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article imageOp-Ed: Why freelancing trumps small business ownership

By Jenna Cyprus     Sep 4, 2014 in Business
Somehow, “freelancing” got a bad rap. Everyone who found themselves unemployed or under-employed but picked up a few Craigslist gigs — even if it was taste testing for $20 — called themselves a freelancer in order to avoid deadbeat status.
Technically, according to the IRS, that is indeed freelancing. It can also be called contracting or being a sole proprietor. Any means of making money without having a permanent position (usually with a single company) can be dubbed freelancing.
However, that’s like saying you’re an actor without ever getting a paid or regular gig. Just because you got paid in free food to be an extra on a local TV commercial does not an “actor” make by the majority’s definition. Many true freelancers who support themselves (and perhaps a family, and perhaps quite comfortably) are often asked what they plan to do next. Get incorporated, open a brick and mortar establishment, hire employees?
The reality is that sometimes being a freelancer truly is the best setup for an entrepreneur for the long run or even forever. It doesn’t work for everyone and every industry, but there are plenty of perks to consider.
1. Why complicate things?
Freelancing/contracting/sole proprietorship are by far the least complicated yet legal type of established business. You’re not required to follow any specific rules or structures unlike other business entities. For example, S-Corp, C-Corp, non-profits, etc. might require you to have a Board of Directors, meet a certain amount each year or have key stakeholders. The only thing that’s required of a freelancer is that you report your earnings via a 1099 to the IRS each year.
2. The write offs are divine.
You don’t need to own a “more serious” type of business to get all the tax perks. A reputable CPA can help you write off travel costs, home office costs, part of your utility or mortgage payments, your health insurance premiums and even entertainment costs.
3. Don’t waste money on overhead.
There’s a reason more and more major corporations are offering virtual environments and telecommuting options: Having a brick and mortar establishment simply doesn’t make sense for many businesses. In fact, the only perk might be that it “seems” more official. Otherwise, you’re paying for space you don’t need, feel obligated to commute and dress professionally, and feel guilty if you want to travel the world while still earning an income.
4. Not everyone is management material.
That fact is neither a good thing nor a bad thing. Let’s say you started freelancing as a graphic designer because you have incredible skills and love what you do. You might feel pressure to “farm out” these resources to less skilled graphic designers, essentially becoming a manager. However, maybe you’re not good at managing people, have no desire to do it, and suddenly you’re no longer doing what you love. Maybe you were lucky enough to find what you love doing relatively early in your career and are happy to leave management as a memory from your “working for the man” days.
There’s no point in asking what the average salary is for a freelancer, even if you narrow it down to a category like “SEO freelancer.” You really can make as much as you like. It all depends on your skill, ambition and a pinch of luck. However, switching to a different type of business entity isn’t going to make you more successful. Choose the approach that works best with you and your liability needs.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of DigitalJournal.com
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