Finding the Right Lawyer to Defend You In a Lawsuit One of the primary goals of any small business is to avoid lawsuits at any cost. Even if you are 100 percent in the right, and even if you ultimately prevail, any sort of court proceeding will take months or years to resolve, and will cost you tens …Read more. Changing Your LLC Operating Agreement as Your Company Grows "My two partners and I formed a limited liability company several years ago. "Our business has grown substantially, and we now have several investors as well as employees who own -voting shares in our company. "We're still using the operating …Read more. My Summer Reading List It's hard to believe, but we are almost halfway through the summer season. Most of my clients are away on vacation and leaving me alone for a little while to focus on chores I seldom have time for during the year (updating my law books, digitizing …Read more. When You Find Yourself in a Grey Area Twice a year, I host a program for the New York State Bar Association targeting young lawyers who are looking to set up solo law practices. These people ask a million questions, and while there are clear answers to many of them, there are some that …Read more.more articles
Twelve Things You Need When Starting a Consulting Business
With unemployment rates at historically high levels in the United States right now, the picture for laid-off corporate executives is looking bleaker and bleaker. Let me say it point blank: If you want a corporate job like the one you just got laid off from, it's probably not there anymore, at least not in this country. If you want to continue working and making a living — especially those of you "baby boomers" in your 50s and 60s who still have some decent decades left in you — you will need to start building a career consisting of "multiple streams of income"
One key element of that strategy is to do some consulting work. Corporations both large and small are looking to "outsource" a lot of internal functions to outsiders. Get two or three long-term consulting "gigs," and you are well on your way to matching the annual salary at your old job.
Are you thinking about setting up a consulting business? Here are 12 things you will need to get started:
1. A federal tax ID number. The IRS says you can use your Social Security number as a federal tax ID number, but I wouldn't if I were you. You will have to give this number out to all of your clients, subcontractors and employees (if you have any), and frankly, there aren't a whole lot of people out there I would want to know my Social Security number. Go to the IRS website at www.irs.gov, and fill out IRS Form SS-4. Better yet, have your accountant do it for you so no mistakes are made. Most accountants I know won't charge for this service.
2. A state business license. Next, it's time to register for a state tax identification number, sometimes called a "business license." Some states require you to collect and pay sales tax when you provide consulting services — check with your accountant to learn your state's rules. Even if they don't, you still have to register as a business with your state tax authority (and sometimes also your city or town tax authority). To find your state tax registration form, go to http://www.taxsites.com/State-Links.html to find your state tax authority's website — once there, click on the "forms and publications" link, then the "business registration" link. Read the form thoroughly, and call your state tax authority (they usually don't bite) or a local accountant with any questions before you fill out the form online.
4. A home office. The home office deduction is one of the biggest tax benefits self-employed people have. Set aside a spare bedroom in your home, put nothing but business equipment in that room, and make sure it's your only office. Be careful about working too much at your clients' offices, as the IRS may deny your home office deduction if it's not the place where your principal consulting activities are conducted.
5. A good accountant and lawyer (OK, that's two things). During your first few months in business you should spend 100 percent of your time generating business leads, selling your consulting services to prospective clients and doing work for clients. You do not have the time to become a legal and tax expert. Hire a good accountant and a good business lawyer — you need both — and let them "spoon-feed" you information when you need it. Your lawyer should review every contract a client asks you to sign — you would be amazed at the crazy things some companies put in their consulting contracts. Talk to your accountant at least monthly; don't wait for tax season, as he or she will be too busy to answer your Zen questions.
6. A supportive spouse or "significant other." Up to now, your spouse or lover has seen you as a corporate executive or Wall Street professional. Now they'll be seeing a person hanging around the house wearing pajamas and working on the computer all day. Be honest and direct with them about the choice you have made, and make sure they're on board. If they can't or won't follow you where you need to go, ask your business lawyer for a referral to a local divorce professional. I'm serious. Better to break up now than face years of misery and heartache from an unhappy or passive-aggressive partner who loved you more the "way you were" than the way you are now.
More next week . . .
Cliff Ennico (firstname.lastname@example.org) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.
COPYRIGHT 2009 CLIFFORD R. ENNICO.
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