Guest Bloggers

Tips From A Pro: The Tax Benefits Of Properly Structuring Your Business.

With tax time coming in the U.S., we thought the time was right to get everyone thinking about how to best prepare your business (or freelance operation) for tariff time. To get the ball rolling, here is a guest blog post from Nellie Akalp of CorpNet.

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Have you ever wondered if your business is legit? Is there a way to reduce self-employment taxes? If so, read on to learn more about business structures and freelancing.

By default, you’re a sole proprietorship.

If you’ve never actually chosen a business structure, then your business is a sole proprietorship. As the simplest business structure, the sole prop doesn’t separate your personal and business finances. That means that if your business is sued or can’t pay its debts, you may be required to tap into your personal savings and property.

A lot of small businesses transition to a formal business structure like an LLC or Corporation. These structures will help protect your personal assets from any liabilities of your freelance business. And in some cases, there can be tax benefits as well.

Business structures: an overview

Three common U.S. business structures are: the LLC (Limited Liability Company), S Corporation, and C Corporation. Each structure has pros and cons depending on your specific situation. However, in most cases the C Corporation is overkill for a freelancer. For several reasons (including tax structure), the C Corporation is a good option for bigger companies who plan to go public, seek VC funding, or invest profits back into the company.

The LLC and S Corporation are popular choices for the small business/freelancer. Both give you the option for “pass through” taxation where the company doesn’t pay taxes, but all profits and losses are passed on to your personal tax report. That probably sounds a lot like how it works with a sole proprietorship, but there’s a big difference.

If you’re a sole proprietor and pay your taxes on a Schedule C, you’re subject to paying self-employment tax in addition to income taxes. This can leave you scratching your head wondering what happened to your hard-earned money.

However, Bert Seither, Director of Operations at Corporate Tax Network, explains that many freelancers will set up as an S Corporation or LLC that’s taxed as an S Corp in order to reduce self-employment taxes.

“When you have an S Corp or an LLC that’s taxed like an S Corp you can be paid a good portion of your money from the entity to yourself in distributions (think of distributions as bonuses). The distributions are not subject to any self-employment taxes,” said Seither.

“However, keep in mind that you cannot take all of your money in distributions and are required to pay yourself a ‘fair and reasonable’ salary,” he added.

Other considerations:Nellie

While taxes are typically at the forefront of everyone’s mind, you need to consider other aspects that can have just as big an impact on your bottom line. If you incorporate as an S Corporation, you’ll need to set up a board of directors, file annual reports, hold shareholder’s meetings, etc.

With an LLC, there’s a lot less paperwork and fewer ongoing administrative formalities to follow than a corporation. For some people, the S Corporation can be too burdensome.

Take some time to learn about the different business structures; talk to a tax advisor about your particular situation. It’s easy to set up and you’ll be protecting your personal assets and giving your business more legitimacy.

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Nellie Akalp is a passionate entrepreneur, small business advocate and mother of four. As CEO of CorpNet, a legal document filing service, Nellie helps entrepreneurs start a businessincorporateform an LLC or set up Sole Proprietorships (DBAs) for a new or existing business. 

 

 

 

Third-Party Tool Improves Communications Between Elancers.

While Elance provides you with many handy tools for communicating and collaborating, sometimes teams have specific needs and opt for third-party solutions. One software program that’s gaining a lot of traction is Doodle, an online scheduling tool. Below is a quick guest blog post from Doodle’s CEO, Michael Näf, explaining the product.

------------------------------Doodle homepage

Communication is something that’s essential for any project to be a success. As an Elancer, you’ve surely experienced the truth of that statement in a personal way.

With that said, finding a time to have a meeting with one or more people can definitely be a challenge. Just because a time works for you doesn’t mean that it’s going to work for everyone. That may be obvious, but it’s still a frustrating reality to deal with.

We created an online scheduling tool, called Doodle, to help solve the problem of getting people together at a specific time. If you’d like to make scheduling less painful, then I’d encourage you to use Doodle alongside Elance to take your collaboration to the next level.

Benefiting from better communications.

Most of the products that we offer through Doodle are completely free, and we also provide extensive time zone, language, and calendar support. This means that collaboration through an international online platform like Elance will be effortless.

Included below are some of the core features you can leverage:

Group Scheduling - Registration isn't required to use the basic free service, so getting started is quick and easy. To schedule a meeting, you just select some possible dates and times and let the participants specify what works best for them. With a quick look, you'll see everyone's availability and be able to make a final decision that satisfies the entire group.

Premium Doodle - This ad-free professional version of Doodle offers premium functionality and customizable branding options.

MeetMe - With this personal scheduling profile, your Elance contacts can see when you’re busy and available and will then be able to submit meeting requests to get on your calendar. 

BookMe - Designed to help service providers streamline their booking process online.

Being more productive on Elance.

While Doodle can be used to make your project communication on Elance more productive, we’ve also found that Elance has helped our business become more productive. Just like with any other company, specific projects randomly come up from time to time, and while our team could handle them on their own, this activity can take time away from other established priorities.

In order to keep our employees focused on their usual tasks and avoid burdening them with additional tasks, we’ve used Elance freelancers to help us with things like user support and market research, and our experiences have been very positive.

In the end, it’s all about getting work done in an efficient way, and I hope you’ll be able to do that with Doodle in the same way that we’ve done that with Elance. 

About the Author

Michael Näf is the CEO of Doodle, which is the world’s leading online scheduling service. Doodle is based in Zurich, Switzerland and is used by more than fifteen million people per month.

Advice from an Elancer (Volume 4)

Welcome to Advice from an Elancer – a place to ask your Elance questions (through Elance’s LinkedIn page) and get them answered as thoroughly and personally as possible. My name is Dorothy D. and I have worked with Elance as a freelancer since April 2009. I have always tried to help other Elancers understand how things work and how to accomplish more. In Advice From An Elancer I will address as many questions as I can each week. In some cases, questions have been edited for clarity.

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Question #1: Category Confusion

Every time I click on the job post I am instructed to subscribe to a certain category to apply. Why?

Advice from an Elancer:

When you signed up for Elance, you were asked what area you would be working in. You may have indicated Writing & Translation, Admin Support, Sales & Marketing, or one of the many other categories. Jobs are listed in categories and you may only bid on those in the category you have signed up for. You may change or add categories at any time by clicking on your name in the upper right hand corner and going to your Membership. The Membership page summarizes your membership. If you need to edit any information, click the edit tab and you will be presented with the opportunity to change information. If you wish to change your category, you may do that with no fee. If you wish to add a second category, you may do so for a fee.

In this example, the Writing & Translation tab has been clicked. The results will include only jobs in this category. As you can see, the jobs can be narrowed even further if you like.

Check what category you are subscribed to and make sure it is the right one for you!

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Question #2: Not Getting Jobs!

How come I have completed the processes of Elance, but am still not getting any jobs.

Advice from an Elancer:

Go to the Help Center or Elance University.

The Contractor Guide, located in the Help Center at http://help.elance.com/forums/30971/entries/34157 has a step-by-step guide to using Elance. It goes from creating your profile to getting paid and more. I suggest starting there. Your second reference guide is Elance University at https://www.elance.com/q/elanceuniversity/buyer/index.html . The videos in the University outline the process of finding jobs and clients, doing great work, and getting paid.

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Advice from an Elancer (Volume 3)

Welcome to Advice from an Elancer – a place to ask your Elance questions (through Elance’s LinkedIn page) and get them answered as thoroughly and personally as possible. My name is Dorothy D. and I have worked with Elance as a freelancer since April 2009. I have always tried to help other Elancers understand how things work and how to accomplish more. In Advice From An Elancer I will address as many questions as I can each week. In some cases, questions have been edited for clarity.

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Question #1: Proposal declined for incorrect reason

A potential Client said they would send me a few pages of copy for a translation project that I had bid on. When I told them I only do test translations of 500 words, they declined my bid with the reason “the contractor does not have the required expertise.” How do I deal with situations like this?

Advice from an Elancer:Report Violations

The reason was not incorrect. The Client was, however, in violation of Elance’s Terms of Service by asking you for “a few pages of copy” for you to test your skill. You should not provide ANY samples for a Client other than work you have done that is not protected by agreement by a client. In other words, if you agreed that you would not take credit for it and it is allowable in a portfolio or as an example. Elance’s Site Usage Policy states that Clients may not “Post any Jobs that require free services.” The request for a sample is a free service.

Clients are given a few pre-written choices for declining a Freelancer. This one chose “does not have the required expertise”. This doesn’t reflect on you at all. It does not affect your rating.

As for how to deal with such posters, let them know that it is against Elance policy to provide samples. You may report the Client via the posting. Click the Report Violation link located just below the job description. The Report Violation Window will pop up and you can enter that the Client violated Elance Terms by asking for a sample and explain it.

Never give anything away for free! Imagine if every bidder completed this Clients sample request. He could get his entire job done for free!

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Question #2: Communication Problems (A Client Question)

I recently hired my first Elance Freelancer. I asked for her contact information right away, sent to my email address, but she sent it on the Workroom message board. This really angers me that she didn’t follow my instructions and I plan to take it off of her star rating. Why wouldn’t a Freelancer follow a simple request like that?

Advice from an Elancer:

I can only guess. Freelancers are told to keep a record of all communication in the Workroom. While they may communicate in other ways, the important elements of the discussion are to be transcribed in the Workroom to keep a record of the contact. I don’t know why the Freelancer chose to reply via the message board rather than email, but she may have felt that she needed to keep a record that she was providing the information to you. Honestly, I hope that she does a great job and that this was a misunderstanding. I hope you rate her on her work, rather than a small bump in the road in the beginning of the job.

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European Study Focuses On Freelancer Rights & Benefits.

Note: As freelancing becomes an increasingly-important force within the world’s workplace, the issues of online worker’s rights is taking center stage. While full-time employees often have access to employee benefits and rights, this is not always the case for freelancers. Below is an article discussing this critical issue in Europe, penned by Joel Dullroy of Deskwanted, with an invitation to voice your opinion in a study they’re conducting. Naturally these matters need to be studied and resolved in all regions of the world.


The situation of freelancers is undoubtedly an important one; and includes the political, economic, and social circumstances of independent workers. Currently, however, there is proportionately little discussion and reform surrounding these issues need to be addressed and rewritten to reflect their economic clout, especially as this demographic swells to account for the majority of the international workforce.Joel of deskwanted

As it stands, the situation of freelancers as a subgroup of the international workforce is still fairly unexplored, and we know comparatively little about this growing demographic which some studies suggest will make up a major part of the European workforce by 2020.

Without information, little can be done to assess the political and social needs of independent workers. This, however, is soon to change.

A study into freelancers is underway.

A group of academics, commissioned by the European Forum of Independent Professionals (EFIP) is currently conducting a European-wide study of freelancers (also referred to as independent professionals or I-pros in the UK), with the aim of better understanding the situation of freelance workers. The outcome of the report will be used by the EFIP to start an EU-level political campaign to fight for better conditions for freelance workers – and much needed workplace reforms.

Why do freelancers’ work protections need to be revised?

We know that work conditions for freelancers need to be improved. The workers’ protections that employees everywhere take for granted – fair taxation, payment protection and affordable healthcare schemes – aren’t extended to independent workers, which has created an environment in which freelancers are too-often exploited for their work.

One recent campaign conducted by the Freelancer’s Union in New York highlighted this all-to-frequent occurrence, when a cumulative invoice of almost $16 million in unpaid freelancer invoices was delivered to the New York senate. Here is a link to their site:

http://www.worldslongestinvoice.com/

Without appropriate protection laws, these instances of payment infringements are bound to continue; and will become a much larger issue as the freelancer demographic grows.

With some statistics suggesting that 55% of businesses already outsource part of their work to contractors, and multinational companies like IMB introducing strategies to reduce their core workforce to a minimum – aiming to cut 14,000 of 20,000 permanent jobs in Germany alone – the independent workforce is set to become a majority of the European workforce within a decade.

There are some precautions that freelancers can take.Deskwanted space, London

There are of course several ways that freelancers can safeguard their livelihoods. Joining an agency like Elance (which includes their Elance Hourly Work Guarantee), offers a buffer between clients and contractual workers, is one way to reduce the risk of working independently. Elance can hold clients accountable by pinning responsibility back on the client, and ensuring timely payment.

Aside from joining a virtual network of freelancers, another way is to join a physical community of freelancers, like in a coworking space. By surrounding themselves with other independent professionals, freelancers can ask advice on administrative and legal issues, as well as finding trusted clients. There are coworking spaces in hundreds of cities worldwide, which are acting as hubs of freelance talent, supporting independent workers in their work and social life. Deskwanted is a useful tool to find and book coworking spaces in all corners of the globe.

In conclusion.


Despite these safeguards, the situation of this growing demographic should be improved on the whole, ensuring they are properly protected by national and regional law.

Anyone working in the EU as a freelancer is happily welcomed to participate by taking part in a brief interview with a member of the research team. If you would like to add your voice, please be in touch with Joel Dullroy joel@deskwanted.com, International Representative of the Association of Founders and Freelancers – Germany (www.vgsd.de and co-founder of Deskwanted.com).

 

Introducing Advice From An Elancer (Volume 1)

Today we kick-off a fun and informative new feature here on the Elance blog. It’s called Advice From An Elancer, and it’s your opportunity to get timely answers to those all-important freelancer or client questions -- all from a seasoned Elance professional who has walked a mile in your shoes. Feel free to peruse the answers to other people’s questions (or ask your own question on the discussion page of Elance’s LinkedIn Group). Enjoy! Hopefully it will help greatly as you Work Differently in 2013.
Advice from an Elancer Icon

Welcome to Advice From An Elancer – a place to ask your Elance questions (through Elance’s  LinkedIn page) and get them answered as thoroughly and personally as possible. My name is Dorothy D. and I have worked with Elance as a freelancer since April 2009. I have always tried to help other Elancers understand how things work and how to accomplish more. In Advice From An Elancer I will address as many questions as I can each week. In some cases, questions have been edited for clarity.

Question #1:

Elance is new to me. I need to understand. How do I get my first job when I don't have anything to showcase. All I need to understand is "How do I approach the client or post a proposal which will not only attract the Client or Hiring Manager, I would rather he initiate the PMB, which should result in a Project Award!!!

Advice from an Elancer:

Part of the answer depends upon what area you are working in. If you are in IT or Design, you may provide links to work that you have done online. For writing, you may want to write a few pieces to use for examples of your skills. You can use this technique in several areas. Make some examples simply to use in your portfolio or to share with clients in proposals. You could also use recommendations in your portfolio from previous clients.

You cannot approach a client without making a proposal or asking a question. There is no way to contact a potential client without using a Connect and filling out at least something in the proposal screen. This may be questions for clarification or a bid without an exact amount, but it opens the door to communication.

While it is nice to communicate via PMB, your main impression on the client will from your profile and your proposal. This is the place to show who you are and what you can do. Don’t worry about initiating private conversations. Focus on your public profile and high quality proposals.

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Question #2:

I have been on Elance for over a year now but unfortunately I've not even won a bid. Is the problem about my proposals? Or where I come from? (international provider). An employer that was interested in me recently declined my bid because I do not have a feedback. How do I get one when I'm not offered a job? I'm in the Finance and Management section.

Advice from an Elancer:

This was posted within a thread selling an e-book with tips for writing winning proposals. Honestly, to give a precise answer, I would need to see the freelancer’s profile as well as a sample proposal that they have written. Elance is a global business, so it is doubtful that location is the culprit. More likely, your profile is not complete or is not attractive to clients or your proposals are not written in a way that stands out above the others.

Remember, each proposal must be different. You cannot use a “cookie cutter” proposal with small changes and expect to win jobs. There is no secret for writing that magic proposal that will win a job. There are, however, ways that you can write your proposal that will show the client that you are the best candidate for the job. Let your experience and personality shine through. Be confident and explain why you are the best person for their particular job. Realistically, you may have to bid lower for a few jobs to establish a reputation on Elance. Once you have the reputation, you may raise your rates to a more reasonable level.

Another way to gain a reputation is to add some references or some jobs to your portfolio. This will help clients feel comforted that you do, in fact, have experience.

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Question #3:

Sometimes it is very tough to get a project on Elance. Do clients get a lot of proposals and get confused and move for the cheapest bid?

Advice from an Elancer:

Some clients are simply looking for the lowest bid to get their job done. Some even say this in the description! Often, the client is looking for good work for an unreasonably low price. This can be frustrating for both the client and bidding freelancers. I have had situations where the client chose a very low bid, did not receive the work they needed, and came back and hired me to fix the work so that it met their needs.

The best case is the client who realizes that you get what you pay for. In other words, the client realizes that to get high quality work, they may have to pay more to get a freelancer who can provide what they need.

There are all types of clients out there. Before you bid, look at their profile. Do they usually hire the lowest bidder? Have they spent very little money on Elance? If so, you may want to save your Connects and look for another client.

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Whew, that's enough for today. If you have questions or want to follow the conversation of other Elancers, visit the Discussion page of our LinkedIn page.

Online Revolution in the Accounting Industry.

More and more fields of business are discovering the advantages of online work in general, and online freelance work specifically. In this guest post, e-conomic CEO Torben Frigaard Rasmussen discusses why his accounting software company is firmly-based around an online mindset.

With 60,000 customers, mainly small and medium businesses, e-conomic is one of Europe's leading providers of cloud-based accounting software. When we started out more than 10 years ago, “the cloud” as a concept was virtually unknown, but moving accounting online made a lot of sense, both for us and our customers. From the start, we've focused on giving customers a range of obvious benefits compared to traditional desktop accounting software, including:

  • Fixed low costs. With our SaaS model, customers subscribe to e-conomic for a fixed monthly fee and are free to unsubscribe when they no longer require our services. This means that they don't have to make heavy software investments, which is particularly important for freelancers, small business owners and startups whose financial circumstances may be very tight and who may not even be sure for how long they will need access to accounting software.

  • No maintenance. The e-conomic software updates automatically as changes are introduced to the system. We release new functionality around every two weeks, but our users never have to spend time or energy updating their software, or even paying external consultants to maintain and upgrade their software. Instead, the updates are simply available when they log on to e-conomic.

Tips on Managing Online Freelancers.

As our workforce physically moves to a remote and contingent model, it’s important to also adapt from a philosophical and logistical standpoint. In this thought-provoking post by TurbineHQ’s Matthew Stibbe, the CEO of the popular HR management tool maker discusses some important factors to keep in mind.

Bringing new flexibility to your workplace can result in a 45% reduction in HR costs and a 38% reduction in real estate costs. It can improve retention rates and employee satisfaction and attracts emerging talent. It can help to eliminate down time and improve customer service. For these very reasons, remote and mobile working has become a reality for all sizes of business and forecasts show that by 2015 there will be 1.3 billion remote workers around the world.

The advent of portable technology, cloud computing and international talent sourcing has created this fantastic opportunity for businesses to reap the range benefits from a new style of working. This seismic shift in the way we work does not, however, come without challenges. Managing remote workers means changing the way you think.

Coworking Spaces Grow in Popularity Among Elancers.

As freelancing gains traction and the mobile workforce emerges, coworking spaces such as those on Deskwanted and NextSpace deliver real advantages to online workers. Here’s some food for thought from the team at Deskwanted.

Ring, ring, it’s 8 a.m.—time to get up and go to work. Or rather, stumble into the next room to your home office. It’s fantastic not having to commute. All you have to do is get up, get dressed and start working. But perhaps today you’ll skip the second step and work in pajamas. On second thought, your bed is far more comfortable than your desk chair...you’ll just get settled here for a day of work. You think you can definitely sit properly in your bed and have a productive day of work. Definitely. Oh, but one moment; before that, you first have to put in a load of washing. Oh, and you should make some coffee. And feed the cat. Maybe you should slow cook something for dinner tonight?

Ahhh, being your own boss has many advantages. Flexible work hours, complete control over your workload, and no need to wear a suit. But with these perks come challenges: Maintaining a healthy work-life balance, keeping your skill-set and knowledge up-to-date, and fostering extended business and social networks. Actually, being productive can be exceptionally difficult when working from home. It’s not uncommon for freelancers and entrepreneurs to feel isolated, which can quickly take its toll.

How WordPress is Changing Our Webosphere.

While there are richer and more robust solutions for creating websites, WordPress is steadily gaining ground as the go-to tool for entrepreneurs looking to create a simple but easy-to-manage website. Freelance web designer and writer Scott Stanton shares his perspective on this trend bringing simplicity (and great eye-appeal) to your web presence.

When first dipping my toes into the web development world (over a decade ago), there was one request that consistently brought a grinding halt to landing a new client. It was as if they were all reading from the same script. “I just want something simple, only a few pages, because I don’t have a very big budget for this. Maybe a slideshow on the homepage, other than that I’ll leave it up to you.”

No problems there – so I’d say, “Perfect.” And that was the cue for the inevitable: “Oh, and I want to easily be able to update everything as well.” Ladies and gentleman, the train has derailed.

Unbeknownst to me, about the time I was ankle deep in the development waters a little open source blogging project called b2/cafelog began. Over the next few years the project snowballed in to what we now know today as WordPress.

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