As a part-time small business counselor at the UW-Madison SBDC, I am the voice of the WI Business Answerline a couple of days a week. Callers ask a variety of questions such as, “I’m opening a pet store and want to import tropical fish from Asia, do I need a permit?”, “I’d like to sell fireworks out of my garage, is that OK?”, and “do I have to collect sales tax on mowing yards this summer?”. The answers in order are; “yes”, “probably not but check with your local municipality and your homeowners insurance”, and “yes”.
With the number of professionals downsized out of corporate America lately, there has been a lot of interest in self employment as a consultant. Here are some of the most frequently asked questions:
Q. How can I get started as a consultant?
A. First, identify your area of expertise. Define what services you can provide a potential employer. What problems can you solve? If you are not already recognized as an expert in your field, here are some suggestions:
– Volunteer to do a presentation at a professional organization that is interested in your subject area. For instance, I gave a presentation today to an organized job search support group on “Small Business Startup.”
– Start a blog
– Submit articles to www.ezineartlicles.com – Write a letter to the editor when you see a topic in the paper on your area of expertise.
– Get networking! Create and carry business cards at all times – you never know who you may run into that could be a great connection to a project.
– Put up a website ASAP and get into social media: Linked In, Twitter, Facebook.
Q. What form of business structure is best as a consultant, sole proprietor or limited liability company?
A. In general, I suggest the LLC as it enables you to separate out your personal assets and liabilities from what is in your business. If things go south, you don’t want someone putting a lien on your car, your house, or any other personal property. To learn more about the requirements and how to file in your state, contact your local Small Business Development Center: http://sbdcnet.org/sbdc.php . If you are in Wisconsin, go to: www.wdfi.org to file the LLC (or Inc for that matter). It’ll cost you $130 and there is a $25 annual renewal fee. You will also need to contact the IRS and obtain the Federal Employer Identification Number which will become your tax ID for your business. There is no cost for the FEIN and you can get it quickly by calling 1-800 829-4933.
Q. What tax deductions can I take working from a home office?
A. For starters, you can deduct the space within your home designated as an office. There are two ways to do this, either by the room itself or by square footage. You can also deduct mileage from your home office to wherever you conduct business with a client; their office, a coffee shop, whatever. The same goes for entertainment expenses. If you meet a prospective client over lunch, keep your receipt. Nolo.com has an excellent article: “What are some tax deductions for the self employed?” tinyurl.com/lf869b
More Q and A coming soon!
Have a topic you’d like to see a Q&A on? Email Dee [at] deerelyea [dot] com