[TriLUG] Consultants ... business license?

Alan Porter porter at trilug.org
Thu Dec 13 15:24:06 EST 2007


>  I am adding a couple of clients to my after-work schedule. One of them
> would like me to have business license in order to sign a support contract
> with me. This may be a dumb question, but where do I begin this task? I'd
> appreciate suggestions regarding getting/having a license? This is my first
> foray into being my own boss.
>   

It sounds to me like he wants you to have some sort of business
structure, and not necessarily a "license" (which is required by
some cities in order to do certain types of business).

You can:

(1) be a sole proprietor:
- Working under your own name.
- Working under an alias (fill out a "doing business as" form at
the county registrar of deeds, using your own SSN.

You'll file your income in schedule C of your personal 1040.
There is no shield for liability. It would be easy for someone
to sue you personally for something your company did.

(2) form a corporation:
- S-corp, simple, fill out a form at the NC Sec of State
- LLC, same, but costs a bit more, differences are subtle
- C-corp, costs a lot, usually only for large businesses.

You'll file a separate tax return. There is some shield for
liability. It's harder for someone to take your house for some
boneheaded thing your employees do (but it can still be done).


Alan





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