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Business & Self-Employment?

Forming one, pricing it, invoicing it, and paying the taxes on it. 33 questions and counting.

What is an LLC, and do you actually need one?A legal entity that separates your business liabilities from your personal assets. It does not change your taxes by defa…
Do you need a separate business bank account?If you have an LLC or corporation, effectively yes, because mixing funds is the fastest way to lose your liability prote…
What are quarterly estimated taxes, and who has to pay them?Prepayments of income and self-employment tax for income without withholding. If you expect to owe 1,000 dollars or more…
What business expenses are actually deductible?Expenses that are ordinary and necessary for your trade, which is the statutory test. The deduction reduces taxable inco…
What is the difference between a 1099 contractor and a W-2 employee?Control decides it, not the paperwork. If you set the hours, direct how the work is done, and supply the tools, that per…
How do you price a service business?Start from what you need to earn, not from what competitors charge. Divide your target income plus costs by realistic bi…
Why do profitable businesses run out of money?Because profit and cash are different things. Profit records a sale when you invoice it; cash arrives when the client pa…
How do you get your first clients?Through people who already know you, almost always. Cold outreach and advertising work eventually; the first several cli…
How do you actually get a small business loan?Lenders want two years of tax returns, financial statements, a credit score usually above 680, and a personal guarantee.…
What retirement account should a self-employed person use?A solo 401(k) usually allows the largest contribution for a one-person business because you contribute as both employee …
What is the difference between an LLC and an S-corp?They are not the same category. LLC is a legal entity; S-corp is a tax election that an LLC or corporation can make. The…
What is an EIN, and how do you get one?A federal tax ID for your business, free from the IRS in about fifteen minutes online. Never pay a third-party site for …
What does net 30 mean, and how do you get clients to pay on time?Net 30 means payment is due 30 days from the invoice date. Late payment is normal rather than exceptional, and the fixes…
What is a good profit margin?It varies enormously by industry, so cross-industry comparisons are meaningless. Grocery runs on low single digits while…
What business insurance do you actually need?General liability covers third-party injury and property damage and is the baseline most contracts require. Professional…
What is a P&L statement, and how do you read one?A summary of revenue minus expenses over a period, ending in net profit. Read it top to bottom as a funnel: sales, then …
How do you trademark a business name?Search first, then file with the USPTO for federal protection. Rights come primarily from actual use in commerce, and re…
When do you have to collect sales tax in other states?When you have nexus there, which since the 2018 Wayfair decision can be created by sales volume alone with no physical p…
How much cash should a business keep in reserve?Three to six months of operating expenses is the common target, and the honest answer depends on how volatile and season…
What is business credit, and how do you build it?A credit profile for the company rather than the owner, scored differently by Dun & Bradstreet, Experian, and Equifax. B…
Do you actually need a business plan?You need one if you are raising money or borrowing, because lenders require it. Otherwise the value is in the thinking r…
How do you fire someone properly?Document performance problems before the conversation, keep the meeting short and unambiguous, and have final pay ready …
What is an NDA, and should you sign one?A contract restricting disclosure of confidential information. Signing a mutual, reasonably scoped one is routine. Watch…
What is a W-9, and why do clients ask for one?A form giving your taxpayer ID to a business that pays you, so they can issue a 1099. It goes to the client and never to…
How do you value a small business?Most small businesses sell on a multiple of adjusted earnings, commonly two to four times seller's discretionary earning…
Do you need a business license?Almost certainly something, and it is rarely one license. Most requirements are local: a general business license from y…
What makes a contract legally binding?Offer, acceptance, consideration, capacity, and a lawful purpose. It does not require a lawyer, a notary, or even paper …
Who owns the work when you hire a freelancer?The freelancer does, by default, unless your written agreement assigns the copyright to you. Paying for creative work do…
What is a DBA, and do you need one?A registration to operate under a name other than your legal one. It creates no entity and no liability protection, it j…
What is an operating agreement, and do you need one?The internal contract governing how an LLC runs and how owners settle disputes. Most states do not require one, and skip…
What is a retainer, and how should you structure one?A recurring fee for ongoing availability or a defined scope of work each period. Structure it around deliverables rather…
What is depreciation, and why does it matter?Spreading the cost of a long-lived asset across the years it is used, rather than deducting it all at once. It reduces t…
What is a purchase order, and how is it different from an invoice?A purchase order is the buyer committing to buy before work happens. An invoice is the seller requesting payment after. …