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How to Freelance

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Forming a Company

2:15 with Pasan Premaratne

Now that you have a good understanding of how to run your business, it might be time to make it official and create a company. There are many good reasons to create a company and we will go over the ones that are relevant to freelancers.

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    [How to Freelance with Pasan Premaratne] 0:00
    [Creating a Long Term Business] 0:02
    Now that you have decided to continue freelancing long-term, 0:05
    it may be time to make it official and create a company. 0:07
    There are lots of reasons why starting a company may be good for you. 0:11
    First up: Legitimacy. 0:14
    A lot of freelancers like the idea of forming a company 0:17
    to seem more legitimate. 0:20
    Forming a company's structure around your business 0:22
    makes your business seem more official. 0:24
    Sometimes clients prefer to work with established businesses 0:27
    rather than an individual. 0:30
    And creating a company can help you get that status. 0:32
    Then there's finances. 0:35
    When running a freelance business, or any business, for that matter, 0:37
    it's always a good idea to keep your personal finances separate. 0:40
    Forming a company and keeping all your 0:44
    business expenses within the company 0:46
    will keep your personal finances safe and free of any confusion. 0:48
    Liability. 0:53
    If you run your freelance business as an individual and owe people money, 0:55
    they can come after your personal assets. 0:58
    Certain company structures offer liability protection 1:02
    by keeping your personal assets separate from the company's assets. 1:04
    In fact, this liability protection is probably 1:08
    the number 1 reason freelancers choose to create a company 1:12
    rather than to continue as an individual. 1:15
    As you grow as a freelancer, you might want to hire 1:18
    some people of your own. 1:20
    Having a company structure will allow you to do that properly, 1:22
    get payroll, employment taxes, and all that good stuff. 1:25
    Now, that's a future consideration, 1:29
    but it's one of the reasons we would go about forming a company. 1:30
    If one day you do have employees, 1:33
    then the liability protection offered by a company 1:35
    becomes even more important. 1:38
    You may be able to carefully control your actions so that 1:40
    you don't incur any liability, 1:43
    but you can't always keep an eye on your employees and their mistakes. 1:45
    Then we have taxes. 1:48
    Now you can certainly file your taxes as an individual when running a company, 1:50
    but there are certain advantages to doing so as a business. 1:54
    This depends on the type of structure you choose and the benefits that come with it. 1:57
    Now these are all great reasons to start a company. 2:02
    and you should take time to understand if they apply to your scenario as well. 2:04
    In our next video, we'll take a look at the types of entities available to us 2:08
    once we've made the decision to form a company. 2:12

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