Freelance, Contracts, Tax Advice

Hello all,

I've had about 4 "hits" in the last weeke alone
to do graphics for a few companies, some
being owned by family friends & relatives.

I've been studying for a while now on
rates and fees, scheduling work and so on....

I want to charge a fee for my service, and I want
it to be legit. Meaning, I don't want unlce sam
kicking down my door because I didn't include
my extra earnings on my taxes.

Do I need to get a license to operate a small
freelance business on the side? Any advice?

Also, let's say I work fulltime for a company that sells different cogs
made by a vast array of cog companies. My boss talks to these people
who need catalogs, etc. and charges them a fee. In return, I get a small
portion of that fee. I would like to contact some of these cog companies
on my own and offer some of my freelance service.

A lot of these cog companies have really, really bad advertisements and websites.

In short, I want to kill the middleman, because mr. middleman is taking
between 70 & 80% of the cut and I'm tired of it.

any ideas? links? anything to help really....

thanks much.

You don't really need a license, but you'll have to claim that income on your taxes or whatever. Unless you don't want to.

And you can get into trouble using your employer's contacts to try to steal business from them. I think they could probably sue you somehow.

Got ya on the tax stuff...

I have a hard time calling it stealing though.
If anything, he's stealing money from me and I'm
doing all the work to make him look good.

The service I provide for my boss is not the same thing as the
service I would provide for the manufacturer with the crappy logo
or website.

Does that mean squat?... I'm not too sure.

I don't know. If his business is unrelated to what you are offering, then you could probably get away with it. Of course you'd still be contacting his clients when they may not want to be contacted by you.

But if the company you work for sells X and then you call of those clients and offer them your own X, then you can get in trouble for that. It's using privileged corporate information or something like that.

As far as a license goes it all depends where you work from. I mean if you're going to work from home then you would need an "operational housing permit". At least we do in California and then we would have to go to our State Board of Equalization to get a seller's permit. This permit of course is only for tangible goods sold in California, or whatever state you're in.

The reason I needed one was only because I was selling tangible goods on eBay for a while. But since I run a business from home, and do graphics, then I no longer need a seller's permit only a housing permit. So you might want to check with your local civic center to see what's necessary and what's not.

If you're going to be doing work on the side that you want to report and you're getting paid cold hard cash, you can decide as to whether or not you're going to report it, but if there's something that can be traced like checks or PayPal payments, then you might want to consider what you're going to report. Here in Cali we also request a form 1099 for tax purposes. It's like getting a W2 form from your employer. This way you give it to your tax guy to work out the figures.

Of course you want to make sure that this is something you're going to be consistently doing. But if you're not going to make a large sum of money throughout the year, why report it?

But if you don't and then you buy a Ferrari, then you're going to have some explaining to do.

As far as gently moving in on your boss' clients. I'm not sure about what can or can't happen in that area. Deker might shed more light on that. However, if you run into a client at the super market, or the local mall and you decide to just make an offer, then I would say that's legit since you're not directly doing it from the work place or through the work place resources.

This is my two cents man. But good luck and I'm sure you'll find a way to gain exposure leading to more business.

Cheers!

Well I used to work for a company making name tags, and then I was interested in starting my own. I spoke with the lawyer and he said I'm in the clear because I didn't sign a non-compete. However I can't contact his clients and try to undercut him, and I can't use anything in my new business that would be considered a "trade secret" of the other company. Like a secret recipe or something if they made cookies for instance.

Like Zerimar said, you can request a 1099-MISC, but often times if they want to write off the advertising expense, they will send you one anyays. If they call you at the end of the year asking for your social security number, and you didnt' plan on reporting that income, you're hosed, because now you have to. By them filing a 1099-MISC, it would make it quite obvious when you file your taxes if that form isn't in there.

In short, I want to kill the middleman, because mr. middleman is taking
between 70 & 80% of the cut and I'm tired of it.

If you did not sign a no-compete contact with your employer, you are free to do what you want with your free time. Of course if you are stealing his contacts, he can fire you (or even sue you). Otherwise, you are free to contact anyone you like regarding any sort of work you want to do. Derek must have state laws in Tennessee regarding "line-of-sight" and previous employers. I don't believe that is the case here in Iowa, so it may be illegal in Cali also. Where the issue comes into play is specifically 'TRADE SECRETS", and with web development, and logo development, where everything is original (from the creative bowl so to speak).

I did a little research, and here is what the state of California defines as "Trade Secrets"

A trade secret may therefore be any of a long listing of information which is critical to the trade secret owner in maintaining or improving his position in the marketplace. It may include:

1. technical information, drawings, procedures and processing details necessary to prepare a product,
2. purchasing information critical to the manufacturing, function or cost of a product,
3. testing parameters which allow the owner to assure that his product is better than or functions differently from his competition,
4. sales information regarding customers and the customers' desires, preferences, purchasing volumes and like information,
5. marketing plans for introduction of new products, entry into new marketplaces, or proposed new uses,
6. personnel data regarding key or unique capabilities of specific individuals necessary or critical to the operation of the company, or
7. a broad range of other factors which allow one company in the marketplace to distinguish its products or services from those of its competition.

I think as long as you can distinguish your product from your (ex)employer, you are safe.

Wow, thanks for the great tips.

Maybe I should be even clearer than in my previous posts.

I work for a company that sells sporting cogs.
My job is to make advertisements, flyers, etc. for our company.
In these ads, we feature all major manufacturer's cogs.
Some being large and others quite small.

I call these companies marketing dept's to get hi res images
and copy to use for our company's ads, etc. in which we buy their tools
at a discount, sell for a profit, and advertise like crazy.

When I go to the manufacturer's websites - I notice how horrid some of them
are. You all know what I'm talking about... the websites that look like they
were designed by someone in HR.

What I want to do is contact the owners of these companies,
none of which are in direct relations with me or my boss.
I deal with the graphics/marketing peeps and he mostly talks
to the sales rep people, not the owners.

Does that make more sense?

I'd say you'd be in the clear then.

If I get sued, I'll come looking for YOU deker.





kidding.