<\/a>
You set up a structure. If the business is just you, or will be just you for a while before expanding, then a sole proprietorship is probably best. There’s nothing you need to do in advance, nothing special to file until tax time, and you can now deduct many new expenses. You can always change structures later, in case you grow. In the USA, a sole proprietorship just means you add two new pages to your annual tax return. That would be a Schedule C to show your income and expenses, and a Schedule SE to figure your self-employment tax.<\/p>\n
You also need to establish your start date. This can be the point when you actively started trying to get clients, or the point when you agreed to your first paid gig if it was a total surprise. From that point forward, any expense that qualifies is deductible.<\/p>\n
Some small business situations call for a different business structure, and that’s explained in When NOT to be a sole proprietorship<\/a>.<\/p>\n Miles are deducted on a flat rate, currently 50.5 cents per mile. That flat rate includes fuel and vehicle repairs, so you don’t need to track those separately. (No need to save gas receipts!) Each January 1, record your current odometer reading, so you can figure your total miles driven. Mileage as a whole is a complex topic. Commuting isn’t covered, but driving to a meeting with a collaborator or to a client’s site is. You might want to read more info on mileage expenses<\/a>.<\/p>\n The whole point is that you probably have enough qualifying expenses to offset your income, so you won’t owe any self employment tax.<\/p>\n Records<\/b> For a bit more about expense tracking, read Simplified accounting for side businesses<\/a>.<\/p>\n Calendar<\/b> Banking<\/b> As a sole proprietor, there is no requirement that you have a separate bank account. It’s much better from a record-keeping perspective, but not required. The bank account will still use your social security number, but you can put your business name on it.<\/p>\n Licenses<\/b> Now, don’t tell anyone I told you this, but it’s pretty unlikely that you need <\/b>to file any business licenses if you are just consulting, speaking, writing, podcasting, etc. If you aren’t selling any taxable services and aren’t having walk-in business traffic, you might not even be required to file anything. Some jurisdictions may require a general business license or DBA (doing business as) filing. Ask around with others in your area, because this varies significantly from place to place.<\/p>\n Contracts<\/b> Insurance<\/b> What else?<\/b> [Updated] Comments and follow ups are now online at Next questions from starting your first business<\/a>.<\/p>\n New to SmallBizSurvival.com? Take the Guided Tour<\/a>. Like what you see? Get our updates<\/a>. Want more stories? Read our shared stories from all over<\/a>.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" “I just got my first paying side gig! Now what? Am I a business? What do I have to file? How does all this work?” If you are active in the world of social and creative media, you may find yourself with an unexpected offer to accept advertising, do some consulting work, or speak for […]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","episode_type":"","audio_file":"","cover_image":"","cover_image_id":"","duration":"","filesize":"","date_recorded":"","explicit":"","block":"","filesize_raw":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_newsletter_tier_id":0,"footnotes":""},"categories":[22,3,35,17,25],"tags":[104],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/smallbizsurvival.com\/wp-json\/wp\/v2\/posts\/1245"}],"collection":[{"href":"https:\/\/smallbizsurvival.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/smallbizsurvival.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/smallbizsurvival.com\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/smallbizsurvival.com\/wp-json\/wp\/v2\/comments?post=1245"}],"version-history":[{"count":2,"href":"https:\/\/smallbizsurvival.com\/wp-json\/wp\/v2\/posts\/1245\/revisions"}],"predecessor-version":[{"id":8016,"href":"https:\/\/smallbizsurvival.com\/wp-json\/wp\/v2\/posts\/1245\/revisions\/8016"}],"wp:attachment":[{"href":"https:\/\/smallbizsurvival.com\/wp-json\/wp\/v2\/media?parent=1245"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/smallbizsurvival.com\/wp-json\/wp\/v2\/categories?post=1245"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/smallbizsurvival.com\/wp-json\/wp\/v2\/tags?post=1245"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"\"](\"https:\/\/farm3.static.flickr.com\/2378\/2320525498_ac61c3aeb2_m.jpg\")
<\/a>What qualifies as deductible?<\/b> Any reasonable and necessary expenses related to your business. So any money spent to connect with clients or potential clients, to do your work, or to get necessary equipment to run the business. For example, you can deduct:<\/p>\n\n
Make a business folder, accordion file, box, what have you, for receipts and records.
Receipts:<\/p>\n\n
Your calendar is an important business record. It helps support where you were and when and who with, and that’s important to establishing what is deductible. So keep it complete, and be sure to print out a copy at the end of the month and put it with your other records.<\/p>\n\n
When you work on your own, you’ll find yourself signing frequent contracts. Most times, you’ll have to start with what the client provides, but don’t sign blindly. Now is a good time to line up a legal adviser who can quickly<\/b> read and respond to any contracts you receive. If you’ll be providing contracts for your clients to sign, ask some other independent pros in your field for a copy of theirs. That will be the best starting point.<\/p>\n
Any business includes some liability. I recommend you read Insurance and the Home Based Business<\/a> for an introduction.<\/p>\n
That should get you started. It’s inevitable that you’ll have questions! Feel free to post them here, and Maesz (who contributed a bunch to this article) and I will put together some follow up articles on the next most important topics.<\/p>\n