As Kermit the Freelancer once said, "It ain't easy covering 100% of your own payroll tax."
How do you know if you're self-employed?
You filled out a W-9 instead of a W-2.
You receive a 1099 at the end of the year.
You have heard rumors of such things as "sick days" and "paid holidays," but if they were to happen to you personally, you might question the validity of the pythagorean theorem.
In short, it's easy to lose your pants in this town--especially when you're self-employed.
Make sure your a** is covered with these helpful tips.
Get Health Insurance
I don't want to hear your excuses. "I'm healthier than the offshore banking account of a Goldman Sachs executive in 2006" or "I have more vim and vigor than a Virginia eel during mating season."
I've heard them all. They all suck.
You heard me.
Think you can't afford an extra $100 per month? How about $50,000 for an ear infection? (I made that number up. But still.)
No Seriously, Get Health Insurance
It's the law, bro. Open enrollment started October 1st. Get on it.
Open an HSA (health savings account)
As a self-employed individual you have the option to get HSA qualified health insurance (high deductible health insurance that meets certain government requirements). I know you're starting to doze off right now because this information is so fascinating, but get this--
Money you put into your HSA is tax deductible--and you can use that pre-tax money to pay for qualified medical expenses. Now you can finally get those wisdom teeth extractions you've been eyeing. It's a win-win, my friend.
Open an IRA
A retirement account is a lot like a trusty pair of corduroys--it's extra embarrassing to be 72 and caught sans pants or nest egg.
Maybe you don't have a lot of money to invest. That's okay. Start small, but start somewhere.
If you open a traditional IRA, the money you put in (up to $5,500 per year) is tax deductible. You are going to need those deductions. Trust me.
Register Your "Business" with the City of Los Angeles
For the love of all that is green, fuzzy and pants-free, do this NOW. You may not have a cubicle, personal assistant or water cooler around which to discuss the Breaking Bad finale, but to the city of LA, you are still a business.
The details are a bit hazy, but if you do not do register your business with the city, they will track you down and hit you with a nasty sounding tax bill (happened to a friend of a friend).
All you have to do is register, then report your income each year.
It's easy and free to fill out the form and apply online. Go:
Find an Industry Accountant
No, it won't cost less than TurboTax and the bottle of vino you use to take the edge off of doing your taxes. Yes, it will save you money in the long run. Pay for a good accountant. A good accountant is worth the $100-$250 you might spend.
How do you find this good accountant? Get a referral. Ask your industry friends--even if you're not in the industry. I know you have that friend who's been around the Runyon Canyon block a few hundred times. They will know a good accountant, as well as the best way to get rid of a body (oil drum, hydrochloric acid, rinse, repeat).
I hope I have sufficiently bludgeoned you with useful information. Stay smart, stay safe and hold onto your pants.
*All information in this blog is not meant to take the place of consultation with an actual professional, such as an accountant, lawyer, etc. etc. Use at your own risk.
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