I second Erik`s comments. Start locally. Get whatever business licenses you need, etc. As far as Federal goes, anyone in this country can be a SP. It is a few more forms to fill out when you file your Federal and State taxes (I am not a tax attorney nor do I play one on TV). I do know that for the first 5-6 years of my business life, I operated as a SP and then eventually became a Sub-S Corp - and that is not difficult to do either.
I`ve said this before on this forum but it is worth repeating. The tax laws of America are designed for business owners - large and small and the benefits are huge. Keep records and you`ll be fine. Be honest and upfront and you`ll be fine. Owning a business in America is a great thing and something many people in this world do not have the option to do.
Look around. Do you see a lot of immigrants as business owners? (and this is in no way a slam against immigrants) They come here because of opportunity and America knows that it could not be the country it is without the small business owner. Just do it!
Thanks very much for this. I`ve been developing a freelance writing business since early 2006 and although I`m keeping good records for tax purposes, I know I`m supposed to be paying the govt for my Social Security percentage and a percentage for income tax.
I`m setting my best guesstimate aside in an account but I think I already blew it by not paying something to somebody quarterly. I really must figure this out -- thanks for the links and motivation.
You`re getting some pretty decent advice here.
But here are some things to help you.
1) Find out about your local rules related to office in home. Some areas require a separate license.
2) Get your business license for your town. And if you`re planning to do a lot of work in a different, more affluent neighborhood, see if you need another license in their town.
3) Get business insurance on your vehicle. Don`t scrimp just because personal insurance costs less. If anything happens while you`re working, they won`t cover your claim.
4) Get an accounting or record-keeping system. You can do it on computer, or you can buy one of those Dome Bookkeeping Systems for just a few bucks.
5) Make sure you get an invoice pad with duplicate invoices so all your billings are in writing - and you keep a copy once you`ve given your customer the invoice. When they pay you, mark the invoice paid with the check number (or write CASH) and date paid.
6) Pay for all your costs by check or credit card so you have a good record of your expenses. If you must pay cash, keep your receipts in an envelope or box in the car and write them into your books each evening, or each week.
7) And Seafarer asked about making estimated tax payments. She`s right. You will need to do that. You`ll find details here on TaxMama.com about how to make estimated payments, when and what forms to use http://www.taxmama.com/Articles/es.html
This should give you a good start.
And, oh yes, read IRS Publication 334 - For Small Businesses http://www.irs.gov/publications/p334/index.html