self-employment income on Schedule C.  Depending on what you need to pay yourself to meet the ""reasonable salary"" test, your overall income, and other factors about your business, this could result in tax savings. Contrary to other answers here, making this election will not force you to create a board of directors.  You are still an LLC for all purposes except taxes, so whatever requirements you had in organization and governance at the state level will not change.  You will have to file a ""corporate"" tax return on Form 1120S (and likely some corresponding state tax form), so that is additional paperwork, but this ""corporate"" return does not mean the S-Corp pays taxes itself. With a couple of exceptions, the S-Corp pays no taxes directly (and therefore does not pay at the corporate tax rate). Instead the S-Corp apportions its income, expenses, and deductions to the owner(s) on Schedule K.  The owners get their portion reported from the S-Corp on Schedule K1 and then include that on their personal Form 1040 to pay tax at their personal rate. In addition to filing Form 1120S, you will have to handle payroll taxes, which will create some additional administrative work and/or cost. Using a payroll service for this will likely be your best option and not terribly expensive. You've also got the issue of determining your reasonable salary within the rules, which is the subject of other questions on this site and other IRS guidance."

negative: Scanned or electronic copies of invoices should be sufficient as long as they are accurate and you can deliver them during an audit. Also, if you have an accountant prepare your taxes you would either need to provide them a copy of the invoices or a summary of them with the corresponding amounts to be claimed. Personally I prefer to print out a paper copy and file that away with that quarter's and year's other tax documents. I do my own taxes and find paper copies handy as I can go through each invoice/receipt and make sure I have entered its information by ticking it. I find that when handling a large number of documents that paper copies are more easy to handle than electronic ones. In the end you will need to use a system that you feel comfortable with and are able to use effectively.

negative: ">Trust me: those ""EDI operators"" (called ""EDI Service Bureaus"" in the US) have a unique EDI map for each trading partner, because, as I said, each trading partner sends the EDI data in a completely different way.  Different ERP systems have different mappings, but there are no unlimited amount of ERP systems. If you can cover SAP, Microsoft and Oracle you can already trade EDI messages between most of the big parties. You only have to make the EDI mappings once for a system and if you have dediceted process to update them it is not hard to sell it to companies that want to have EDI processes.  We never had to do any kind of mappings our self. I guess the infra in EU is just a bit ahead of what you got in US.  >EDI service Bureaus charge $$$ per message  So does it cost to scan, input data and process the invoice. For us it was easy choice as it is way faster, more reliable and also cheaper than having someone do all the data input into ERP.  >Shortly, invoices from suppliers are for many different types of services handled by many different departments.  For all those we have automated rules. Freight orders are sent through a 3rd party system that matches the invoices to the freight orders. They have our freight prices and can automatically approve the invoices with the tables or reject them and ask for a credit.  Goods invoices have the PO-number. The shipping documents have the same PO-number and when a item is received with a PO number it is allocated to a invoice with the same PO number. Buyers know if the PO is not full filled automatically as the inventory will not match what was ordered.  HR invoices will go to HR department automatically and they just have to check if the invoice is correct. Postings and deparment allocations are done by automatic rules here also.  Office supplies can either be bought by PO number or with reference to who the invoice has to be sent for inspection. Inspector can change the automatic postings if there is something incorrect with the automatic posting.  The system we have has been quite flexible and there has not been much of need for customization after the initial setup.   Of course there is still some manual postings to be done, but lot less than without."

negative: ">As a legal matter, shareholders who purchase shares of stock in a  corporation own nothing more than that—shares of stock. Similarly, bondholders own only bonds, and executives with employment contracts own their contracts. None of these types of ownership give shareholders, bondholders or executives the right to control the firm. The right to control the firm’s assets and actions rests in the hands of its board of directors, and only when they act as a body and follow proper board procedures.  All this says is ""decisions are made by the board."" This is not news, and it doesn't mean that shareholders do not own the company. Shareholders elect the board, by the way.  >An important consequence of this governance structure is that shareholders not only have no legal right to control the firm, they also have no legal right to help themselves to the corporation’s    assets.  Well, that's wrong.  >In fact, the only time shareholders receive any funds directly from the corporation’s coffers is when they receive a dividend or the corporation repurchases their shares.  Or, you know, in the case of bankruptcy.  >This only happens when the directors vote to declare a dividend or a corporate repurchase.  The same directors who were appointed by shareholders.  >At law, a principal has a right to control her agent. But shareholders can’t exercise direct control over corporate directors.  I suppose this is true in the sense that shareholders cannot practice slavery. But shareholders can, again, vote on issues relating to the governance of the company.  >It is thus wildly misleading to describe shareholders as the sole residual claimants in companies that aren’t actually in bankruptcy.  This is only true if you're retarded and don't know what ""residual"" means.  >This idea is supported by modern options theory. In effect, bondholders own the right to access cash flow but have sold a call to shareholders, while shareholders own the right to access the cash flow but have sold a put to bondholders. Neither shareholders nor bondholders can claim an exclusive right to “own” the company’s cash flow, much less the company.  This is a made up explanation that doesn't mean anything. The real options model of corporate assets is that corporate debt is a risk-free bond with a short put option and equity is a call option. There is no ""deal,"" in actuality or in spirit, between debt and equity owners.  You can dismiss the article as ""shit."""

negative: If your business name is your name, you are automatically considered a sole-proprietorship and any income you generate and expenses you incur can be calculated on your personal tax return. You can use QuickTax Home & Business tax software to lead you through the steps; you don't even need an accountant. One drawback of a sole-proprietorship in your name is liability. You are personally responsible for the business because you are the business. If you get sued, you can lose everything. To limit that liability you can look into opening a corporation. If the corporation gets sued you are insulated from that; the corporation goes bankrupt, not you. A lawyer and an accountant will be required to give you solid advice on this direction.