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As a freelancer, should I get an accountant?

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Joey KorenmanAs a freelancer, should I get an accountant?
by on Aug 16, 2005 at 5:49:36 pm

I'm 24, I recently left my company of 3 years to pursue freelance motion graphics design. It was, hands down, the best move I've ever made in my life. As a result, my income is going to be quite a bit larger than it has been. I've also had to invest quite a bit to get my "business" up to speed, buying a new laptop, software, website, etc...

I'm sure there are plenty of people on this board who have done the exact same thing. My question is, should I pay for an accountant to help me figure out what I can write off, how much to pay in quarterly estimated taxes, etc... Is this something I should be able to figure out myself? Should I buy QuickBooks? I've done my taxes before, but it was really easy when my taxes were withheld and I didn't have to write anything off, but now I'm not sure. Any thoughts? Thanks.


joey


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Frank OttoRe: As a freelancer, should I get an accountant?
by on Aug 16, 2005 at 10:35:25 pm

Yes.

Tax issues aside, it's good to have a second party remind you of what you have incoming, outgoing and pending. That'll also help with long range planning, re-investment and collections.


Cheers,

Frank Otto



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joeRe: As a freelancer, should I get an accountant?
by on Aug 17, 2005 at 1:50:33 pm

..and getting Quickbooks or developing a system to track and organize your business yourself surely makes sense and will make it easier for an accountant to help you.


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ColoradoProducerRe: As a freelancer, should I get an accountant?
by on Aug 17, 2005 at 4:14:37 pm

Joey,

Congratulations on your new success.

It is imperative you find a good accountant, preferably a CPA. You should interview several and should seek one with whom you have good chemistry and who you believe can offer you good business advice. Your CPA will help you set up your accounting books on QuickBooks and will help you generally set up your accounting system. You cannot/must not operate a business without these systems in place. Many CPAs work with dozens of businesses and have substantial experience you can draw upon.

The biggest mistake I see in most accounting systems is lack of discrimination between overhead and direct expenses (cost of goods sold or project costs). Ask your CPA for advice here.

Also, if you do not have a good business attorney, you should definitely consider establishing a relationship now rather than later. You didn't indicate your organizational form, but not all organizational forms are created equal. If you haven't agonized over these decisions, you attorney will help you. Ditto for liability protection.

The business world is stacked against the little guy and having these professional resources gives you a fighting chance of staying out of trouble and building a business of lasting value.

-Scott








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Seth BloombaumRe: As a freelancer, should I get an accountant?
by on Aug 17, 2005 at 5:27:55 pm

yes, yes, yes!

I went slightly more modest - got a recommendation on a CPA from my former employer, met with him once to get things set up. Met with him again prior to April 15 to have him check my return. Now, I call him a couple times a year with questions as my business grows in new areas, and meet with him every couple years on more substantial issues.

Others may benefit from twice-yearly meetings. A buddy of mine does that (he's more of a designer and less of a producer, doesn't crunch numbers much).

MOST IMPORTANT: Keep great records. It isn't hard, and now's the time to start. If you're not on quickbooks yet, keep track of every penny of income and expense on a spreadsheet (item, cost/income, who, short description, date). This will help you SO much when you do get your arms around quickbooks.

Nothing wrong with having your accountant keep the books, too. A lot of people don't want to pay for this, for others it's the best money they spend. Typically, you'd batch your records in monthly.


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Joey KorenmanRe: As a freelancer, should I get an accountant?
by on Aug 17, 2005 at 5:58:37 pm

Dear LORD you guys are great. Thanks so much. I found a CPA I'm meeting with tomorrow. I've been keeping records of my time, invoices, expenses, etc... so I think I'm in good (enough) shape to get started. I really appreciate the advice.

Since my "business" is just me and my laptop, I don't see why I'd need a lawyer yet. Is that mainly for protection against lawsuits and clients who don't pay?

joey


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ColoradoProducerRe: As a freelancer, should I get an accountant?
by on Aug 17, 2005 at 9:23:08 pm

1. You need to make sure you have the proper business organization for liability protection and tax purposes. (ie in the US: LLC, C corp, S corp, etc.) Furthermore, some of these organizations require strict compliance with procedure if they are to actually provide you protection. Changing organizational from can be tricky in some cases, so it is best to do it right from the start. An attorney can advise you on this.

2. It is a sound business practice to have this attorney-client relationship in place prior to actually needing it. What you may find is that soon you are going to be faced with signing numerous agreements with clients and suppliers. Your present inexperience in these matters makes it easy to make a serious mistake--especially since making mistakes in these areas is easy to begin with.

Good Luck.
Scott


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Frank OttoRe: As a freelancer, should I get an accountant?
by on Aug 17, 2005 at 9:55:03 pm

It isn't necessary to keep an attorney on retainer...yet. But you should develop a relationship with one that specializes in entertainment law and contract law.

The biggest issues you may see are clients who are late-no pay, misrepresentation of rights and infringment claims by others (yes, if you produce it, they will sue - seems like everyone thinks they created the same thing and YOU copied it...)Plus, with the morass that is the new state and federal regulations on s-corps, llc and the ever changing tax and bankruptcy laws, well...it's in your best interest to have an experienced party availible.

I have a attorney that I can get into see within 48 hours - if I need him to proceed then it's billed hourly. For me that was less expensive (2-4 times a year, vs. a retainer + costs)

Cheers,

Frank Otto



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TimRe: As a freelancer, should I get an accountant?
by on Aug 17, 2005 at 11:58:45 pm

Has anyone checked into the "Pre-Paid" legal organizations? Are they worth the pre-payment and do they have expertise in our field?

I have heard that it can be cost effective, just wonder if anyone has experience here.

Tim Baker
Chameleon Mobile Video Productions
(239)849-3295
"It is not the light at the end of the tunnel that we should seek...it is the courage to take the next step in the dark that we must find."


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Frank OttoRe: As a freelancer, should I get an accountant?
by on Aug 18, 2005 at 3:12:39 pm

Most "Pre-Paid" legal firms are the basics; divorce, landlord-tennant, bankruptcy and and traffic/civil. They generally don't do contract law or other niche arenas such as entertainment and intellectual rights.

They could be of some help in a collections area, I suppose, or in setting up an llc, but I've found them to be too general in nature for this business.

Cheers,

Frank Otto



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mannfilmzRe: As a freelancer, should I get an accountant?
by on Aug 25, 2005 at 5:42:41 pm

After over 20 years freelance director, I've done quite well without a regular accountant or lawyer.

The computerized business and tax programs are just as good or better most of the time. The only people I know who got audited, used CPA's who appearantly "pushed' alittle too far.

Of the court cases that actually get filed, 95% are small claims or district court where you don't need a lawyer. A big dollar case could be anything, from standard business to entertainment specific. You're better off hiring a specialist in the feild. A entertainment attourney is not the right guy for a workmans comp case. If its out-of-state, you have to find a local guy anyways.


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